Flex space UK Research | 9


The service revolution...


The flex market is far from static. Customers are increasingly discerning and operators are having to keep abreast of clients’ needs.


“ We are really in the hospitality business - and service is just so important. There are a few operators who put that at the forefront of everything they do.”


London flex operator


In a market with low barriers to entry and limited product differentiation, it is important for operators to develop their own brand, culture and USP. There will still be demand for budget space with a limited service offering but for the hybrid operators the focus is on service, environment and experience to differentiate the individual brand. Providers are disrupting the real estate industry by introducing new levels of customer service and intelligence. They are consulting their customer base to ensure continued relevance and to identify potential new service offerings.


This is even more important as competition increases across the sector. Central Working, for example, seek to curate customer networks and has gone so far as to provide a money back guarantee of a meaningful connection to businesses within the first 30 days, while its workforce is targeted on relationship building and customer satisfaction, rather than revenue generation.


One of the consequences of a more focused client service has been the growth of centres targeting specific verticals. Examples include Ministry of Sound, Huckletree and Runway East focused on tech start-ups while London - based centres such as Third Door and Blooming Founders cater for family friendly and female focused customers respectively. This trend should filter out to the regional offices as gaps in the market are identified. Operators such as Gilbanks, who target professional services in Leeds, and Birmingham University who are opening a 100,000 sq ft plus centre focused on STEM4


businesses at Belmont Works, Eastside are recent examples.


“ The thing that separates the hotel industry is the level of service and that’s what makes you come back. That should be the same in flexible offices.”


Regional flex operator


The next phase of service provision will centre on the “managed workspace” by flex operators, where space is tailored to the individual occupier’s requirements. All occupational costs – rents, rates and service charges – are wrapped together with a rentalised fit out which takes the hassle out of providing the right design and spaces. The occupier is then presented with the option of additional services which are rolled into the monthly costs.


“ The attraction in our opinion, and feedback from customers over the last couple of years who have done this, is the ability to take away the headache of the exposed capital on the fit out and the furniture and to wrap that up into a cost and to depreciate it over a period.”


Landlord flex operator 5Science, technology, engineering, mathematics


It’s a win-win for both sides. Occupiers are provided with a tailor-made offer - not what the operator thinks they might want. Being able to pre-agree or extinguish residual dilapidation liabilities is also attractive. Meanwhile, the operator gets the benefit of a longer lease term - typically 5 years minimum - because it makes financial sense for the occupier to rentalise the costs over a longer period.


This is an area that most of the operators we interviewed are looking to enter. BE offices has already made the move with its Bespoke brand, while TOG will be rolling out a managed solution shortly. WeWork offers the service via its enterprise solution and the Powered by We solutions.


The central point is that operators are encroaching on the traditional landlord market - particularly those that are no longer offering the flexibility of lease terms that characterises flex space.


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