Zoe Ellis Moore Founder of Spaces to Places | Navigating the Changing Needs of Today’s Professionals: Trends in the Flexible Workspace Industry

Transcript

Jo Meunier [ 00:00:31 ] :  Hello and welcome to the Future of Work podcast by allwork space. I’m Joe Mernier. Today I’m thrilled to have Zoe Ellis Moore on the podcast with us today. Zoe is the founder of Spaces to Places. She’s a flexible workspace expert and she has 20 years experience in the commercial property industry. And today we’re going to be talking about flexible workspaces, what makes them such an important part of the business landscape today and how they might evolve over coming years. So welcome Zoe, and thank you for joining us today. 

 Zoe Ellis Moore [ 00:01:01 ] : Likewise, thank you so much for inviting me. 

Jo Meunier [ 00:01:03 ]: Good to have you on the show. And could you start by giving us a bit of a whirlwind tour of flexible workspace, what it is, where it came from and how and why it’s grown over recent years. 

Zoe Ellis Moore [ 00:01:18 ] : Yes, sure. And I think sometimes it gets confused now sort of everybody’s talking about flex space, but actually when you think about flex based, everybody’s now sort of the terminology space as a service as well. And so it could be blurry. It’s basically the pay as you go model, that’s how I see it. That could be similar to Co living bill to rent apart hotels. But by adding that workpace or office side, we’re very much just talking about workspaces there and for the premise of this conversation, my expertise. So with the sort of defining the flexible workspace sector, it’s probably what it’s not, it’s good place to start. So there’s a traditional model and traditionally businesses, larger businesses have leased a property or they’ve purchased it, so they have got much more longer commitment to that asset. So it’s larger companies, more 100 employees where they’re fitting out and managing that whole space themselves. And then the opposite side is much more of the model that is flexible Office, or it’s traditionally been known as Serviced Office, a business center. And the product there is pay as you go model. All services, all the price, everything’s encapsulated from receptionists to your WiFi. You’ve got offices there, meeting rooms, you’ve got dedicated desks as well, co working hot desking. So the products there you buy which products you want as well, and you get a ready made community. That’s the big one there with the flexible office sector. And you can go from anything from an hour booking a meeting room to usually about three years contract horizon there. And what’s interesting now, there now is a middle product because traditionally sort of flexible offices, much more smaller companies, but we’re now we’ve seen larger and larger sizes of companies coming in, so much more the 20 plus sort of companies. But this middle ground is, I would say, managed solution that’s somewhere between a traditional office lease and the traditional sort of flex office sector. So that’s growing as well with new providers, sort of kit you’ve got Netspace, business cube, some specialists in the sectors, but often what’s confusing is a lot of these flexible office providers are also sort of moving more into the managed based solution where a company can have their own name above the door and sometimes, best of both worlds, that they might have a floor in a flexible office provision. And so they’ve got meeting rooms that are separate as well and then they’ve got the best of both worlds, they’ve got the ready made community of the Flex office as well. So this is where it gets confusing because there’s a lot of blurring happening within the sector but it’s more what customers are now seeing much more wider selection and choice, which is great for the customer in sort of Occupier perspective. And I know you said about sort of just in the sector and the growth as well because it’s very much been demand led to this consumer world. Now we’re seeing constant growth 2021, 3% increase in providers, 5% last year as well. The trajectory sort of saying annual growth rates between sort of six to 11%. Nintel are saying there’s all the office predictions of saying that this chunk where we talk about the traditional sector that makes up sort of 90% of the market with a traditional office lease is slowly declining and that the Flex office sector is going to increase from that 10% to 30%. So we’re really seeing a transition there. And when you look at graphs as well with the rise of this Flex office sector, when I started in commercial property, average lease length of 20 years, now we’ve really gone down to seven to five years for leases. So businesses are not committing for longer terms and hence why that flex has plays a role there. 

 Jo Meunier [ 00:05:24 ]: Yeah, that is a huge difference and that’s all relating to flex offices. But the flex can also be attributed to other types of workspace, can’t it? Like industrial manufacturing space, even kitchen space. It’s growing into all these other sectors and industries. 

 Zoe Ellis Moore [00:05:43] : The one that’s really fast moving in demand is labs and sort of Oxford innovation are huge in this area where businesses want the lab space. It costs so much with some of this equipment as well. And so these niche providers of specialists are coming up as well. That’s really serving a role and demand led as well. 

Jo Meunier [00:06:07] : And one thing we spoke about recently was that these workspaces or these places, they should be designed for human needs. So thinking about the flexible office, what is it that makes a good workspace. What is it that typically on an Occupier’s wish list? 

