March 4, 2020
Fiera Real Estate recently hosted a podcast, focused around flexible office space. Joining the discussion was Steven Wright, Director at Fiera Real Estate, Gavin Bridge, Executive Director at Cubex, Rupert Dean Co-Founder and CEO at X+Why and John Vaughn, Managing Director at The Instant Group. We share below what we consider to be the top 5 questions and answers from the podcast.
Why has demand for flexible workspace become a lot more prevalent?
If you’re looking for new office space, you are faced with two choices. One is a conventional lease, where you’re entering into a long-term commitment with a whopping great big deposit or parent company guarantee. You’re having to then design your own space, pay for the Capital Expenditure on that, as well as all the operational costs and organization around the facilities management and asset management. The alternative now is much more flexible, you can now instantly turn up and enter into well-designed, well-apportioned space with immediate connectivity and data. You’re going to require to take the space that you actually need rather than the space that you feel you’re going to grow into over time.
How do buildings need to adapt and how are they going to cater for all these various demands?
Enlightened developers and enlightened funders hopefully. One of the trends that we’ve seen in more recent years is the way that offices are being occupied more intensively than they have in the past. The British Council Offices that does some research in this area have suggested that occupancy levels are between one person per eight square meters, one person per 12. We’re designing at the lower end, so one per eight. We’re seeing a lot of offices occupied at one per six, which means that people using their floor space a lot more intensity than they have historically.
What are the most important factors to consider when it comes to flexible workspace?
Connectively is definitely up there, we’re seeing buildings becoming far more intelligent, office buildings particularly, than they have been historically. Now, the occupier has far more interaction with the building. The building will sense when you arrive in the morning, and rather than having passes, it’ll work from an app off your phone. It will bring the lift down to your floor, take you up to your office space, the lighting and heating will then react to suit your particular requirements.
Where are we at the moment with the design of flexible space?
Green credentials are now increasing, the WELL certification, the BREEAM certification, these are the redevelopment rather than the building up of a building. I think these are becoming increasingly important from a landlord’s perspective, possibly from a valuation perspective, but increasingly, from a tenant perspective. Design-wise, it’s changed probably the most significantly in terms of where people go at certain points. There’s a central co-working space where people can go, there are quiet areas, library areas, a range of meeting rooms, the technology in terms of the VOIP, the data. It’s all changed.
How should landlords and developers monetize this additional investment?
We’ve had to experience this first-hand with the Aurora project, which Cubex developed for us down in Bristol recently. Where back in the day, as a funder, you’d have your development appraisal, you’d look what rents you think you’ll achieve, what yield you thing you’ll achieve, and then you’ll have your build costs, ultimately, you’d be focused on those, get them as low as possible because obviously, the difference between your capitalised rents and yield and your cost is going to be the profit and I’m afraid to say, that’s generally what the funds want to achieve at the end of the day. But I think there’s a difference now between looking at the build cost and calling it cost. I think we very much say now that build cost is actually investment, we’ve proactively chosen to invest more in our buildings to deliver a better product.
Listen to our latest podcast: The changing trends in office space – a focus on flexibility and smart buildings.
Any views or opinions represented in this podcast are personal and belong solely to the podcast participants and do not represent those of the institutions or organisations that the participants may or may not be associated with in a professional or personal capacity, unless explicitly stated.