Small Towns and Commuter Hubs Are an Expanding Frontier for Flexible Workspace

• Small town flex: Flexible workspace demand is surging beyond city centers as enterprises embrace locations near-home offices.

• Club house: A planned $2.7 billion take-private deal for Soho House is running into a last-minute funding snag.

• Invest more, not less: NAR is pushing for federal incentives aimed at increasing investor participation in the housing market.

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Perspectives

Small Towns and Commuter Hubs Are an Expanding Frontier for Flexible Workspace

Flexible workspaces have moved from a niche solution to a core component of enterprise real estate strategy, with more than 80 percent of Fortune 500 companies now using flex in some form. As companies seek capital light models and greater portfolio agility, flexible workspace is increasingly valued for its ability to reduce risk while supporting productivity, well-being, and hybrid work policies.

Demand is no longer concentrated in central business districts. Growth is strongest in suburban, commuter, and small-town markets, where flex space often commands significant rate premiums over traditional office. In some U.S. markets, flex rates are more than four times higher, offering landlords an attractive path to higher returns, particularly in areas with limited supply and rising enterprise interest.

Employees are also driving this shift. Near-home flexible workspace reduces commute times, cuts annual costs, and improves work-life balance, reinforcing employer adoption. As hybrid work becomes more permanent, smaller markets are emerging as the next frontier for office demand, positioning flexible workspace as both a workforce strategy and a long-term opportunity for real estate owners.

Overheard

Capital Crunch Hits Soho House Going-Private Deal

A roughly $2.7 billion deal to take Soho House private has hit turbulence at the last minute because of trouble securing full funding from lenders. The private equity consortium backing the deal, led by Ron Burkle’s Yucaipa and partners including Founders Fund and Rhone Capital, agreed last year to buy the members-only club and hospitality brand known for its curated blend of social, hotel and real estate assets. But as the financing package was coming together, lenders grew skittish about the cost of debt and broader credit conditions, prompting a pause in final commitments that could force changes to the terms or even a rethink of the timing and structure of the transaction.

Soho House’s appeal to private capital comes from its blend of real estate and brand value. The company operates dozens of private club locations with hotel, dining, and event space in major global cities, often occupying prime urban real estate that commands outsized rents and membership premiums. Its model ties upscale hospitality experiences to long-term leases and owned property, and during its last earnings cycle management highlighted resilient membership revenue and steady renewal rates even as travel patterns shifted. But the asset class sits at the intersection of hospitality and office, areas that have seen uneven performance in a credit environment where lenders are scrutinizing cash flows, leverage, and cyclical risk more intensely than in prior years. The death of WeWord due to its unrealistic band valuation assumptions certainly didn't help either.

The funding snag reveals broader market dynamics for real estate-linked take-private deals. With interest rates elevated and lenders cautious about cyclical exposure, especially in downtown office and urban hospitality markets, getting paperwork across the finish line is proving harder than in recent years. Investors may demand deeper equity cushions or more conservative leverage assumptions to get deals done in today’s lending climate.

NAR Calls for Federal Incentives to Boost Investor Home Purchases

The National Association of Realtors is urging federal policymakers to consider incentives that would encourage more investor purchases of residential properties. The proposal comes at a time when overall sales activity remains subdued and inventory continues to run below historical norms, particularly in entry-level segments where investor competition once drove turnover. By advocating for incentives, NAR thinks markets may benefit from increased participation by institutional and individual investors who can help absorb unsold units and support pricing stability.

The backdrop for this push is a housing market that has struggled with tight supply for years. Higher interest rates and mounting carrying costs have tempered demand from typical first-time buyers and widened the gap between buyers and sellers. At the same time, investor activity, particularly from smaller, individual investors and build-to-rent players, has ebbed from the highs seen earlier in the decade. NAR’s suggestion of federal incentives is premised on the idea that targeted support could encourage capital to re-enter sectors where it has pulled back, such as lower-priced homes and workforce housing that may not offer strong yields without some policy boost.

Suggesting federal intervention to spur investor sales signals a broader policy conversation about how to keep housing inventory moving and markets functioning. If incentives were crafted to support investment in underbuilt segments, they could attract capital that currently sits on the sidelines. However, any incentive regime would need to be carefully designed to avoid unintended consequences such as pushing up prices further or sidelining owner-occupiers in competition for scarce listings. As discussions unfold in Washington, what qualifies for support and how it is structured will be closely watched by the real estate industry.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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