Zoe Ellis Moore [00:06:28] : Yes, so good workspaces, they sort of basically on a few principles on how you work. Is it’s got somewhere that you rest, where you can focus, where you’ve got movement, where you’ve got belonging and growth. Those are sort of the checklists there that the good providers and thinking about. There’s so many different niches and it does depend on budgets and different things like that as well. So there isn’t good to somebody means so much in different senses to other people. I think that’s always the one. But as a starting point, I would say there has been a flight to quality that’s well being documented. It’s about the best in the rest of the industry and it’s got to be better than your home. It’s got to be. Is it worth the commute? This seems to be one of the criteria that as an individual, everybody’s marking it on. The Instant Office report was fascinating from this year, this of September, and it was all about service and just basic things of great customer service there. And I think this is where it’s really moved to hospitality. You want things to work. If the WiFi must work, there’s these critical success factors. If you’ve got a sparkling water tap, make sure sparkling water comes out like a plug and make sure the plug socket works. These are the basics that it seems to be with this survey. That instant office doing much more. The end user is demanding that everything works and is top quality is much more. These things need to be standard but we’re seeing a greater spectrum that this flight to quality where it’s rich amenities you might have food and beverage offering and restaurants, very much conferencing facilities there as well, the end of your journey. So when you come in, the shower facilities, the ESG, these are all coming in much more higher on the requirement list, but it’s more expectations I see it’s COVID an office isn’t a must have now because you could work from home. It’s now creating that desirability. People want much more, so much more the demanding customer on that side. 

Jo Meunier [00:08:49] :  Yeah. So it’s really becoming a place to work. There’s also this comfort element where people want to go and perhaps feel as if they’re working from home, but they know they’ve got the amenities and the WiFi speeds and the community and all those sides of things that they would find in their office. 

Zoe Ellis Moore [00:09:07] : I like the sort of theory, the activity based working where you want somewhere that you can go and focus a quieter space than a different kind of space. When you were having an informal chitchat with somebody to a formal boardroom table, there’s different then change your environment to the right setting for the right tone of that meeting or the type of work that you’re doing as well. Actually, people sometimes say that they work better if they’re in a busy, noisy environment, better for creativity, that you’re working out your tasks and how you work most efficiently as well. 

Jo Meunier [00:09:48] : And does it still come down to location, location, location? Or has that sort of slipped down the priority list a little bit? Especially since COVID and knowing that a big chunk of the workforce have tried working from home, they’ve discovered that it works, they no longer need to go into the office as much anymore. So how much is that impacting the need for location? 

 Zoe Ellis Moore [00:10:12 ]: If you’re prime space, you do need to have location. Location is still very much a critical factor. There finding the difference now within London, where actually around Waterloo and Southern’s really come up because of good transport links, whereas Shoreditch is finding it a bit harder because people are traveling into London and then they have got to commute onwards and so they are seeing that additional time. It’s a direct correlation now in London, the Elizabeth line, with a new transport link, people getting in quicker, those sort of locations near to the Elizabeth line, like Farrington, has seen an increase as well within, you know, plays an important part. If you’ve not got that convenience, then you have to do something more. That’s where I see you’ve got to make it much more of a destination. If you’re not near to the ideal sort of prime premises, with the higher footfall nearer to a train station, then you have got to work harder. You might have to discount on price or do something. So that’s where those factors come into play. More rural locations, you have to make it a destination, say put a cafe in a gym, all these extra amenities, like we think of a business park as well. So still, location will always come as a factor, but does depend on price, the linkage there with price as well, how much business is expecting to pay. 

Jo Meunier  [00:11:46] : Yes, of course. And it’s interesting to think how for those companies that don’t need to be in city centers, how their employees could live further afield. And actually thinking of a friend of mine who lives nearby and we’re in Northampton, and people who are buying their house, they work in London full time, but now they’re moving away to come further north to live near family. And they will be going into the office once a week and it’s an hour and a half train journey, but once a week is doable. And that’s now possible for them. They can move away from London, they can buy a place more or less anywhere they want to, so long as they can still reach the office once a week or once a fortnight. And we saw this start to happen during COVID when people realized that city centres were not the places they wanted to be and they started to take the initiative to move further afield. And this idea of hybrid work came in and it was the next big thing. How do you see the hybrid work model? Do you think this is still very much a part of our working future or is it starting to diminish a little bit? 

