Advantages to Owners
As can happen in many arguments, discussing the merits of office space leasing is often about the two extremes. On one side is the established, long-term lease by stable tenants committing to building out at least one whole floor and staying for 10 years or more.
On the other, is the disruptive, venture-backed, cash-burning co-working startups who want to disintermediate owners by offering workplaces in increments as little as one desk for one hour. But much bigger than hot-desk coworking is the opportunity for building owners to add flexible offers into their mix. This can better monetize existing space, grow business, retain existing customers, and provide a platform for resiliency for times like these.
In this context flexible means space that is variable in size and shape on short term, even month to month terms. Already, several leading owners are expanding their branded flexible space offerings. As co-working appears to be struggling over the last year and even more in the current climate, owner-provided flexible offers will continue to be one of the fastest growing products in commercial office space.
10 advantages of adding flexible spaces
- Monetize while selling. An opportunity to lease part of the space while waiting for a full-floor tenant. If a tenant arrives who wants the whole space, you can move flexible tenants to other open spaces in the building or in another nearby building, and or terminate short-term leases.
- Monetize both as space and as options on space. A way to put space to work while still holding it for expected growth by adjacent tenants who hold options to expand into adjacent space in the future.
- Offer differentiated overflow options. Overflow space for existing tenants when they have project-based surges. This increases the value of the building to the best tenants.
- Market the same space in multiple layouts. A way to match more of the market demand. You can digitally offer the same space in many alternative shapes and sizes to more quickly match what brokers are looking for.
- Attract a high-growth class of tenants. A business model alignment with startups in the digital economy who are growing and pivoting often — and on runways measured in months rather than years.
- Attract companies built to adapt and survive. A turnkey workspace offer for any tenants who need to move fast — and fast moving companies are likely to survive and succeed in high growth and digital sectors.
- Extend branded, turnkey services to retain tenants. A set of services and digital capabilities provided as part of the space that makes it easier to stay in the building and with your other buildings, as they grow and move, rather than choose another brand.
- Use Flexible Suites as a more-forgiving entree to Spec Suites. A test bed for capabilities for spec suites, especially useful for floors or spaces that are relatively harder to lease out. Tenants who prize flexibility and adaptability on their decision about how much space they need may put less emphasis on minor defects.
- Enable tenants to adapt to sudden change. Temporary space when clients are retrofitting space for example while making adjustments for distancing. Available flexible space can keep tenants in the building while they expand and experiment.
- Help tenants find the new normal for their workers. Flexible-centric satellite locations for the sake of Covid19 employee wellness. Extending the same set of services to suburban locations can help rebuild worker trust and therefore occupancy more quickly, and retain within the brand those tenants who decide to change their footprint.
In fact, the where, how, for how long, and on what terms to create hub and spoke or suburban satellite offices based on flexible and turnkey models is a fascinating set of topics to explore in another post.
Another set to explore are other ways to use digital platforms and applications to build employee trust and enable enterprise tenants to experiment as they establish the new normal workplace patterns.