Flexible working and co-working are two agile working models that continue to disrupt and shape the commercial property sector.
Reports point to these models causing a decline in office space demand in some parts of the UK, but it’s not all doom and gloom. Many of the companies hot on these trends are enjoying benefits in the form of improved morale, higher employee productivity by up to 74%, found a report last year and greater collaboration.
A flexible future for landlords
A CBRE study, cited in an article we read recently on Property Week, revealed around 79% of commercial landlords are aiming to launch a flexible office offering over the next 12 months. Not surprising, given the co-working sector has experienced 10% growth in the past few months alone.
Last year, a whopping one-fifth of commercial property deals in the capital went to flexible office space. Meanwhile, in many of the UK’s other large cities, uptake of shared offices has tripled.
By 2019, almost all (95%) of the landlords polled by CBRE believe flexible office space will be on the brink of becoming mainstream.
Adopting an operator model
As the study outlines, landlords who wish to open a flexible co-working space have a number of potential routes. Almost four in ten (38%) landlords are considering taking the DIY approach and building the offices themselves, while others are opting for the potentially less risky sole occupancy model. CBRE explained 30% of landlords are thinking about letting their space to an existing co-working operator.
But there’s another route, called the ‘operator model,’ which may enable landlords to meet demand and generate long-term gains. This model is pioneered by the hotel sector, where property firms manage hotels through joint ventures with operator brands such as IHG and Hilton – offering prime space, outsourcing operations and management, and dividing the income.
In the commercial space, the co-working operator can use its brand and expertise to inspire members to occupy the office, run the community and manage the building, splitting income with the landlord.
This model has benefits for both parties, allowing the landlord and operator to capitalise on new office trends and at the same time, protect themselves against expected ‘boom and bust’ cycles in the market.
Over the long term, landlords who are using traditional leasing models and capitalising on the co-working trend could crash if there’s another recession; while landlords with no experience of marketing to new customer demand may struggle whether the economy is booming or going bust. With the operator model, however, the synthesis created between the landlord and operator allows then both to profit and flourish.
If you’re a landlord or commercial agent searching for flexible co-working spaces for your client, why not partner with Kerr? Many of our recent projects showcase flexible workspaces, with our services spanning design, build and supply. Get in touch today to find out more.