Zoe Ellis Moore  [00:12:53] : So we keep on talking about Hybrid, and most people are ending up at sort of this three to four days in the office still with hybrid. Even that is ending up that sort of mark and the McKinsey report, actually, it was interesting. The larger the company, the less time people spend in the office, the smaller the company. So smaller companies have that tighter culture, having people in the office as well. So there’s those correlations, but we keep on seeing different outliers where some companies are like, we need to have everybody in the office, others are like going get work done. You can work a near to home model, so there’s different models, everybody’s working out which is the best model, but it is now turning. Sometimes with job choices, people are instantly looking at it. It’s like that work relationship about the office is about a lifestyle choice. Do you need to be in your HQ just one day a week and then you’ve got a near to home provision locally, so you’re working your offices around your purpose and your needs. As we’re seeing. I see it as just opening up a broader range of choice expectations as well as in the region side thinking about the UK specifically. People that have worked in more urban areas have higher expectations and so now out into more rural locations. The office qualities had to come up because people were expecting much higher quality there as well. But it’s much more with hybrid, I would say it is here to stay and some companies have gone fully remote, some in the office it is all about you’ve got much more options available to you as an employer and employee as well for your team, what works. 

 Jo Meunier [00:14:41 ] : It’s brilliant for people who need that workplace from time to time. And actually, I was going to ask you where does the flexible workspace fit into this pattern? Is it because we might start to see flexible workspaces, as you say, popping up in the regions and in the areas outside of towns and cities. And so that means that people who do work from home a lot can pop into a co working space and use a day office or just rent a meeting room for a few hours. Do you see that giving the flexible workspace industry even more of a push? 

 Zoe Ellis Moore [00:15:16 ]: Yes, and technology has also been a factor that now designer is a great app and there’s many other apps that actually companies have bought into, like being able to give your employees choice of workplaces and that giving them a budget, because I think that’s always the one from sort of the employees perspective about using different workspaces. Who’s going to pay? Is it actually an employee if they don’t want to work in the HQ that’s being provided, do they have subsect? So that’s always been the debate there. It’s people working out where they work best and delivery with their job roles that’s also some people are very much it’s the home base working for them because they can be more productive, others are finding that they must go into an office and that’s a necessity. So it is huge range there. But a flexible workspace, the big role it plays for large corporates as well is to set up a location quickly, move in, you haven’t got the legal, as I say, the board approval. Sometimes certain thresholds, they can be much more nimble, companies can be nimble and opening up, getting a presence, getting teams together much more quickly, see much more uses of collaboration, team spaces and bringing teams together regularly once a week or once a month. That seems to be where FlexPACE is providing that provision. The hard one for Flex providers now is a company taking 100 desks and then wanting they’ve got 300 employees and managing when those employees come into the office because most people all want to come in to a flexible workplace all the same day. And so the tricky part now is managing supply and so I think we will see much more dynamic pricing, say on day of the week for using different facilities even. 

 Jo Meunier [00:17:16 ]: That’s really interesting and this has got to be a bit of a challenge, as you say, for the operators of the flexible workspace. And so far we’ve talked about the people who use it. As for the people who own and run flexible workspaces, if they’re thinking about scaling a flex office business or thinking about which location to set up in, that’s got to be it’s completely changed from just a few years ago, hasn’t it? I think since COVID and since these new trends for remote work and hybrid work, there’s like a whole different set of needs that they’ve got to tick now. 

 Zoe Ellis Moore [00:17:50 ]: Yeah, I would say it’s going back to it is a hospitality business now in some ways running a workspace with unless you’ve gone, say on price and you’ve added in technology, if that’s your proposition, that you’re offering great quality workspace at a lower price, that is a provision there. But if you’re going for that rich community vibe, it does take a lot to make that work and I think where we work with lots of operators that are expanding and growing quite often it is the challenge of scalability. When it’s one location, you can control it much more easily. It’s very much often found a lead, maybe they’ve had another business that they’ve been successful and sell. Quite a lot of people come into the industry and sometimes it’s a passion project, but really to get it to scale, it is then going what is repeatable and replicable? What do people need? And offering that service. From our perspective, we’re working with scale and the hard one is property isn’t replicable, it isn’t like you can find another property exactly the same, similar demographics, each location. So you do have some variables there but we’re always working with clients going what’s your secret source? What works for you? What size is really important? Is it a 20,000 square foot operation you’re working? Because it’s economies of scale with this model as well. Do you need to be in a university city? Is it about needing to have car parking? Are you taking grade A or B off this stock? All these factors, there’s so many variables for somebody starting up to consider and working out what model is right because there is so many different models and working out, is there the demand as well? Because some locations we’ve looked at the high street and different things, but sometimes the property stock isn’t right for the provision as well. So there’s lots of things that need to line up as well. 

