Last week Brooklyn, New York was host to the first-ever joint Global Workspace Association and NAIOP Office Evolution conference. Seasoned and new operators, commercial real estate asset owners and investors collided for an event that brought a sea of opportunity to all sectors of the office industry. It also brought a wealth of content, data, and expert thought leadership to help guide attendees in better positioning their businesses for the future of the workplace.
In this article:
All Eyes on Service
In business, the days of long transactions to secure real estate are longkrus gone. Where office leasing used to require multiple people and steps – brokers, leases, lawyers, contractors, overhead, office managers, etc. – it has been simplified into an easy turnkey solution for business of almost any size. As Kane Wilmott, president of the Global Workspace Association, noted when kicking off the conference, “Coworking has removed the friction from the process”.
The current restrictions that Operators and Landlords face in their respective sectors can be alleviated by joining forces. The high expense, difficulty financing limited hard assets, and leasing constraints that operators face can be offset by landlords who, in parallel, seek to expand their portfolio of assets, build a brand, integrate hospitality and service and manage infrastructure and startup costs. As Kane noted, the “real opportunity is for us to work together.
The Office Industry Disrupted
One of the more compelling panels of the Office Evolution conference highlighted the Future of CRE. Moderated by Mark Gilbreath of Liquidspace, the leaders of Convene, Parkway Property Investments, and Adaptive Office Resources discussed the occupier and service provider perspectives of commercial real estate and “Office 3.0”. As explained by Ryan Simonetti of Convene, the traditional way of activating and managing assets is being disrupted by new worker demands, advancing technologies and changing demographics.
As we’ve written before, Coworking is just one phase in the constantly evolving office industry. However, Coworking is proving to be the first step in a major CRE industry shift. According to data presented by Simonetti, 67% of businesses globally are now choosing forms of flexible workspace as a long-term strategy and not simply a temporary solution to their workplace needs. The implications of this are massive.
Asset holders who want to get their foot in the shared workspace door are often stumped by questions around yields, management strategies, building or partnering; questions that seasoned operators can easily answer. Convene’s Ryan Simonetti observed that Coworking is a growth market for asset owners as they are best positioned to take the whole of the industry to Office 3.0, where it’s not about real estate, but about workplace experience, infrastructure, products, and services. The obstacle with evolving the future of CRE is getting the buy-in from Corporate decision makers…which brings us to another panel of interest presented at the conference…
The Corporate Customer Appeal
Industry experts Annie Rinker (Work Ready), Jamie Hodari (Industrious) and Kris Elliot (Preferred Office Network) discussed the value of taking on corporate customers to their range of space occupiers. Why? They are a sexy addition that generally stay longer, grow with your space, and pay on time. The shift in corporate mindset is towards a curated office experience, one which operators are well versed in providing.
Strategically, operators must present their workspace proposition in terms of delivering more value, at a better cost and for less hassle than if the corporation were to embark on their own asset acquisition journey. That is, a Coworking provider can deliver cheaper and more flexible solutions that make employees happier and more productive.
Technology is Driving Change
We don’t need to tell you how instrumental technology has been in driving market changes. It’s spoken for itself. At the Office Evolution event Julie Whelan, Head of Occupier Research at CBRE, delivered a keynote that spoke to the exponential impact technology has had in the workplace and the office sector. While there were many takeaways from her presentation, our primary takeaway from her keynote is the following: Get Technology Right!
When it comes to space, technology is the driving factor for space activation on multiple levels. Technology supports innovation, driving idea to company faster than ever. Flexible technology, wireless networks, and remote access have “unchained work” giving individuals the ability to work where, when and how they want.
Lastly, there is a focus like never before on the culture of delivering services and amenities. What this means, according to Whelan, is that technology is the driving factor causing individuals to influence – whether directly or indirectly – their companies into making new decisions around real estate. So future-proofing your office with forward-thinking technology is the only way to go.
The Office Evolution Conference highlighted the importance of differentiating your shared workspace. In a panel moderated by Angie O’Grady, Shlomo Silber of Bond Collective and John Arenas of Serendipity Labs discussed the secret sauce to a running a successful workspace and staying competitive. More than ever, it’s not about square footage, it’s about service and hospitality. Whether you’re in a suburb or an urban area, the user experience is front and center of your proposition, especially with the appearance of WeWorks’ and Spaces globally, smaller brands must capitalize on building a hospitality brand, focusing their efforts around their members, and building a community.
When it comes to “the Giants” of the shared workspace popping up in communities throughout the globe, the panel agreed that operators can capitalize on the education about the market that is happening as a result, and ride on the coattails of that success. Ultimately, healthy competition makes operators better.
What You May Have Missed
RentShare Stole the Spotlight
The latest payment processing platform built for the workspace sector, RentShare, made their debut in the office sector at the Office Evolution Conference last week. They are bringing operators thousands of dollars in cost savings and peace of mind when it comes to compliance with just a few clicks. Prior to using RentShare, Carr Workplaces, the fourth largest US workspace operator, was receiving nearly 70% of their yearly revenue from credit card payments. At the average 2.9% processing fee, the operational savings to the Carr portfolio has been tremendous and operators got their first look at RentShare, the latest addition to the GWA member pool.
We know Coworking has gone through its growth phase and is peaking at maturity. At the Office Evolution conference, we learned that even CRE is growing up. The old days of under the table dealings are gone thanks to advancing technologies making transactions more transparent and thanks to the proliferation of data sets helping to underscore the main players.
About Coworking & Shared Workspace
More than ever before operators can leverage their knowledge and expertise in running a service business. There is a natural chemistry between workspace operators and the developers, asset holders and investors eager to expand and monetize space offerings within their portfolios. Through partnerships and management agreements, operators can take their brands to new cities or scale quicker and faster than if they were to do it on their own.
At the GWA/NAIOP event, longtime Coworking operators Mara Heuser, 25N Coworking, and Nick Clark, CommonDesk, presented their experiences with developer agreements and the managed services model. While each contract and relationship will vary, both have been able to grow their brand with minimal effort to secure property assets, while at the same time activating services to supply for the growing demand for the shared workspace category of office space. They’re also more easily able to bring to life the “live, work, play” model throughout communities, something that we will undoubtedly see more of in the near future.
Until Next Year
Despite not having the sunshine of Miami or the rooftop pool, the GWA and NAIOP Office Evolution was one of the greatest events our industry has seen in the past few years. From the excellent content to the familiar and new faces, The Office Evolution proved more than ever that the flexible workspace industry is coming to maturity and on to the next phase which will bring a new iteration of workspace brands, competition, and technologies to the market. Likewise, commercial real estate is at the threshold of a new category of property. This event was a pivotal moment for operators and CRE players alike to capitalize on the connections made to bring new categories of space and opportunity to market.
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