Can flex offices make REIT portfolios more resilient across market cycles?
REITs are increasingly exploring flexible workspaces to balance predictable rental income with changing occupier needs, as businesses seek greater flexibility without compromising on workplace quality. A “core-plus-flex” model could help landlords improve occupancy, retain tenants and build greater resilience across commercial real estate cycles.
- Aug 20, 2026,
- Updated Aug 20, 2026 6:10 AM IST
Commercial real estate investment trusts (REITs) are increasingly looking at flexible workspaces as a way to balance predictable rental income with changing occupier requirements. A “core-plus-flex” leasing strategy, combining long-term anchor tenants with premium flexible workspace, could help REIT portfolios maintain occupancy while adapting to businesses with shorter or more dynamic space needs.
According to Manish Khedia, Regional Managing Director at The Executive Centre, the office market is becoming more dynamic as occupiers seek flexibility without compromising on quality. He said the core-plus-flex model can give REITs “a more flexible portfolio structure with predictable cash flows and adaptability.”
Balancing predictable income with flexibility
Long-term leases remain the foundation of predictable cash flows for commercial properties. Flexible workspace, meanwhile, can help landlords activate underutilised areas and cater to businesses that are not ready to make long-term real estate commitments.
“These would include multinational companies setting up their project teams, companies entering new geographic locations, and businesses that are growing at a fast pace and are in no hurry to make any real estate commitment,” Khedia said.
This combination allows REIT portfolios to serve different categories of occupiers rather than relying entirely on conventional long-term leasing. According to Khedia, professional management of flexible spaces can also help landlords diversify their tenant base while improving occupancy.
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Rather than replacing traditional office leasing, premium flexible workspace can complement it by functioning as an extension of a company’s workplace strategy.
Premium flex could support asset performance
The resilience argument also extends to the quality of flexible office space. Khedia said occupiers are increasingly evaluating offices on more than rental costs, with workplace experience becoming an important consideration.
“Enterprise-grade and premium flexible workspaces provide operational readiness, hospitality-based services, technology infrastructure, wellness facilities, and quality design,” he said.
These features could influence tenant satisfaction and retention. Khedia argued that when companies invest in a workplace that supports collaboration, employee wellness and productivity, the cost and disruption associated with relocating can make renewing an existing lease more attractive.
For REITs, stronger tenant retention could help reduce vacancy risk and support rental growth when leases come up for renewal.
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‘Flight to quality’ supports premium offices
The growing preference for Grade A, experience-led workplaces is another factor shaping the strategy. Khedia described this as an increasing “flight to quality”, with companies placing greater emphasis on workplace quality as a tool for attracting talent and supporting business objectives.
He said REIT portfolios with premium managed offices could be better positioned to “increase retention, decrease the risk of vacancies, and generate better rental spread.”
For REITs, the core-plus-flex model therefore offers a potential balance between stability and adaptability. Long-term leases can provide the predictable income base, while professionally managed flexible spaces can respond to changing occupier demand.
Khedia said REITs that successfully integrate institutional-grade flexible workspace into their portfolios are “better positioned to maintain high occupancy levels, strengthen asset performance, and build greater resilience across market cycles.”
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Commercial real estate investment trusts (REITs) are increasingly looking at flexible workspaces as a way to balance predictable rental income with changing occupier requirements. A “core-plus-flex” leasing strategy, combining long-term anchor tenants with premium flexible workspace, could help REIT portfolios maintain occupancy while adapting to businesses with shorter or more dynamic space needs.
According to Manish Khedia, Regional Managing Director at The Executive Centre, the office market is becoming more dynamic as occupiers seek flexibility without compromising on quality. He said the core-plus-flex model can give REITs “a more flexible portfolio structure with predictable cash flows and adaptability.”
Balancing predictable income with flexibility
Long-term leases remain the foundation of predictable cash flows for commercial properties. Flexible workspace, meanwhile, can help landlords activate underutilised areas and cater to businesses that are not ready to make long-term real estate commitments.
“These would include multinational companies setting up their project teams, companies entering new geographic locations, and businesses that are growing at a fast pace and are in no hurry to make any real estate commitment,” Khedia said.
This combination allows REIT portfolios to serve different categories of occupiers rather than relying entirely on conventional long-term leasing. According to Khedia, professional management of flexible spaces can also help landlords diversify their tenant base while improving occupancy.
MUST READ: Dwarka Expressway vs Noida-Greater Noida Expressway: Which NCR housing corridor is winning in 2026?
Rather than replacing traditional office leasing, premium flexible workspace can complement it by functioning as an extension of a company’s workplace strategy.
Premium flex could support asset performance
The resilience argument also extends to the quality of flexible office space. Khedia said occupiers are increasingly evaluating offices on more than rental costs, with workplace experience becoming an important consideration.
“Enterprise-grade and premium flexible workspaces provide operational readiness, hospitality-based services, technology infrastructure, wellness facilities, and quality design,” he said.
These features could influence tenant satisfaction and retention. Khedia argued that when companies invest in a workplace that supports collaboration, employee wellness and productivity, the cost and disruption associated with relocating can make renewing an existing lease more attractive.
For REITs, stronger tenant retention could help reduce vacancy risk and support rental growth when leases come up for renewal.
ALSO READ: Mumbai breaks into the world's Top 15 data centre markets: Can it enter the Top 10?
‘Flight to quality’ supports premium offices
The growing preference for Grade A, experience-led workplaces is another factor shaping the strategy. Khedia described this as an increasing “flight to quality”, with companies placing greater emphasis on workplace quality as a tool for attracting talent and supporting business objectives.
He said REIT portfolios with premium managed offices could be better positioned to “increase retention, decrease the risk of vacancies, and generate better rental spread.”
For REITs, the core-plus-flex model therefore offers a potential balance between stability and adaptability. Long-term leases can provide the predictable income base, while professionally managed flexible spaces can respond to changing occupier demand.
Khedia said REITs that successfully integrate institutional-grade flexible workspace into their portfolios are “better positioned to maintain high occupancy levels, strengthen asset performance, and build greater resilience across market cycles.”
MUST READ: As wealth grows, why real estate is becoming a core asset in HNI and UHNI investment portfolios