All markets are shifting towards becoming more people-centric.
With so much choice in the market, the consumer is the one calling the shots. We’re a generation of impatient commitment-phobes, with apps for just about anything, and where convenience is king. Take ZipCar or Ubeeqo as examples – pay as you drive app-based platforms providing a convenient alternative to car ownership.
Millennials job hop more than any generation before them, moving companies on average every five years. As companies fight to secure the best talent for their business, they are increasingly turning to real estate to help with this. They want to secure the best spaces in order to secure the best talent. With this we have seen the rise of ‘space-as-a-service’, where occupiers are consumers, and experience is at the heart of design.
Agile real estate
In this fast paced, ever-evolving market, a company’s ability to be flexible is also more important than ever. They are seeking the ultimate agility from their real estate with the ability to grow or contract as their company does, paying only for the space required. There is a reluctance to commit to lengthy contract terms and futureproof for the long term. At the same time, they want to be able to benefit from having a fully customised office to fit their business brand and needs.
Within this people-centric real estate model, we’ve seen the rise in popularity of flexible office providers, with flexible lease terms and customer-centric spaces. Even in a market where central London office vacancy rates are below the 10-year average at 4.0%, and the West End is as low as 2.8%, (as of December 2019), the opportunity lies with Landlords as to how they choose to reposition their space against competition from flexible office providers.
Institutional property owners are fighting back by launching their own in-house flex offerings. The London market will soon be accustomed to the new buzzword of “Tenant-Ready” solutions, where Landlords are offering fitted, ‘plug in and Play’ space at a rental premium to the customer but with a reduced, fixed dilapidations settlement at expiry of the term. It’s a sweet spot between traditional and flexible leases, and is particularly attractive to SMEs who can move straight in without having to worry about arduous fit-outs, and is a great option for those occupiers with concerns around data security or brand dilution in a flex environment.
One thing is for certain.....
As the London market continues to develop solutions to suit all types of occupiers, the lines between flex and traditional become increasingly blurred. What is clear, however, is that there is an abundance of choice.