Flexspace 2020 – motoring forwards at full speed, or sinking on the HMS Brexit?
Last Thursday we gathered together key members of the flexible workspace community – GKRE, The Instant Group, Office Space in Town, Orega and The Argyll Club to name a few, on The Sunborn Yacht Hotel, Docklands. We met to share thoughts on the year to come in our market space and celebrate arriving at the end of the longest month in the year.
The irony of attending a 2020 Thinktank Lunch the day before the UK leaves the EU was not lost on the group. Were we the moneyed classes sipping champagne and listening to the string quartet on the upper decks whilst the Titanic sank?
Perhaps it was the good food and wine, but the atmosphere was positive. Those around the table have all been in this market space long enough to believe that their experience will help their organisations avoid the likely boom and bust still ahead for some brands in the year ahead. Every-one was taking a wait-and-see approach in terms of Brexit impact, not shifting their business model significantly in anticipation.
Flex Space, do we believe?
The first issue was “Flex Space” – do we believe in the term? Or, is the operator’s view even important? The property market’s perspective is key – how to realise the best potential return for the real estate? The answer is to provide the right ratio of straight lease to full-service space that achieves this. Also central to conversation was of course tenant perception. They understand the term “serviced office”. The industry might think it sounds old fashioned, but clients can’t differentiate between flexible workspace and coworking. Niki Fuchs, OSiT (firmly in the flexible workspace market), reported prospective clients asking for coworking space and putting free beer high on the requirements list. The conclusion was that “space as a service” is perhaps the term that will win out as making sense to all.
Vanilla is dead
The headline grabbing nature of the market over the past six months with the failed IPO of WeWork leads many pundits to believe that the market is maturing. Will Kinnear, GKRE, opined that, “There are so many new concepts, products and brands coming into the market. Whilst some of those – perhaps after trading a while – will no doubt refine themselves and their offering, the fact remains that those who know their market segment and understand their proposition will succeed.” This idea that the vanilla workspace is dead gained agreement around the table. The rebrand of The Argyll Club is testament to knowing who you are and who that will appeal to. Diversification into niches is perhaps a London-only trend for 2020 but defining your brand and knowing your target market will increase success of lead to lease, especially through brokers in any region.
Low key branding or front and centre
As the market matures, interestingly the issue of brand does seem to split the market though. Some clients want to shout from their social platforms which operator runs their office space; whilst others want a much quieter branding evident on the buildings, to create the perception that their offices are just that – their offices. An interesting conundrum for all those round the table and one on which they will have to choose a side.
Is it all about London?
Another development in a maturing market is that some of the London-centric operators around the table agreed that their offering was attractive in the capital but would not work in some 2nd cities. They were surprised though to hear from regional players like Orega and Chadwick how buoyant such markets – Bristol and Reading were mentioned – are. The rumours of 2nd and 3rd city growth were also revealed as truth by attendees such as UBC and MSO.
Whatever their investment model all players could see the value of the freehold approach and were envious of those operators who have the flexibility to meet client needs in terms of design and space.
A big thank you
Whatever we decide to call this industry, it is still small enough that everyone knows each other and are friendly and respectful enough of each other’s different models to gather around a table and debate their views. A huge thank-you to everyone that attended. We will look forward to seeing you next year!
So, the question remains – were we drinking sauvignon blanc whilst the ship is sinking? These players were all savvy enough to drink a strong coffee and disembark to steer their businesses through whatever 2020 brings us.