The impact of the pandemic has been unprecedented, causing many organisations to re-evaluate their operations. To begin with, the organisations are now looking to reduce their dependence on fixed assets, such as real estate to save on overhead expenses. Given the unpredictability and the speed at which the environment is changing, flexible workspaces can prove to be beneficial for businesses, as well as commercial landlords.
As the global economies get back to the usual groove of business, there is a growing demand for flexible workspaces that have been supporting business continuity with innovative business models and flexibility in terms of leasing. Here are three important ways in which flexible workspaces are providing workable and profitable solutions to the commercial real estate industry:
Diversified deal structures: With the evolvement of the commercial real estate sector, the underlying deal structures are also evolving rapidly. The flexible workspace ecosystem is gradually moving away from vanilla-type deals; wherein; the landlord would simply lease the property to the workspace provider. A range of innovative trends is gaining prominence, which is bolstering an equitable profit-sharing arrangement between the workspace provider and the landlord. One such innovative model is pure revenue-sharing deals. Such a model is beneficial for all stakeholders, including the landlords, as it safeguards their interests while guaranteeing assured returns. In a revenue-sharing arrangement, the CAPEX is either paid fully or shared by the landlord. In return, the workspace provider shares the profit with the landlord. Amid the increasing demand for flexible workspaces owing to massive shifts in the economy, a revenue-sharing mechanism offers higher Internal Rate of Return (IRR) to the landlord. In turn, the landlords are also expressing confidence towards flexible workspace environment and are inclined to increase their return on investment through these profit-sharing models. The increasing adoption of these profit-sharing models is a win-win situation for both the service providers, as well as the landlords.
Agility to customise and innovate: Flexible workspaces possess inherent agility in terms of providing customisable solutions, powered by innovative technology that supports the convenience, functionality and safety of members and employees. In the face of the pandemic, flexible workspace providers have worked vigorously towards re-evaluating density plans and strengthening social distancing norms, all in a steadfast and agile manner. Flexibility in design makes it easy to ensure that the changes take place in a seamless and cost-efficient manner. From incorporating new styles of working to leveraging digital tools for customer engagement, fostering community spirit, revising spatial guidelines, and seating layouts; the space-as-a-service model enables workspace providers to turn around scalable, workable solutions in the shortest amount of time.
Adding flexibility to businesses: As more companies look forward to adopting the asset-light model, the employees, too, seek benefits from workspaces without being tied to long-term leases. Flexible workspaces allow both short-term and long-terms leases with customisable options for businesses and employees. Asset-light models allow for distributed workspaces that cater to the needs of the employee, including customer proximity and accessibility.
With the onset of the new normal, flexible workspaces are likely to support and lead the way for the Indian workspace ecosystem.