The three overarching conclusions from the Trowers & Hamlins Future of Offices round table were:
- The need to adapt to change – in particular the way properties are valued.
- No one size fits all – whether you are an occupier, investor or operator.
- The difficulty of predicting the future of the workplace in an age of fast-changing technology.
The language in the market, meanwhile, has evolved. Office space has become ‘workspace’, and tenants are ‘customers’.
A fresh lens for valuation
- The valuation matrix needs to change; it is still biased towards a long lease to the institutional investor.
- Switch your mindset as to what strength of covenant looks like. For example, 19 years ago Google would not have been seen as having strength of covenant.
Workspace as a people business
- Take care of all your customers’ employees; not just the decision makers. The workspace market is a people business.
- Keep up with trends, as trends “change hearts”. All trends – property, business, technology, environmental, social and consumer.
- Change your business model to allow your customers’ business to thrive.
- A full understanding of your customers’ needs requires extra resources – both money and people.
New boundaries for workspace
- With the advance of AI and automation, space will increasingly be about providing employees with an environment to be creative and insightful.
- A creative working environment requires high capital expenditure, to bring a fresh, on-trend look and feel.
- It’s all about offering a high level of service and a flexible space – a space that creates a feeling of community and wellbeing.
- What else does the customer need? Privacy and confidentiality? Room to express their corporate identity?
- Ask yourself, how can I use building performance data for the benefit of my customer’s business? And for my business?
- As the market grows, co-working operators are specialising. For example, with the offer of women-only workspaces.
Other takeaways included:
The centre of gravity is shifting across the UK
- The regions accounted for a quarter of co-working space take-up in the UK last year, according to CoStar.
- Apart from London, the big five markets for 2018 were Leeds, Manchester, Berkshire/North Hampshire, Birmingham and Glasgow.
Do I partner with a co-working operator or do I do it myself?
- Consider setting up a partnership with a co-working operator. They have the experience and the reputation.
- If you decide that you have the scale to set up your own operator team, look at transferring in-house skills and expertise, such as from residential and hospitality teams.
- Remember, no one size fits all.