A Missing Piece in Vacancy Reports
After reviewing numerous reports on business premises vacancy rates in Croatia, one thing becomes clear: the overall vacancy rate has remained relatively stable for quite some time. However, what I found lacking in most of these reports is a closer look at two increasingly important metrics — the average deal size (i.e., rented square meters per lease) and the length of lease agreements. These data points offer valuable insight into how the office leasing market is truly evolving, especially in the era of flexible work and shifting tenant demands.
How Flexible Office Leasing Has Evolved
Having spent the past 11 years immersed in the serviced office, flexible lease, or — more commonly known — coworking industry, I've witnessed firsthand how dramatically things have changed. When I first entered the market back in 2014, the typical inquiry we received was for a 9-month lease accommodating roughly 1.2 employees. Fast forward to today, and we're now averaging 3.1 people per inquiry with a standard lease term of 12 months.
Conventional Leases Are Changing, Too
These shifts aren't limited to coworking alone. Conventional leases, which used to lock tenants in for 5+ years, are also being affected. The average square meterage per deal has significantly dropped compared to a decade ago. In a recent high-profile example, Meta (formerly Facebook) broke a 20-year lease agreement with a landlord in central London — and paid a staggering £142 million in penalties to exit early. This kind of move reflects a larger trend: corporate flexibility is no longer a perk, but a necessity.
What Smaller, Shorter Deals Mean for Landlords
As a result, many landlords are now finding that the majority of incoming inquiries are for smaller spaces — typically no more than 250 square meters — and for significantly shorter terms, often not exceeding three years. But what does this mean for their business model?
Operational Complexity Is the New Challenge
It means adaptation is no longer optional. While many landlords are beginning to recognize and respond to these changing demands by offering more flexible lease terms and subdividing larger spaces, doing so comes with increased complexity. Smaller deals mean higher tenant turnover and greater administrative load. To operate successfully under this new model, landlords must invest in robust back-office operations, technology platforms, and professional property management — all of which contribute to higher operational costs.
Flexibility Must Be Supported by Structure
This is why it's critical that these transitions are done strategically and managed professionally. A well-structured approach can ensure profitability even within a landscape of smaller, shorter-term deals. Conversely, failing to adapt — or adapting inefficiently — can lead to operational strain, lost revenue, and empty buildings.
Conclusion: The Future Belongs to the Prepared
The bottom line? Flexibility is the future, but only if it's backed by operational excellence. Landlords who embrace this shift with the right mindset, tools, and infrastructure will be best positioned to thrive in the new era of office leasing.
