What Is Flex Space in Commercial Real Estate?

Flex space is a building product. One operator's glossary defines it as a commercial property that combines warehouse or industrial area with office or showroom space under one roof, so a business can store product and run the company from the same address. Picture a row of units in a low building: glass and a front door on one side, an overhead door on the other, and an open work area between them.

You may also hear it called flex warehouse, flex industrial or small-bay industrial. Those labels are used loosely, so read the unit and not the name. NAIOP's 2012 terms and definitions list general-purpose flex buildings at 10 to 24 feet of clear height and 30 to 100 percent office, and note that actual characteristics may vary. Units marketed as flex may carry less office than that, so treat those numbers as a classification aid, not a standard. Two buildings marketed as flex can differ a great deal in office share, height and loading.

The useful question is not whether a building is called flex. It is how much of the unit is finished office, how high the open area is, and how freight gets in and out.

Flex tends to suit a business that has people at desks and physical work happening a few steps away. Common uses named in published definitions include:

• Online sellers who store, pick and pack from the same space where staff manage orders.
• Contractors and trades that need secure storage for materials and vehicles plus a small office.
• Light manufacturing and assembly, where production sits next to administration.
• Distributors and growing retailers holding moderate inventory.
• Showroom businesses that pair a display area with backstock behind it.

The common thread is a limited need for height and truck volume, and a real need to keep the team together. A company shipping several full trailers a day, or stacking pallets as high as a building allows, is usually describing a warehouse requirement and not a flex one.

The word causes real confusion because two different products share it. Flex space is a physical building that combines office and warehouse, while flexible workspace is generally shared, membership-based desk or office space, usually managed by an operator.

• Flex as a building. You lease a unit, often under a commercial lease, and you get an overhead door or dock along with some office.
• Flex as a contract. You sign up for desks or offices on short terms, often in an ordinary office building. The flexibility is in the agreement and there is usually no loading at all.

If a listing or a salesperson uses the word, ask one direct question: does this space have an overhead door, or does it have a short agreement? If what you actually want is less commitment, a flex building may not solve the problem, because a flex unit can come with a conventional lease and its obligations. Short-term warehouse options are covered separately in this resource center.

Because the label is loose, the checking happens at the unit level. Bring these questions to any flex space you tour.

• ✓How many square feet are finished office, and is that more or less than we need?
• ✓What is the clear height in the open area, measured to the lowest obstruction and not to the roof?
• ✓Is there an overhead door, a dock, or both, and can the vehicles that serve us actually reach them?
• ✓Is the power enough, and of the right type, for our equipment?
• ✓Does zoning allow what we will actually do there, including any production and customer visits?
• ✓Is there enough parking for staff, visitors and company vehicles?
• ✓Do the lease and the landlord allow us to add or remove office walls if our mix changes?
• ✓Who maintains the overhead doors, the HVAC serving our unit and the parking lot?

Zoning deserves its own check. The SBA advises any business renting a property to make sure it conforms to local zoning, and notes that ordinances can restrict or ban specific kinds of businesses in an area. Zoning is controlled locally, so the municipality's planning office is the place to confirm your use. Do not rely on a marketing sheet or on what the last tenant did.

Flex spaces may be quoted on a net basis, which means rent plus a share of operating costs, though the structure varies by building. In a triple net lease, a tenant typically pays base rent plus its share of real estate taxes, property insurance and common area maintenance. McCormick, a Virginia and North Carolina law firm, cautions that these labels are used loosely and that the lease's actual definitions are the only reliable guide.

That matters when you compare a flex unit with an office suite or a warehouse. A lower quoted rent can leave more of the bill with you, and a rent that includes everything can look high until you add the other side's extras. Compare total annual cost, using the same list of items on each option.

Also price the office portion honestly. Finished office is more space to heat, cool, clean and maintain. If you are paying for office you will not use, or if you will need to build more, either answer changes the math on an otherwise attractive unit.

Flex is a compromise building, and that is its appeal and its limit. It may not fit if:

• Your storage plan depends on tall racking, since many flex units have far less height than a modern warehouse.
• You receive full trailers regularly and need several dock positions with room for trucks to maneuver.
• Your work involves heavy machinery, significant power loads or materials that the building's use rules or fire protection may not accommodate.
• Client visits matter and the location or finish would not make the impression you need.

Tenant Advisory Group represents tenants and buyers across office, clinical and industrial space, so we can screen flex, warehouse and office options against how your business runs and put them on the same cost basis, without steering you toward one building type.