AirOffice
Have we reached the point at which the office product might be consumed like the hotel, or the homes and rooms rented on platforms like Airbnb? We’re certainly moving in that direction. Companies like Upflex (a Cushman & Wakefield partner), The Instant Group and others aggregate global facilities for easy access via technology apps. This transition resonates with the growing demand for flexible, location-independent work solutions, allowing employees to effortlessly book an office space wherever required. I’m in Denver, I go to my app, enter my requirements (much like I would do on Airbnb) and, voila! my space is ready. The question is: are we ready to redefine our workspace consumption in line with the on-demand economy?
It’s also interesting to contemplate the implications for space owners (be they landlords or sublandlords). This shift could disrupt the traditional structure of long-term office leases, analogous to how Uber revolutionized car ownership. The idea is radical when you consider the traditional office lease structure. But for coworking or flex spaces, which still make up a relatively small percentage of the overall market, office space is mostly leased to a single company for a long period of time. We’ve long known this arrangement, while serving the investors and lenders (the “landlord”) well, falls considerably short for the occupier because it fails to flex with their ever changing needs. So what would it mean for a space owner to abandon the safety of long-term leases and embrace a more dynamic model? For starters, quite possibly higher income. The primary hurdle lies in the substantial capital required for creating appealing spaces and the need for security in generating and monetizing future cash flow. It would necessitate a shift in the value proposition of office buildings to resemble hotels, considering factors like occupancy rates and pricing. Moreover, current lease structures pose a challenge, with complex sublease and assignment clauses making it hard for tenants to transition their space to an on-demand Airbnb-style model. This cumbersome process stands as a significant barrier to this transformation
While there is clearly market demand for high-flex office products, there are also real impediments to seeing it evolve at scale. But evolve it shall.