Occupiers are customers, not tenants

Share this

A business rarely has a planning horizon of more than a year and yet commercial property leases revolve around periods that start with five years, usually more. Is there a way to resolve this disconnect between two disparate timescales? 

Enter coworking. The last few years has seen an explosion in the provision of coworking space, especially in London, which now represents about 4% of total office floor area in the capital and is still growing. Many organisations subscribe to it precisely because of the misfit between business needs and the traditional commercial property offer described above. Smaller enterprises in particular cannot afford the cost and risk of a lease, so short-term space is a no-brainer. 

Tenants could balk at the higher cost per square foot of coworking space compared with leasehold, but they don’t. The clear benefit of reduced commitment and flexibility means the comparison is redundant. 

Occupiers also want all the other stuff that comes with the deal. The convivial ambience and buzz of a coworking space means that it’s not a property solution but a hospitality business. The dry concept of a ‘serviced office’ with cleaning, coffee and internet provided by others has evolved into a place with personality, offering community and customer experience. 

This model shines a light on the traditional design approach to leasehold space. 

Does this wider availability of desirable short-term space mean that the 10-year lease is dead? Not at all. There is, and probably always will be, a majority of employers that can reap the economic benefits of traditional leases because they have enough confidence to commit to them, and they might also like to preserve their own internal business culture, protect intellectual property and exploit the credibility of having their own front door. But there are lessons to be learnt, and ideas and skills to be transferred. 

The traditional leasehold gets a design rethink on rare occasions, frequently matching the renewal cycle, so the occupiers often tolerate sub-optimal space for years. But problems with accommodation crop up frequently because organisations evolve unpredictably, in fits and starts, as business pressures ebb and flow. Departments grow, acquisitions are made, demand for collaboration increases. 

Can the design industry offer a more nuanced service to clients that follows this irregular development journey, rather than sorting things out after years of neglect? This idea, like coworking, is not new, and designers commonly offer to review accommodation after occupation – but how often is the offer pressed home? Workplaces come in two flavours – either continually serviced and maintained by others, or renewed every five years or so, more often 10. There is an opportunity for continuous, or at least regular improvement of the traditional leasehold office space. 

Designers are permanently engaged in progressive thinking and real life workplace solutions. They have their finger on the pulse and spend time understanding the client’s business. More frequent engagement, little and often, could improve a business, the working lives of employees and the credibility of the design industry. 

I am not proposing that designers change scale and deliver a stream of mini-projects, but that they enhance their service mentality, in addition to the current professional offer. We like big projects, the bigger the better, and incremental improvement has not really been our bag. We can do both and help occupiers enjoy the benefits of the more curated and flexible coworking environment. 

There is a blind spot here, because smaller more frequent change is less risky and the chances of success are greater. The big projects will still come around, and a designer who has developed trust through countless conversations will be in a good position when their client has to move on and upgrade. Customer relationship management can be elevated to a real working relationship. 

I suggest that the design industry could mature like the coworking offer. We too can engage more closely with clients to make their business sing. Continuous improvement is central to success for most businesses. We can help them.

 

Steve Gale is Head of Business Intelligence at M Moser Associates. SteveG@mmoser.com