Elad Hod is the co-founder and CGO of infinitSpace, a company that enables office landlords to easily create and run a flexible office space under their brand and conditions. Prior to launching infinitSpace, Elad was a former director of real estate at Mindspace. He is a flexible workspace specialist, with a huge amount of experience in Pan-European commercial real estate transactions.
There is no way to predict what the future holds, neither in business nor in our personal lives. But by examining and analysing the past, we can notice trends that help us build a better foundation for forecasting and anticipating the near future.
Take the commercial real estate sector (CRE), for example. More than 18 months have now elapsed since the beginning of the Covid-19 pandemic and, in this time, irreversible trends have been formed that will shape the fate of the market.
Most notably, the dramatic shift towards remote working has had a significant impact on the market. Large, sole-occupancy office buildings now make up a much smaller proportion of workplaces, with co-working, shared and flexible working spaces on the rise.
Rather than presenting a threat to commercial landlords, however, this opens new opportunities to reimagine traditional offices and create hubs that businesses will be proud of. With that in mind, here are some ways that landlords can adapt their spaces to meet the new – and still evolving – needs of tenants.
What tenants will expect from their office spaces
The model of the big corporate HQ is at a critical juncture. Many large businesses have already announced long-term flexible working policies that will see large segments of their workforce operating remotely – at least in some capacity. A survey of UK businesses carried out by CBI Economics in July 2021 found that 93% of firms plan to adopt hybrid working models in the future. A mere 5% said they plan to work entirely from an office.
Greater collaboration is now required between landlords and tenants, as companies respond to changing employee expectations. Fixed, long-term leases are no longer the norm for businesses looking for a dedicated space, with commercial landlords increasingly expected to provide agile solutions that can underpin their new flexible working arrangements.
Today and into the future, a commercial building’s design, build, functionality, management and marketability will be driven by this demand. Landlords must therefore create environments that are not focussed on dedicated workstations, but more on collaborative spaces and, crucially, an enhanced experience for tenants.
A Knight Frank survey of UK businesses underlined this point. It found that 81% of companies believe they need to implement a new workplace strategy post-pandemic; 53% want their offices to have a greater amount of collaboration space; and 47% envisage their real estate strategies to include a greater amount of flexible, serviced or coworking space.
The needs of the end-user – in this case, the employees – cannot be overlooked. Professionals today are looking for a midway point between the traditional office and home working; a space that is a short commute away, convenient, and is conducive to productivity, collaboration and wellbeing. From high-tech meeting rooms through to after-work classes and healthy food options, businesses will increasingly be looking for workspaces that will appeal to and excite their employees.
To stay relevant, commercial landlords must convert their buildings (or parts of them) to attract the growing number of prospective tenants who simply will not consider a traditional office space. In fact, JLL predicts that 30% of office buildings will have some form of flexible workspace by 2030 – a conservative estimate, I suspect.
How commercial landlords can adapt
The market is moving quickly, and commercial landlords are being confronted with difficult questions about their long-term strategies. Many will think they are confined to two choices: either to hand over their building to flexible workspace operators such as WeWork or TOG and allow them to take full control of it, or set about completing the transformation by themselves.
Positively, there is a third option that is not only viable, but which will also address many of the limitations of the first two options. Landlords can outsource the creation of the space and the management of it to a specialist third party. By leveraging the support of white label flexible workspace providers, they won’t have to give up control of their branding and the end product, and can enjoy the benefits of ready-made solutions that can be tailored to their own needs.
When transforming a building (or part of it) into a flexible workspace, there are a number of practical steps that need to be taken – the most obvious one is adapting the design, functionality and services on offer.
Technology has been the driving force of flexible working for many years, but it will play a starring role in the future of the workplace. Not only will innovative tech make the management of a building simpler, it will also help tenants get the most utility and enjoyment out of the space. Landlords would be wise to consider how they can incorporate technology that will allow tenants to book meeting rooms, browse what events are being run, access exclusive deal from partners, and network with other tenants in the building. Importantly, these solutions don’t need to be built from scratch – leading providers of flexible workspaces will be able to provide an all-in-one platform that will deliver a positive experience for all partners.
Tech will also help the ongoing evolution of workspace. For commercial real estate, space utilisation and adaptability will be critical. Every square foot and piece of furniture must constantly be re-evaluated to ensure that the space is catering to the businesses operating within its confines. By using data to analyse how their tenants interact with a space and use the services, commercial landlords (or those operating their spaces for them) can make ongoing improvements to their offering and maximise the building’s potential.
Engaging and inspiring offices will be just as, if not more, important in the future. With employees only commuting to their workplace once, twice, or maybe three times a week, these spaces must offer more than just a desk and chair. I look forward to seeing how commercial landlords reimagine their spaces, and how they create community-driven hubs that will improve that way people work and live.