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Flexible Office Space Is Growing and So Are a Landlord’s Responsibilities


Office workers are returning, tentatively. In areas where life is starting to return to normal, companies are starting to reoccupy offices. But the shock of the past few months and the threat of a second wave of infections has the world cautious about committing to business as usual. This lack of confidence has a lot of implications for the economy and the real estate market as a whole. The office sector in particular is worried about a decrease in demand due to the number of companies that will adopt work from home permanently. A number of high profile companies like Twitter and Shopify have already made headlines with their intentions to do so. 

So, there was a fair amount of confusion when the new CEO of that battered co-working company WeWork, Marcelo Claure, announced that he forecasted the company to have positive cash flow by 2021, a year ahead of schedule. How could a company that was the poster child of what happens when a tech growth mentality meets real estate economics be able to stop its money-losing streak? Well, the company has cut costs and sold off some of its underperforming assets but, more than anything, Claure attributed this new outlook to the growth in enterprise leases. “We have companies like Facebook, Google, and Amazon who have told their employees that they can work from wherever they are. We have a lot of those employees who basically now come to a WeWork facility to use it one day, a week, two days a week, three days a week,” he said.

While co-working is struggling to find its way in a world without shared spaces, larger and larger companies are electing to have flexible offices for their full time staff. If these last months have taught us anything it is that work from home is fine for some business functions, but not ideal for all of them. Workers often need to at least have the option of being able to come into the office for meetings, taking calls, recording podcasts, or, lets face it, just a change of scenery. Jamie Hodari, CEO of one of the fastest-growing flexible office space providers, Industrious, recently told reporters, “About eight weeks ago, companies said to us that once things reopen, people will want to go to work, but no one wants to go to work five days a week. There’s a level of flexibility that companies are anticipating that we’re working to try and provide. But it’s pretty out there. It hasn’t traditionally existed in the real estate market.”

Companies are also guarded when it comes to new expenditures, making even the most bullish prioritize the agility that flex space can provide. The threat of more lockdowns means that almost every industry is having a hard time knowing their future revenue which renders budgeting nearly impossible. The general sentiment is that the economy will not take the form of that V-shaped recovery we all had hoped, and the stream of bankruptcy news serves as a constant reminder to err on the side of caution. 

The growth in flex space demand has a lot of office landlords considering adding a flex section to their buildings. Many are probably realizing that this isn’t a decision to be made lightly. Flex service providers have quite a bit more responsibilities than traditional landlords. Unlike normal office leases, flex leases often include things like food and beverage service and room booking, not to mention a much larger workload when it comes to contract management, billing, and marketing. 

There are also the extra IT concerns that come with selling the service of an office as well as the office space. An unsecure or spotty wifi will not cut it when it comes to a professional office environment (just ask someone working from home with an unreliable connection during an important meeting). Larger enterprises have even more strenuous IT needs, many have a long list of requirements when it comes to digital security. All this means that networks will have to be designed with different layers, one for occupier devices, one for staff, one for building equipment and so forth. In short, landlords considering adding flexible space to a building will need to completely rethink their service offering. 

More than just the new tasks, flex space requires landlords to be much more hospitality-driven. This reinforced the need to have technology that can automate as much of the management process as possible. Things like guest check-in and cleaning schedules can all be automated to help save time and bandwidth which then can then be redirected into creating a better experience for the guest. Important protections like cybersecurity updates and data governance best practices are overseen in a way that can avoid problems before they occur. The busywork that comes with administering an office can be easily automated but the interpersonal exchanges that make someone feel welcome are not so easily turned over to a computer. 

Might find that there is less demand for actual office space but that the demand for the office experience remains. That means that flexible space can act as a way to give those working from home part time access to that experience. In a way, available flex space is the hottest new office amenity because it instantly gives flexibility to anyone leasing in the same building. We have to accept the fact that workers will need to come back to the office on their own time, in their own way. The pandemic hasn’t killed the office, it has just forced it to be much more flexible and reconsider how they deliver both space and service to today’s occupier. 

To learn more about what flex space requires of buildings and how a service layer of software can help landlords manage the new workload check out this useful guide on agile workspace software.

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