“follow the trend lines, not the headlines.” – Bill Clinton
I was recently reminded of this quote by Ryan Simonetti, CEO of Convene. It really resonates with me due to the current headlines floating around about the “coworking” sector (or outsourced real estate, as I’ll refer to it from now on).
While the headlines are noisy, the trend lines tell a compelling story. From my perspective 3 major trends stand out;
Technology.
Technology has impacted every line of business. Whether that be infrastructure or software. Real estate and office leasing have become no exception.
Flexibility.
The pace of change in business is fast. All types of companies are looking to real estate providers to create flexibility and mitigate risk during this inflexion point that many economies around the world are facing.
During this interesting time, outsourced real estate providers are providing the opportunity for companies to avoid making large capital investments into areas of their business that could become redundant more so than in the past such as IT and office layout which are adapting/changing at a rapid pace.
As time goes on, the conventional 9-5 existence will be a thing of the past and this lends itself to an outsourced real estate model. Shorter duration lease terms will become commonplace for at least part of a company’s real estate strategy. The advent of COVID-19 has only accelerated that.
Experience.
Arguably the biggest trend, in my opinion, is that companies are in a war for talent which makes EXPERIENCE key! The largest enterprises in the world are able to curate their office environments to attract and retain the best talent but what about the scale-up companies and mid-market companies. Do they have an equal opportunity? I would argue that historically they have not but with the rise of outsourced real estate providers, we are starting to see the playing field level out. When this crucial element is curated in the right way it makes paying a premium for real estate a much easier sell up the chain.
Even the largest enterprises in the world are still outsourcing aspects of their portfolio for the purpose of curating an experience for certain user groups.
Key take-away
Keeping these 3 trends in mind, as time goes on, there’s going to be MORE players in the outsourced real estate sector, not less.
I would love to hear your thoughts on these trends and the future of outsourced real estate.