When looking at advertisements of properties for lease, you may come across the real estate term "flex space." A flex space is usually available for lease to commercial or industrial renters who intend to use it for a combined business purpose. The renter can customize a flex space to meet his particular business needs.
Flex space, short for flexible space, for lease describes a commercial or industrial building that offers a multi-purpose work space, typically with separate manufacturing, warehouse and office areas.
Flex Space History
In the 1970s, ugly industrial buildings had loading docks for trucks in front, forcing employees and visitors to go around these trucks to go to work. The 1980s saw demand for more office space and better-looking industrial buildings. Property developers began designing industrial buildings that had rear loading docks, plenty of parking space and high ceilings. These features allowed businesses to use such buildings for various purposes. Thus, the flex space was born.
Flex Space Uses
Businesses can use flex space for both inventory storage and office space. Because of the clean design of a flex space, businesses can remove and add features to customize the space for their specific purposes. For example, they can add machinery and turn a flex space into a manufacturing factory. Alternatively, they can decorate the area into a showroom to display their products to prospective customers. They can also turn it into a laboratory, a retail store or an assembly area.
Flexibility of Use
A business can rent a flex space for five years or less, according to Baltimore Business Journal. As such, a growing business can quickly move if it outgrows the flex space. Because flex space comes in sizes between 1,500 to 60,000 square feet, businesses can move from one flex space to another, depending on the kind of business space they need. A business renting a flex space has the ability to control various building features, such as HVAC, security and operating hours.
Flex Space Cost
The lease rate of a flex space is often less than that of a specialized business space. This is because the business rents only the areas it needs, without having to pay rent on common areas, such as hallways and bathrooms, which are usually present in regular office buildings. Also, the simplistic design of the space means that it costs less to build, allowing the property developer to pass on the savings to the renter.
Flex Space Gross-Up Consideration
Because a flex space doesn't charge rent on common areas, its usable square footage is also its rentable square footage. Compared to a typical markup factor of 15 percent on other rental spaces, the markup factor on a flex space may be only 1 percent. As an example, if you're leasing 5,000 square feet in a traditional building, the grossed-up area that you're actually paying rent on is 5,750 feet. The same building area in a flex space, however, has a grossed-up area of only 5,050 feet.