 Jo Meunier [00:19:52 ]: And it’s interesting because flexible space is popping up everywhere now, isn’t it? It’s not necessarily just in an office building. You can also find flexible space in motorway, service stations, in shops, train stations. They pop up in, I was about to say the most unlikely of places, but they are actually obvious places because you get lots of people passing through, business travelers and so on, who might need to pop in and use a desk for a few hours. So do you think, again we’ll start to see more of this. 

 Zoe Ellis Moore [00:20:22 ]: Often I think it is customer expectations because thinking of that co working side, you get a coffee at prep for quite a reasonable price and you buy one coffee and you set up with a laptop. Is that a great sort of workspace experience? No and I think the customer expectations to great service the process I work in and go in day to day it is a totally different level there and that sort of drop in drop when you’re traveling and stuff is not a quality. Workspace in some ways where you walk in, somebody knows your name and you feel like you feel accomplished because you’ve got all the rich amenities there. So I think there is this thing of expectations that the more people understand about the industry and how they best work, I think is only going to help the industry increase even more. And what’s hard is the co working side where it’s very small, sort of under 8000 sqft is really hard to make it work financially and make it viable and that’s where sort of that coffee shop sort of vibe or traveling isn’t the best environment and it’s hard to make it work economically as well. That side. 

 Jo Meunier [00:21:43 ]: Yeah. So that’s one challenge you mentioned a moment ago about community in workspaces and actually I was reading your blog earlier and this was a blog post from 2020 and you very accurately predicted that when people start using offices again after the worst of COVID that they’re going to want flexibility, productivity and community. There you go. So flexibility. We can totally understand why businesses want that. They want to reduce risk and then on the community side, that seems to link in with the productivity side. I’m interested in this link between community and productivity. What would you say is the value of community in a flexible workspace? 

 Zoe Ellis Moore [00:22:33 ]: For me personally as well, seeing the value is community makes you it’s that sense of belonging and actually feeling like you’re part of something and that you’re comfortable. And what we’ve seen a lot of the increases being in sort of the member model as well, member clubs and membership or bringing together with like minded people has been huge and that’s what people since COVID have really missed. And so actually it stretches you further. You’ve got these like minded people that give you new ideas, the constant growth there. So I’d say the interesting ones, we’ve seen sort of charities clustering together with, say, Five Fields, with Grosvenor and X and Y there. We’ve got Impact Hub that just about companies, about social impact together, or a tech based tech companies that are ambitious for growth. But we’ve also seen that even Albright, which is women’s only, bringing people together there as well and working together. So, so much options. You can find your own tribe. It might be that Soho House, you’ve got your membership there, you can have Soho Works or Hoxton and working from with the hotel brands coming in. So you’re finding your tribe of people that I think that’s the thing with community, that’s what works for you. Interesting, the fisheries I’ve got phenomenal they’re North London fields, actually, and they found during COVID that they introduced once a week on a Wednesday, offering lunch for everybody and everybody getting together. They have to book this. And having a meal sat down quality vegetarian and vegan meal together was the big thing for their community. And actually they spent that time together. They’re very much they see themselves as a daytime hotel as well. I think that’s where we’re really seeing that strong community and people will pay that premium as well, where they have a waiting list, they don’t offer any three day passes at all because they have got that strong community. So when community works, it’s really strong. When you can come in and say hello to a few people, but also get your head down and they respect you, but you can smile to some got all the etiquette and niceties of environment with equal values in a place that’s when the true value can be seen there. 

 Jo Meunier [00:25:10 ]: That’s fantastic. It’s like the social cohesion sort of sells the space, doesn’t it? They don’t really need to push it because they know that people will value that sense of community and belonging that they’ve got there. 

 Zoe Ellis Moore [00:25:22 ]: And this is where I think it will move to the participation economy as well. That’s really interesting that people understanding they have to give something to get that in return as well, as opposed to just go in and expect that ready made community. It is a two way thing as well. And I think that sometimes with the expectations where it’s packaged as community or you buy into you buy this workspace, you get community. No, you have to actually give something to get it back. 

 Jo Meunier [00:25:50 ]: Yes, absolutely, that makes sense. One thing I wanted to ask you, I know we are nearing the end of our episode, but I wanted to ask you about the ethical and sustainable side of flexible workspaces. And when we spoke before, you said that these are two values that are very close to the modern customers heart. How much is the want for a workspace that’s sustainable and ethically operated? How much is that driving the decisions of business owners and leaders? 

