Capital markets are unsettled for buildings with space leased to flex-office operators, but there are circumstances where flex-office commitments can keep favor with lenders and investors, according to a new report from CBRE.
Transaction data for 2019 activity shows that office buildings with a third or less of their square footage dedicated to flex-space operators have seen little to no impact on their value, according to CBRE. Still, investor and lender sentiment about flex-office space has shifted since the fall due to a retrenchment and slowdown of the industry.
At this time, lenders and investors seem more tolerant of flex-space exposure of less than 15 percent. That allows other considerations to take precedence in underwriting, such as the fundamentals of the building’s local market and overall tenant mix. At year end, more than half of U.S. and Canadian office buildings with a flex-space provider came in below that 15 percent th
