Space providers are facing growing occupier demand for flexible real estate and agility in office environments. More than ever, the commercial real estate industry is hinging on its ability to shift from an outdated, passive and rigid value chain to a seamless, flexible, and agile service-based business model. As the competitive landscape expands, success boils down to mastering the inherent complexity and meeting evolving occupier demands. Impossible? No. Involved? Yes.
Below are the top considerations for CRE stakeholders as you consider the transition from product to service-focused assets such as flexible real estate.
Flexible real estate
Flex-space is not one-size-fits-all. There are a few ways you can offer flexibility to occupiers across your portfolio. For one, BYOB (build your own brand). It’s critical to understand all of the dynamic components of the business model for success. Second, buy into established operators with a track record of delivering flexible workspace and services. Third, partner with space operators via management agreements and joint ventures. In this arrangement, the landlord and operator agree to an exchange of operational services for a management fee.
“Flexible workspace”, or what’s often referred to in the mainstream as “coworking”, is not limited to a single product offering. It’s a spectrum of services and products that unlock flexibility and agility to occupiers. It can be anything from private offices and spec-suites to a hot-desk or shorter-lease terms. The trick is being able to deliver on occupier needs through flexible real estate. If you can’t, someone else will.
Premium brand value
You might not be too fussed about brand identity. However, with a greater focus on tenant expectations and the broader market shift from product to service, brand, and culture are top priorities. They directly impact member experience, occupancy rates, and your bottom line.
As a space provider, it’s critical to provide both consistent service performance and brand identity – especially when delivering across multiple sites and regions. According to global research and advisory firm, IDC, businesses are willing to pay for a premium flexible solution. Premium brand and premium and wide-ranging services are likely to be linked to more significant wallet share and higher tenant retention. Shorter lease terms do not need to mean lower retention.
Flexible real estate and the occupier experience
Being in-tune with occupier requirements and meeting their expectations isn’t always easy when they are continually changing. Service-based real estate models are no longer just about hospitality but also about the quality and range of services, productivity, and responsiveness. The power of now is priceless. Occupiers demand immediacy. Acknowledging the increasing number of Gen-Zers in the workforce and how they utilize digital and mobile technology to meet their needs can ultimately be a driver of success.
The greater control you have over service delivery and the less friction in the process, the quicker you can unlock value for your occupiers. Mobile apps, advanced tech services that keep end-users connected and productive, and something as simple as contactless access control can create engaging, safe and friction-free day-to-day workplace environments that retain occupiers.
Implementing flexibility across your portfolio can create pressure on your existing operating model. Legacy systems and tools are unable to support increasingly popular as-a-service models. These solutions lend the scalability and elasticity required to offer in-demand real estate products. If you’re not considering as-a-service models to support your step into flex-space, chances are you don’t have the right tools to bridge the gap between demand for flex and meeting that demand.
To alleviate such strain and to support the inherently complex flex business operating model requires a uniform tech proposition with standardized processes and procedures. In this way, the delivery of different services to a constantly changing customer base with ever-evolving requirements can be managed on a single platform.
In the same way that your occupiers want “space-as-a-service”, you can deliver the technology and digital infrastructure they require as-a-service, giving you more control and visibility over quality as well as occupier experience. When it comes to corporate and enterprise tenants, meeting their technology and security requirements is critical.
Beyond the control, visibility, security, and premium workspace experiences a smart tech operating model can offer, your technology investment can be a lifeline for your flexible real estate operation. Software-based models remove on-site hardware CapEx and maintenance expenses, enabling you to adapt to new technologies and occupier demands easily. Future-proofing and de-risking your portfolio is simple when working with the right partner. From your tenant’s perspective, having access to reliable and immediate services generates confidence in you as a space provider.
Back office operations
Flexible real estate products reduce time to value and enable productivity for occupiers. To achieve these outcomes, you need to skillfully maneuver all the pieces seamlessly in the background. It’s like aiming for a moving target. It entails a higher level of complexity around core business processes such as space bookings, billing, and invoicing, which are rarely the same for any two customers. Often, existing systems and tools don’t cut it when it comes to supporting a high volume of transactions, security standards and the immediacy that occupiers demand.
In moving to flexible real estate and serviced based models, the opportunity lies in connecting people, technology and spaces. With technology, you can automate the day-to-day manual tasks and bridge the gap between the physical and digital environments, ensuring seamless experiences for your tenants.
Keeping a close eye on KPIs and business performance is critical in a flex-space model. Shorter lease terms, more product variety, and varying tenant requirements mean more data to track across more areas of your business. Having both 360-degree birds eye view and more granular visibility into reporting and key metrics drives the actionable insights required to flex. The magic happens when all of your business data can be collected and queried from a single platform, making reporting accurate, efficient, and in real-time.
Flexibility isn’t just a trend. It’s in high demand by a growing occupier market that requires agility and services that meet their expectations. Stepping into the flexible real estate business can be challenging. But when implemented correctly, it can future-proof and de-risk a portfolio, allowing you to cater to a broader range of partnerships and tenants. Ensuring your business is tech-enabled and equipped with the systems and tools to support agility and flexibility is critical.