COMEBACK OF LOCATION
Location remains the most important factor. Paradoxically, the importance of location only increases with the rise of new working practices which are not reliant on time or place. While organizations have fewer offices, they must devote greater attention to those which they do have (see Focus 2014). These offices have a quantitative importance, for the simple reason that they are the â€˜home baseâ€™ of a greater number of staff. But their symbolic importance is even greater: these offices are the home base and nerve centre of the organization itself, and help to establish its identity. Staff spend less time in the office, but when they are here they should experience added value in terms of productivity and interaction with colleagues.
Growing attention for service is a trend with two drivers. First, the fact that there are fewer offices but those which remain are in strategic locations means that the successful areas are becoming even more successful: â€˜the winner takes allâ€™. Their popularity has created an attractive mix of businesses, facilities, amenities and talent, all of which strengthen the attractive force of the location. Even in the depth of the worst crisis ever seen on the office market, the importance of Amsterdamâ€™s Zuidas district continued to grow, as did rental values.
The second driver is the symbolic importance of the office. In theory, it is no longer necessary to have a permanent workplace to which staff report every day. Technology enables most work activities to be undertaken practically anywhere and at any time. Many employees can now decide whether they wish to go into the office. They must take several factors into account, such as the journey time, and whether working in the office offers any added value. Is it more conducive to productivity? Are there more opportunities for interaction? In short, the office must offer more than just a desk if it is to be seen as the focal point of the organization. The quality of the office becomes far more important, whereby the key success factor is its ability to offer the appropriate level of facilities and service.
As the successful areas become even more successful, we can see that the service component is the distinguishing factor. It is the â€˜unique selling pointâ€™ which draws users and which encourages them to stay. The two drivers therefore underpin a robust trend which will be seen throughout 2015 and beyond.
THE SERVICES SURPLUS
A marked effect of the crisis is that poor management has become more obvious. If the owners of a building experience financial problems, they may skimp on maintenance, provide a lower level of service and adopt a non-cooperative attitude towards tenants. Worse still, if the owner goes into liquidation those tenants could find themselves unable to use facilities such as parking spaces. Prospective tenants are therefore devoting ever greater attention to the continuity and credit status of the lessor.
Tenantsâ€™ wishes and requirements have not changed significantly in recent years. They demand flexibility, sustainability and good facilities. Or as ABN-AMRO Bank succinctly states in its Outlook for 2015, they â€œwish to reduce costs but are prepared to pay for qualityâ€ (Kansen voor kwaliteit 2015).
The end-user is increasingly aware that the results of a successful negotiation go beyond one-off incentives or a rent-free period. The traditional building manager who makes money by doing very little has serious competition from the professional property manager who provides added value to tenants with a view to retaining their custom in the longer term. The added value represented by good facilities and good service is a major consideration in the choice of location, and these aspects play an important role in the terms and conditions of the lease agreement. The existing ROZ model, which favours the traditional lessor and his approach, is no longer adequate. The growing popularity of multi-tenant buildings and full-service office concepts provides a good indicator of how the marketâ€™s wishes and requirements are developing.
THE SHARING ECONOMY & THE RISE OF OFFICE BRANDS
Interest in multi-tenant buildings has grown in recent years, reflecting end-usersâ€™ preference for good, flexible facilities and an ongoing focus on effective cost control. The availability of facilities â€˜on demandâ€™ is seen as more important than having permanent access to those facilities, which also entails managing them. Many users prefer to share catering facilities, meeting rooms and other hospitality services. The more general trend of the â€˜sharing economyâ€™ has made such practices far more acceptable within the world of facility management and corporate real estate. Many building owners have opted to implement shared services in order to increase the attractiveness of their properties. A prime example is Delftse Poort, which has been transformed from a single-tenant building (formerly occupied by insurance company Nationale Nederlanden) into a multi-tenant building with an extremely high level of service, and some facilities which are also open to the public. It is likely that this trend will become even more apparent in future, with the emergence of â€˜collaborative officesâ€™ such as Spaces, Seats2Meat and HNK. Even multinationals such as Booking.com and Uber have opted for the service, shared facilities and flexibility that such properties offer.
Service as a distinctive selling point is also the driver behind the growing trend of â€˜brandingâ€™ offices, office concepts and collaborative workspaces. The market mechanism is simple. Where the importance of differentiation increases but quality cannot be defined or expressed in any concrete way, the result is a brand. That brand then forms the guarantee of a certain level of service which is indeed quantifiable or comparable. This mechanism is now taking hold within the office market. The first international office brand, Regus, has now been followed by several others. Famous and iconic buildings such as the Van Nelle factory in Rotterdam and the Caballero factory in The Hague have become â€˜creative hubsâ€™, branded as collaborative workspaces in which the focus is on the provision of facilities and the development of user communities.
In 2015, the â€˜real estate resetâ€™ will continue with the growth of full-service branded office concepts and multi-tenant properties. The flexibility offered by these concepts will place the traditional lease agreement, with its rigid tenancy periods and unclear service component, under yet greater pressure. New contract forms will emerge as alternatives to the current market norms.