Occupier Outlook: Occupiers must view space as a service

Build it and they will come. This saying is relevant now, more than ever, when applied to what we are experiencing with new operators in the office sector. Disrupters have knocked down the barriers of entry into what was once thought to be an established market, dominated by institutional investors and listed property companies. The “WeWork impact” has magically hit on a formula that we don’t believe tenants knew could be made available until it was offered.

The right environment

Initial demand driven by the Technology, Media and Telecoms sector, and start-ups has now evolved. Larger corporates also want a piece of this action to mirror the benefits they see from growth in this dynamic sector.

Business excellence thrives in the right environment, this is true whether you are a start-up or large multi-national. The common goal for success and growth is creating collaboration and a happy work force with a focus on wellbeing. Savvy occupiers (and landlords) who now look at space as a service and use real estate as a platform to help achieve these objectives, will be the long-term winners.

Market shift

Landlords are sacrificing lettable areas and having to offer more amenities to compete. Gyms, artisan coffee shops, roof terraces, communal break out space, onsite catering and communal conference rooms are just some of the services which landlords are providing. Reception areas are getting bigger, with a move towards a hotel lounge feel, encouraging informal meetings and collaboration.

Occupier’s changing demands to satisfy the expectations of the employee experience means a property decision is often based on the additional amenities on offer. The market has responded to these demands, benefitting both start-ups and PLCs who now have more choice and flexibility. Landlords have had to react and compete to attract and retain valuable tenants, maintaining investment values. This movement is here to stay, choices for tenants will only increase.

Best examples of this response to change include 22 Bishopsgate, London and Core Brown Street, Manchester.

To discuss your real estate strategy please contact GL Hearn’s Occupier Advisory Team.