 Zoe Ellis Moore [00:26:23 ]: So we’re now seeing businesses that are becoming B corporations, so they’ve gone from so they’ve got more awareness of asking the right questions to workspaces. That’s where we’ve seen a lot of demands coming through, where they’re asking questions and wanting to know about the energy efficiency levels in much more detail. And so they’ve got ESG requirements within their company and they now are having to find a partner that can deliver those ones with a workspace. So that’s been the one that also when I’ve done actually a blog about the different B corps and it was about 24 different ones, we’ve seen huge increase of B Corp providers within the sector as well and that’s sort of showing a direct response to that. It’s really confusing I think as a consumer making decisions. When you get Wales certification, Brieam, Wired, Scott, you’ve got all these different certifications making choices on those. So I think that’s why quite a few companies have made it that B Corp certification made it much more simpler. So hence why the takeup there but businesses definitely wanting to see it happening. I think some of the complaints and the frustrations are more around when the recycling bins emptied and it all goes into one bit. It all goes into one rubbish bin anyhow when things aren’t happening and people not actually walking the walk actually it’s greater thing that everybody is pulling together and seeing that seeing much more clauses or green leases. So keeps on growing and evolving and everybody’s learning and asking more and demanding more. So that’s what’s bringing the change there. 

 Jo Meunier [00:28:07 ]: Fantastic. And that brings me on to my last question, just thinking ahead a few years into the future, what do you think today’s flexible workspaces might need to do to meet the needs of the future workforce? Are there any emerging trends happening at the moment that you think might become more important over the next few years. 

 Zoe Ellis Moore [00:28:29]: For the flexible office sector as a whole? The side that the weakness at the moment is very much investment into the market because there isn’t the transparency with data, it isn’t like the hotel as an alternative asset class that they know what returns to expect. So the next evolution is going to be and I think we’ve had a sort of few businesses like WeWork, but unicorn and stuff are not so hot on the costings and what it takes to run a great workspace and actually the margins and what you can expect. So that’s where the appetite for more investors to look at the sector and get excited about the sector is all on benchmarks and data and actually the sector solving that back to 1980s when the hotel sector, they’ve got much more spaces of service. People are coming on a daily basis and using a space and can make them demonstrate how the model works. The flex sector needs to go through that maturity because at the moment we’ve seen the last week with a lot of the property funds, seeing St. James’s M G at the moment sort of stopping any investors taking money out with those funds. And so there’s concerns over sort of investing into commercial property but when it works, have good operators and working well. The flex office sector does show those returns but it’s proving that to the investment market. So that’s the big thing that’s going to then have the knock on impact that we’re going to get these investors into the market that then can see the returns and the future in the market as well. That’s the stumbling block is more the investment side for me. And that’s part of the equation, that it will be solved and sort of by three to five years, it will be solved and actually, there might be funds. For just the flexible office sector investors buying into funds with numerous providers because I’m excited about the providers doing phenomenal things growing at scale. They know their business model there, you just look at X and Y clockwise into Europe as well and offering great service and they need the investor backing as well to be able to get the growth the knock on there. So that’s the big thing I think, just unlocking the capital. 

 Jo Meunier [00:31:04 ]: Yes, absolutely, that’s food for thought. So that workspace. Operators got to think about drawing in that investment and they do a lot of that through the data and through focusing on what their customers want that will help to position. 

 Zoe Ellis Moore [00:31:20 ]: Now we’re seeing these different types of models and understanding because we’ve got much more blended use, say with restaurants and members clubs, these are where it’s all coming, makes it cook more with lots of different revenue streams but once we’ve got more providers with the data all sharing then it can show improve the business model there. 

Jo Meunier [00:31:42 ]: Absolutely fantastic. Well, we’ve just about reached the end of our episode, Zoe, so thank you so much for sharing all your. Wonderful insights with us today. Definitely given us lots to think about and if anybody wanted to get in touch with you to dive into this topic further, what’s the best way to contact you? 

 Zoe Ellis Moore [00:32:02 ]: So LinkedIn’s preferred sort of communication channel for myself with my name Zoe Ellis Moore. It is quite easy to find me with spaces to places by just typing that in. So do reach know great to connect with anybody there, especially driving forward the sector as a whole. 

 Jo Meunier [00:32:17 ]: Fantastic. Well, thank you so much for joining us today and have a good rest of the day. 

 Zoe Ellis Moore [00:32:21 ]: Likewise. Take care everyone. Thanks. 

 Jo Meunier [00:32:23 ]: Thank you. Thank you, Zoe.