A Wake-Up Call

From Ron Yariv's desk

A Wake-Up Call!

It's time for office tower owners to wake up!

What was in the office world before the Corona will not be repeated in the post-Corona.

The times when companies rented offices for periods of years, invested thousands of dollars in CAPEX per square meter in setting up the offices probably will be reduced significantly in the years to come.

In the post-Corona situation, companies that want to rent offices for extended periods will not agree to sign a lease without a pre-definition for Force Major. Besides, they will want to get in the agreement an exit option, return on their investment (CAPEX) in case of an early departure, more flexibility, and risk participation of the office owners in case of major recessions or epidemics.

The old model where the office's landlords rent office spaces to tenants for five years or more without the possibility of renters to get out is over. Flexibility, flexibility, and flexibility is the name of the new game in office renting.

Until today, office landlords did not want to enter the world of co-work spaces and flexibly office rentals. Life was comfortable for them. They rented the office spaces on a long-term basis at the market price per square. For them, office space was almost risk-free income generators.

But the Corona reshuffle the cards and changed the rules of the office rental market. In the future and already in the present, companies will significantly reduce the office space they rent as some of their employees will work from home. Some companies will return office space to the landlords nowadays, and some will not renew their leases.

Also, the tenants will seek the option of early departure from the agreement and will require space flexibility that will fit their changing needs. Office landlords will find themselves with empty floors.

What is the solution?

The solution for office owners is to enter the world of co-work spaces on their own. Create in some of the floors flexible office space, office suites for midsize and small companies. The office owners, i.e., the office real estate companies, will own the co-work spaces management company and team. They will market the flexible office themselves, and they will offer short term rentals. For the office owners, this change will only be for the better.

They will earn more money per square meter than long term rent; also, they will allow the other tenants in their buildering access to the common areas in the flexible office space, such as meeting rooms equipped with advanced technology, auditorium, community activities, and more. Office tenets in the building will enjoy using as per demand meeting rooms as well as other flexible space and services. That will save them money, and they will pay only for space they use and when they need it. 

The change is happening now; the required change is needed now. The owners of the offices in high-rise towers need to prepare an array of flexible workspaces in their buildings now. The design should be in a smart design that fits the requirements of post-Corona. Furthermore, they need to work on creating marketing systems different from what they have until today, such as apps that are suitable for managing flexible workspaces as well as a trained workforce that comes from the field of co-working spaces.

Office real estate companies must remember that operating co-workspaces requires knowledge in the co-working space market and different marketing and selling approach and knowhow from what they are using until now.

Property office owners have no choice but to enter the co-workspace field now. It is advisable for them to take knowledgeable and experienced co-workspaces experts and to consult to assist them in making the necessary changes.

The post-Corona creates new opportunities, Wake-Up, the time to act is now. 

=================================================================

The author has served as Regus Israel Country Managers, created ROOMS for Fattal Group, CEO of the Africa Israel Hotel chain and Managing Director International Sales for Hilton Co. Now work in consulting with co-working and hotel owners and investors.

www.yariv-consulting.expert

[email protected]

                www.yariv-consulting.expert            www.blankspace.zone