The office sector will have to adapt and change in order to thrive, experts agreed at Real Asset Media’s The Future of Office Investment Briefing, which took place online recently.
‘There’s been a structural shift in the way office space has been used and it has now become a consumer product,’ said Jonny Rosenblatt, co-CEO, Spacemade. ‘This is the Netflix moment. The landscape is changing fast, and those who don’t embrace change will end up like Blockbuster.’
Flexibility is key to attracting and retaining tenants in this environment. As in other sectors, Covid-19 has has accelerated existing trends, rather than drastically changing the picture.
‘The pandemic has accelerated the demand for flexible space across markets,’ Rosenblatt said. ‘Tenants want an array of different products and landlords want to deliver them but they don’t know how to. We’re at this precipice now.’
The different models have co-existed so far: the traditional leasing market with quarterly rent collection and 5 to 15-year leases on the one hand, and the flexible co-working space on the other.
‘Landlords used to let the space to a co-working operator who played the rent arbitrage game, but then we saw a landgrab by operators like WeWork who took up leases at the top of the market,’ Rosenblatt said. ‘Many new companies and start-ups have grown up in the flexible space and don’t know or want anything else.’
Developers, landlords and operators must find new and innovative ways of providing that flexible office space.
‘I don’t know what will happen but I do know that everything will change,’ said Cees van der Spek, Public Affairs & Global Corporate Relations Director, EDGE Technologies. ‘There will definitely have to be more flexible space but delivered in a different way to what is being done today. We’re in the middle of a profound re-thinking of the office model.’
Spacemade, an operational platform, has opted for flipping the co-working model around, allowing landlords to deliver the flexible space directly to tenants instead of having to rely on a third party. ‘The demand is there and we’re doubling our footprint by the end of the year,’ Rosenblatt said.
Missed the Real Asset Media’s The Future of Office Investment Briefing? To catch up click on the video below: