The new model for commercial office and coworking industry. Moving from serviced offices to coworking to ecosystems for life and business.

1. Office 4.0
The new model for commercial office and coworking industry
[abridged]
VISHAL GUPTA
Co-founder and CEO
Brussels, 28th Nov 2016

2. ThejourneyofCoworking
Evolutionofthe officemarket
• >1 million coworkers by 2017
• 34% of coworking spaces globally are less than a year old –>
fast growth market
• 100 million new businesses are launched annually -> shift
from large corporates to entrepreneur-driven economy
• 40% of workforce will be freelancers, independent
contractors or solopreneurs by 2020
• >10,000 coworking spaces worldwide -> not a trend, but a
new way of working
• $16bln valuation of WeWork has mainstreamed coworking –
> larger companies locating alongside startups
1
Source: GEM, Deskmag Survey, CoworkingLondon

3. How the coworking narrative has changed
Serviced offices being replaced by coworking spaces
“Coworking is a stlye of work that involves a common working environment,
typically an office, but where activity is independent. It’s much more than a
place to do business, it’s a community.”
Coworking spaces now taking the shape of integrated
campuses or villages
“But these spaces are not just business hubs, they’re cultural and social hives
of activity. They attract the best architects to work on them, host the hottest
parties and in the process continue to blur the lines between work and play.”
2

4. Office4.0:It has arrived
Commercialofficebusinessis increasinglycomplex
3
Office 1.0 Office 2.0 Office 3.0 Office 4.0
Serviced Offices Coworking Serviced Office +
Coworking
Ecosystem
Office only Workspace
Community
Workspace
Community
Delivering the
above with choice
and at scale
WeWork ModelRegus Model *NEW* Model
Workspace
Lifespace
Community
Design
Resources
Online platform
Peripheral
locations
Prime locations
– Grade A
commercial

5. Office4.0:Whatit means
Officeis commoditised,new skillsrequiredtomonetise
4
For
landlords
For
everyone
else
Office 4.0 is an entirely different business
than owning and managing buildings
The physical office space is seen as part
of the entire value proposition including a
flexible workspace, community,
resources and design elements
delivering a whole ecosystem for
business, and for life

6. What hybrid ecosystems could look like
5
Incubators
Gestation focus
5-15% equity
Discounted services
Equity-based rent
Accelerators
Investment focus
3-10% equity
Structured programme
Equity-based rent
Coworking
Community focus
No equity
Events + networking
Cash-based rent
Hybrid Ecosystems
Industry incubator host
In-house accelerator
Investment fund
Coworking space
Corporate offices

7. Office4.0:Keycharacteristics
Howit is goingto changethe industrydynamic
• Emergence of co-working value chain – beyond owner and
operator
• Specialization of skills – roles of different players to deliver
Office 4.0
• Coworking operators need to transition from “community
builders” to “ecosystem managers”
• How is owner-operator relationship evolving
• Lease-and-sublease model may not work -> new partnership
models begin to emerge
• Response of traditional players
• A new class of landlords
6

8. Rolesof differentplayersin Office4.0
Howthe coworkingvaluechainis gettingspecialised
7
Traditional players (Office 2.0 & 3.0) NEW (Office 4.0)
Developers
Build spaces
(Large floor plates,
natural light)
Landlords
Own spaces
(Flexible leases,
engage with
operator)
Operators
Build ecosystem
(Package and
manage services)
Investors
Growth capital,
replace or co-
invest as
landlord
Facilitator
Design spaces
Provide resources
and expertise
Networker
Generate demand,
build community,
business
opportunities

9. Owner-operatorrelationship
Howcoworkingoperatorsprovidevalueto the landlord
8
Office 2.0 & 3.0 Office 4.0
• Pre-lease
• Reduce vacancy rate
• Space Incubator
• Broaden offering
• Operating contract
• Monetise vacant space
• Revenue sharing
• Joint Venture and
partnerships
• Brand value
All of the above provide direct and indirect value accretion to the landlors, and should be
considered in the lease negotiation

10. Owner-OperatorRelationship
Summaryofleasing(andrevenue)models
9
Office 2.0 & 3.0 Office 4.0
Conventional lease
Fixed rental/ cost
Revenue share
Variable rental/
cost
Hybrid lease
Floor with upside
participation
Joint Venture
Business
partner, Equity
for capex
Operating
contract
Management
fee
Coworking
in a Box
Aggregator,
demand
generator
Brand
licensing

11. Responseoftraditionalplayers
Office3.0 is withinreach,BUTOffice4.0 is harderto crack
• Traditional players have now awakened to the challenge from new
coworking operators
• Developers & Landlords: Embracing coworking to monetise asset
portfolio
• MarketTech UK: Coworking campus (Office 3.0) as part of Camden market
regeneration, driving footfall to retail sites
• Soho China: Property developer, rolling out a shared office offering across
all its sites (Office 2.0 + 3.0)
• Keppel Land Singapore: Launched hybrid serviced office and coworking
(Office 3.0) space at prime asset
• Operators: Serviced office (Office 1.0) operators are repositioning
their product
• Regus: acquired Spaces to add social coworking (Office 2.0) to its portfolio
10
Traditional operators moving in to Office 2.0, owners moving in to 3.0, but will find it hard to
crack Office 4.0 themselves

12. Thinkingbeyond
Office4.0 willalsoseea newclassoflandlordemerging
• Awareness and interest in coworking business will also attract a
new class of landlord with a completely different playbook
• Strata sold owners: Smaller individual landlords owning smaller
places may be more inclined to agree to revenue shares and
upfront capex
• Angel Investors: HNIs may view this as an asset backed investment
with rentals supported by a constituency they understand and
believe in
• Tech companies: Tech companies that scale up too quickly may be
left saddled with surplus space – with landlord consent, a sub-
lease to coworking operator will provide vital cashflow
• Large corporates: Opening up to the idea of monetising their
surplus space or outsource entire operations
11
Proper market diligence and relationship building is needed to orchestrate such opportunities
and tailor a mutually beneficial structure

13. Contact details
12
Vishal Gupta
Co-founder, CEO
Founder
Tech Startups SocialMedia
London, United Kingdom
www.kabeela.life
vishal@kabeela.life +44 (0) 7788 491 774
Investment
Fundraising Community
@vishthink
Coworking