New London Quarterly Editor David Taylor writes up the latest LREF Roundtable discussion on Space as a service
The commercial property landscape for both tenants and landlords is evolving. There is a growing call for more flexibility of the leasing model, including flexibility of space, locations and contracts. The way in which tenants interact with their space is also changing, with a shifting emphasis on workplace culture improving wellbeing, work-life balance and collaborative working, all of which are gaining greater importance in decision-making. In response to this shift we have seen a rise in serviced/flexible office provision, yet this is not the only answer. What more needs to be done to ensure that the spaces on offer are fit for purpose now and into the future?
A roundtable held at this year’s LREF sought to find some answers.
The key points and selected quotes under Chatham House Rules from this roundtable held at LREF included the following:
- With political and economic uncertainty around, there have been ‘fundamental changes’ in the way businesses account for the properties on their books
- The pace of technology is changing the way we work and interact
- The growth of flexible offices and co-working is offering a different set of services to clients, with new relationships being fostered between landlords and tenants
- Using the office as a ‘tool for talent’ in retaining and attracting staff is a growing principle, and thus workplace design has become of key importance
- Flexibility is a core principle, and for occupiers this is about choice of space and how it might be used and leased, and regarding locational issues
- ‘It is undoubtedly the best time ever to be a tenant in the UK and particularly in London because you’ve got flexibility from almost every angle’
- There are over 600 serviced office providers in central London
- The market is seeing more shorter leases, principally because business cycles have shortened and there is uncertainty about future needs
- Serviced offices can help larger firms ‘flex’ in their space requirements
- ‘There’s a lot more designing for businesses to rub together now’ – businesses are keener on working ‘cheek by jowl’ with others
- The end-user experience also includes ‘members’ being stimulated, invited to attend curated events and enabled to interact, alongside being provided with other services like gyms
- Data collection in how such buildings are used is becoming increasingly important in helping owners design their spaces and improve their customer service/space utilisation, leading to better retention levels
- Individuals occupying buildings want to be part of something, and proud of their offices – a key trend in how buildings can reflect on employees as ‘lifestyle’
- ‘The one mega-shift is that we are pushing our amenity spaces very hard’
- Bike spaces and showers are now a ‘must-have’
- Landlords need to get on top of what their tenants want and how well services are performing/are appropriate
- Buildings in this sector are being used more, accepting the night-time economy, and are being designed to be more open, allowing the public to access the ground floor. It is effectively the hotel model, to drive footfall and help pay for amenity space.
- ‘Space as a service is here to stay’
- ‘The new paradigm is about engaging with tenants’, rather than ‘asset management through reluctance’