The choice is growing for all types of companies, making both providers and occupiers rethink the commercial real estate industry
*Instant data **Google adwords based on 7 key flexible search terms
Talk about some of the key cities but mention the growth in some of the smaller locations, Liverpool, Lyon, Milan etc
-average desk size is decreasing -Centres are getting larger -Greater numbers of hybrid locations -Increased % of private space although Europe looks to have the strongest % of coworking vs private spaces -As expectations from members grow alongside competition operating costs increase
The changes being adopted by traditional landlords and the growth of new providers is consistent with how the retail, leisure, financial and business services industries are being disrupted by companies offering customers a new way to buy (arguably with better quality and price)
Comparable industries taking time to adapt, for example:
Motor cars (leasing now more favourable than ownership) Hotels – shake up with Air BnB IT – innovations in could-based computing – Microsoft, Apple, Skype, etc. HR – outsourced (include examples) – ‘HR for the digital era’, IBM have been pioneers whilst onboarding thousands of new employees every year (AI, chatbots, etc.) https://www.bcg.com/en-gb/publications/2017/human-resources-digital-organization-hr-disruption-leadership-discussion.aspx Real estate – myriad of solutions now
IT – gone are the days of banks of servers in the basement of a large office, partnering/outsourcing in this space has driven innovation towards software as a service and pay as you go cloud computing – risk share, business performance improvements mean greater profitability for vendors Talent – retail and investment banking, insurance, pharma, consumer good supply chains…most businesses have been disrupted by the advances of technology over the past 15 years…headcount has shrunk…AI and robotics will change it further…so talent solutions are about contingent workers, project staff, offshoring, near shoring, hub and spoke models Outsourcing in these industries is about shared risk and performance based contracts Corporate real estate – most time spent developing product often in isolation from client demand…client or tenant or occupier…the industry is built for the transaction…the client wants value…not just body shopping
The market is finally addressing occupier demand. What will actually make their business better?
WeWork Naked Hub – APAC operator LTB – London based fit out firm Teem – Workplace data analytics (acquired fir $100m)
Blackstone Acquired TOG for $500m in 2017
Convene Acquired Beco in 2018 – a workplace activity tracking company
3 or 4 years until the dip based on our thoughts, happens first in the UK and US, then through EU and later in APAC.
Companies will have to focus on value add and customer loyalty. Differentiate from the crowd
Luxury serviced offices (NeueHouse – London & NY, The Great Room, the Work Project, both in Asia) Women- only co-working spaces (‘The Wing’, Washington DC) –WeWork recently invested $32m Lawyer-only spaces - ‘Chisel’ in Washington DC Fintech Spaces / Incubators (Barclays RISE, Techstars) Bro-working – co-working space in Brooklyn and Sydney (spaces just for men) tongue in cheek response Servcorp – Saudi Arabia woman only and men only centres We Work diversifying their offering through We Live + We Grow + Regus – Spaces, Signature Group, Number 18, Basepoint
What is the driving change in agile office solutions, and how is the market reacting? -- John Williams & James Rankin