- While organizations around the world adjust to the shift in business and working practices, the question that faces the flexible workspace industry is: what comes next?
- The good news is that the flexible space industry may come out of this crisis well.
- Allwork.Space approached a number of owners and operators within the coworking and flexible space sector to find out how they are coping during the situation, and their thoughts on what comes next.
While the world’s population adapts to a landmark shift in business and working practices during the COVID-19 pandemic, the question that faces the flexible workspace industry is, what comes next?
In a webinar hosted on March 23rd by Cushman & Wakefield, ‘COVID-19: Implications for Real Estate Investors and Occupiers’, Kevin Thorpe, Chief Economist, Global Head of Research, said that the second quarter of 2020 will be “brutal” as the economy enters recession.
However, the pace of recession — and recovery — is dependent on the path of the virus and, if social distancing measures work as expected, there could be an economic rebound in the second half of 2020.
On the coworking side, Thorpe acknowledged that hospitality is being hit the hardest. Positively, he went on to say that coworking may come out of this crisis well, as “flexible space is a good way for occupiers to navigate the near term, gather together, and figure out their business before moving forward with longer leases.”
All in all, the light at the end of the tunnel could be very bright for our sector.
What Does the Flexible Space Industry Think?
Allwork.Space approached a number of owners and operators within the coworking and flexible space sector to find out how they are coping during the situation, and their thoughts on what comes next.
John Williams, Head of Marketing, The Instant Group – “hope on the other side”
“I would say that not only have I been amazed by the resilience of operators in the face of incredible challenges, but I would also add that our Asia-Pacific colleagues, who are starting to return to normality, have seen a market bounce. Many of the key markets there are two months ahead of us, and having persevered through distancing, isolation and so on, are now seeing a lot of pent up market demand come through – there is hope on the other side of this.”
Cal Lee, Global Head of Workthere – “flexible space is able to fill the gap”
“We have spoken many times before about how the relationship between landlord, operator and customer in the office sector has become increasingly more pivotal in the success of a building or scheme. However, during the current situation, the need for a team effort in the flexible office sector has never been more pertinent. With all sides facing challenges and pressure as the situation continues to evolve and many UK workers now working from home where possible, we will see impacts across the whole market.
“Many clients in flexible space are on 12 month + contracts, our average contract is 11.9 months. Similar to an office contract for conventional space, it is not easy to cancel contracts unless there is a material breach by one of the parties. In many cases it will therefore be a question of timing as to whether they can simply cancel and acquire space again as and when they are ready.
“Almost all providers have pivoted quickly to focus on their renewal strategy, making sure they work with their existing customers to help them through this period of uncertainty and for them to retain a level of contract occupancy (if not building occupancy). However the longer this continues the harder it becomes for the serviced sector and inevitably, like other sectors affected, it will require government support to keep it going as best possible.
“We are already seeing highly incentivised rates for longer licence terms, as well as many providers dropping their minimum contract terms and offering clients rolling contracts, so despite the current situation, there are competitive deals to be done for companies needing space or renewing.
“One positive area for the sector is a growing spike in demand for swing space from companies where they move into a conventional space has been delayed as a result of delays to the fit-out process following supply chain issues. We’re already seeing several such requirements where companies still have a critical move-date and therefore need to find some form of office space as a contingency, and this is where flexible space is able to fill the gap.”
Liz Elam, Executive Producer, GCUC (via webcast on Friday, March 19th) – “this is coworking’s potential moment”
“We’re going to have to buckle down for a couple of months. We’re going to be okay. This is coworking’s potential moment — everyone has figured out that they can work from home, but it’s lonely. This industry has risen up to support each other and we’re going to continue doing that. We’re going to come out of this better, together.”
Listen to GCUC’s webcast in full or read the highlights here: Sales Strategies and Support during Covid-19
Jane Erasmus, Sales & Marketing Director, UBCUK – “a unifying experience”
“For sure it’s a challenging time personally and professionally, but it is also a unifying experience because it’s affecting all of us.
