The widespread shift to remote work because of the pandemic has been a productivity boost for many companies – but it’s left landlords with millions of square feet of unused office space.
Converting all that empty space into coworking spaces has become a savvy way to keep revenue coming in, but it’s not as simple as just leasing to a new set of tenants. It takes smart strategy and special expertise in the unique aspects of this dynamic new real estate specialty.
There are plenty of opportunities in flexible workspaces (also known as “flex”). The Global Workspace Alliance estimates that there are 230 million square feet of office space vacant since workers started working from home. This means that there is the potential to collect more rent for the same space – as much as 30-40% more net operating income than from traditional leasing, according to the Commercial Real Estate Development Association.
There are plenty of benefits to having a coworking space in your building – and they extend far beyond just increased rent. For one, your existing tenants are likely to be more willing to pay higher rent if they know they’re working in a building that’s fully utilized. This can, in turn, help increase the overall value of your property.
At Propques, we’ve found one of the biggest benefits to be the opportunity for the property owner to build a community within their property. Instead of just existing as a collection of disconnected renters, tenants often create networks that form a new kind of company culture – one important element that has gone unmet with the switch to remote work.
Managing flex spaces comes with its unique set of challenges – ones that most landlords aren’t prepared to face on their own. In today’s market, it’s becoming more and more common for landlords to outsource the management of their coworking spaces to specialized companies. And rightfully so – members of coworking spaces have come to expect certain business amenities and services, like coffee and snack areas, up-to-date technology, networking spaces and even receptionist services.
Because of this, very few landlords will find success in coworking without partnering with someone who has experience running flex spaces profitably.
When it comes to coworking, it’s important for landlords and property owners to partner with an experienced team who can take care of the details and support tenants’ needs. Additionally, traditional office leasing teams can benefit greatly from working closely with coworking sales teams when it comes to sharing leads and marketing the property.
Having a dedicated team of experts and professionals can make all the difference in generating a strong return on investment.
Next Steps in Adding Flex Spaces to Your Building
As a landlord or property owner, if you’ve decided to add coworking to your building, here’s a guide on how to get started:
1. Shop around your local area to see what kind of demand and pricing there is for coworking spaces, as well as what amenities you could invest in to make your space stand out from the competition.
2. Research the coworking brands and models that best align with your property and its needs. Not all operators are the same, so be sure to look at companies’ track record of success, executive leadership, expertise in the industry, etc.
3. Find a coworking partner/expert who knows how to run successful spaces in properties like yours so you can avoid any hiccups down the road.
4. In order to create a lease that will last, it is important to make a deal that will benefit both parties involved in the long run. By staying up-to-date and open to reinvesting in areas that will continue to produce positive results, you can protect your agreement.
Now is an excellent time to add a coworking space to your building. With more people working from home and needing flexible workspaces, there is a growing demand for these types of operations.
Flex operations can be complex, but working with an experienced partner who knows the market can simplify things and help you operate in the most profitable way.