By Cal lee
Here we look at some of those offers, each of which has a variety of different brands providing space:
Private member’s clubs turned business clubs – for members to work and socialise, often freelancers or small businesses that do not require an office 5 days a week, they are often footloose and like to drop in and out between travel and other working locations. Many members are individuals attracted by the exclusivity and the idea of a community of like-minded individuals to network with.
Incubators and accelerators – often based within a flexible office, incubators and accelerators offer office space, as well as capital in some cases, and expertise to build a business. Space is usually taken for a finite amount of time, i.e. that company will either succeed where it is able to grow out of the space, or it doesn’t and it folds. These spaces form an important part of the co-working eco-system.
Traditional co-working spaces – the true model of co-working, an open plan space with desks shared by several businesses and freelancers, either on a daily hot-desk basis or as a resident with a dedicated desk. There are several more independent brands in the market that just offer shared desk-space and a community of freelancers and small businesses.
Spaces with a particular niche or sector focus – some flexible spaces have certain criteria a company must meet in order to be able to lease space. These requirements are usually determined by sector i.e. occupiers must be a tach company or focus specifically on one sector such as music or sport. These spaces are seeking to create a cluster and eco-system of businesses that are able to work together, providing a very specific reason for businesses to join.
Classic serviced offices – a large part of the market still provides the classic private office suites, combined with community areas. These come in all shapes, sizes and designs, catering for almost any business need. From professional, like Landmark, to boutique, like The Boutque Workplace Co, to global, like WeWork.
Enterprise spaces - in the last few years we have seen a significant rise in the number of ‘enterprise’ style spaces to meet the demand for bespoke custom built space providing somewhere a company can input on design and make sure it reflects their brand and culture. Knotel is a business specifically set-up to accommodate this market, offering companies of 20+ plus a choice of furniture and, layout, and their own front door.
Landlord models – In a similar vain to the above, many of the traditional landlord models have focused on the 20+ desk market, targeting businesses that are growing out of serviced office space and seeking a more ‘grown-up’ space, somewhere they can input on design, but on more flexible terms, so a 2 or 3 year licence, with break option. This offers a nice step between a serviced office and a fully-fledged 5 year lease commitment.
Joint-lease / hybrid model – WeWork offers an option whereby both business take a lease on separate parts of the same building, with an agreement that the occupier taking the lease can utilise the WeWork space on short notice. This is proving more and more popular for larger businesses and high growth companies as it enables them to flex-up (or down) in a WeWork space during a growth phase or as staff levels fluctuate, whilst keeping a core space. We expect more providers to follow-suit and start offering this type of space.
Managed offices – managed spaces have been around for a while but are beginning to evolve. They are often popular in markets with limited supply, or for companies with a very specific requirement. There is the option of taking a managed space, whereby the provider takes a lease on a space, fits out the space and manages it for the occupier – taking away the upfront costs of acquisition and fit-out and wrapping all costs into a monthly fee. For many years, the managed provider has taken a lease direct from the landlord, and then sub-leased to the tenant. However, we are now seeing models that provide for a direct licence between tenant and landlord, whereby the managed provider simply designs and manages the space on behalf of the landlord for a fee.
Virtual Office – where you get the benefit of a registered address and telephone number but no physical office space is an important part of the market. Many individuals have small businesses without the need for an actual office, but love the opportunity to have an address at some of the world’s leading landmarks like One World Trade Centre or London’s Cheesegrater at Leadhenhall, both with Servcorp.
So what next?
The variety of different ‘shades of space’ outlined above show a general trend towards a customer focus. The businesses providing space, be they serviced offices or landlords, are having to think carefully about how they make it as easy as possible for the end user – the customer.
Those that best meet the demand will win, and in an increasingly competitive market that is why we are seeing this shift towards the model of ‘Space as a service’, be it a small co-working space or a large tower block.
More than ever before companies are putting their workforce at the forefront of any real estate decision. All spaces will require activation. By that we mean for the end user of the space, i.e. the staff, who want the ability to work from anywhere in a building (or even City and country), to utilise amenities like free coffee, to network with other like-minded people within a community – and importantly, be proud of their office.
Demand is chief currency, space that meets this demand will win, and often this means being space on demand. For this reason we will continue to see the rise of flexible offices as a market offer, but we will also continue to see an increased range of products on offer to meet the variety of different businesses and different demands they might have. Watch this space…