“From a business perspective, it will test our resilience, ability to pull together (albeit sometimes not physically) as well as our determination to overcome adversity, find ways to adapt and potentially innovate or try new ways of working. Technology has really come to play, many businesses and networking groups have quickly adapted from face to face format to online, whether that be via Zoom meeting or a Whatsapp group.
“Of course, the importance of having the right technology has come to the forefront. Many people have dabbled with home-working part-time or ad-hoc before, but some of our larger customers are trying the technologies around remote working for large groups of employees for the first time; they are used to the high-speed business-grade connectivity we use in the office and we have yet to see how home broadband will cope with the increase in traffic.
“Some people are already reporting back that they are really missing the daily interaction with their fellow workers and the business centre teams and of course having the children back home is going to present an even greater challenge for many new home-workers.
“My prediction is that by the time we’ve done a few weeks at home, many of us will very much be looking forward to getting back to the office! In all of this our UBC serviced offices are very much open for business although significantly quieter than usual. We have introduced additional cleaning measures and adapted our working environment so that users can maintain safe distances if they wish to. Our centre staff are providing a reassuring and supportive ear to listen to the very real worries of our customers – they are doing a great job and we are super proud of them!”
William Edmundson, COO, Office Evolution – “communication is vital”
“As the situation continues to change, Office Evolution’s message continues to evolve. Communication between company leaders, franchisees, employees, and members is absolutely vital during this crisis, which is why we are in constant contact with all of them. Our members are entrepreneurs and continue to need a place to receive their mail, work and get their business done. Office Evolution is that place.”
Jane Sartin, Executive Director, Flexible Space Association (FlexSA) – “our members are making huge efforts”
“As for every area of life right now, it is a very challenging time for the flexible workspace industry. Our members are making huge efforts to maintain their services. This includes work to keep their buildings open, but they are also supporting customers with technology and virtual office services to enable them to work remotely for the duration of this crisis.
“We are calling on the Government to add the flexible workspace industry to the list of sectors which are benefiting from a Business Rates holiday. This would provide vital support to get operators of flexible workspace through this difficult period, and to then be there to continue supporting their customers, who run all manner of businesses, to bounce-back once this crisis is over.”
Giles Fuchs, Chief Executive of Office Space in Town – “absolute importance of community and staff wellbeing”
“Although people are naturally gravitating to their homes to work remotely in this time of uncertainty, there are reasons for office and workplace providers, owners and investors to feel reassured.
“Government guidance on social distancing will likely result in reduced occupancy for workspaces in the short-term – this will no doubt put pressure on operators that rent their space and those with tenants on short contracts without deposits, but those who own their own buildings will likely show more resilience in this current period of increased remote working. Additionally, office providers that invest in the right technological infrastructure that facilitates more flexible working in this period of uncertainty will likely benefit from robust tenant retention.
“Furthermore, the flexible working model could well benefit significantly from the current dramatic change in working style. As workers become increasingly adept at remote working and demonstrate their productivity outside of the walls of a centralised office, we could see companies from SMEs to larger corporate tenants rethinking their needs and turning increasingly to flexible and co-working spaces. Beyond this, testing times such as these underscore the absolute importance of community and staff wellbeing for businesses – office providers that support this, through the facilities and services they offer, will reap the rewards.”
Industrious – “connected and productive workdays”
“To make working from home more productive, engaging, and less socially isolating, Industrious has launched a new series of products and services for our members, called Continuous. Comprised of two components, Industrious @ Home and Continuous Corporate Services, these initiatives align with our commitment to delivering connected and productive workdays, no matter the circumstances. Industrious @ Home will provide a strong sense of community for our members, as well as opportunities for professional development and curated partnerships, while Continuous Corporate Services will provide solutions for executives and business owners to plan for what comes next.”
Comments, thoughts, predictions? Let us know how your business is handling the health crisis: [email protected]