The way workspaces are used is changing, and landlords need to adapt to attract and keep tenants
The continued growth of flexible working and the workspaces needed to accommodate this trend means landlords must rethink the way they do business.
Conventional leases may have to be adapted and flexible workspaces should be added to their property portfolios, says IWG, owner of both Regus and Spaces South Africa.
Last year JLL released a report saying 30% of corporate real estate would consist of flexible workspace by 2030.
CBRE released its own report about flexible workspace, stating 71% of occupiers believe it is essential to delivery of corporate real estate objectives. The flexible office market is growing at 13% a year.
Reasons behind the growth of flexible workspaces include:
Technology making it easy to do tasks.
The ability to work from anywhere boosts personal productivity.
The cost savings of flexible working versus fixed real estate can range from 5% to 75%.
For landlords, this boom means three key things for the way they conduct business.
“This doesn’t mean completely abandoning conventional leases, but rather adding flexible workspace into their portfolio. This provides an option for tenants.”
“Opening even a few floors in a classic office building that are designed for flexible working can help attract tenants who may become long-term customers with more traditional leases.”
Another way to offer a long-term lease is by flexible workspace providers meeting traditional landlords “in the middle” on lease terms, by signing a long-term lease and taking on the risk of the space. By committing to a 10-year lease, agile companies can offer property owners the security of a long let while giving tenants the shorter-term, adaptable contracts they want.
Make the leap.
Agile office experts will be able to offer the service quickly and efficiently.
Looking at a portfolio as a whole
A vibrant co-working centre with a changing cast of energetic businesspeople has knock-on benefits for the surrounding community and for land use.
Having flexible workspace has ramifications far above a single building, IWG says.
“It can boost an entire portfolio, as well as real estate within a larger area. The availability of flexible working can have knock-on effects for the community as a whole.”
Managing the impact of IFRS16
The IFRS16 (an International Financial Reporting Standard) comes into force next year, and it is changing the cost of traditional real estate.
The legislation requires businesses to include all operating leases of longer than a year on their balance sheets, and corporations are looking at ways to access a more effective real estate portfolio. Picking up shorter leases is one way to respond.
The new regulation will also likely force greater scrutiny of real estate leases by an organisation’s finance team, which could trigger the start of a conversion to flexible working.
The good news, IWG says, is that landlords are already realising the need for a shift away from traditional ways of doing business.
According to that same study by CBRE, those who have started to offer flexible options are reporting a boost in property values, happier tenants and an increased ability to attract new business.