The landscape of flexible working has witnessed unprecedented growth, spurred by the evolving needs of businesses in the aftermath of the pandemic. Despite the economic turbulence of 2023, the flexible office market has remained strong in the UK, achieving a record overall occupancy of 83 percent in the same year. As the demand for adaptable and collaborative working environments continues to rise, landlords and operators of flexible workspaces need to ensure that what they offer is meeting customer demands. Given the number of notable operator closures, many landlords are beginning to find themselves at the forefront of decisions about managing and revitalising failing operations.
Engaging with the operator, understanding the needs of the occupiers, and repositioning your office space is key to transforming poor performing flexible workspaces.
Turning operations around
The difference between an operation failing and being a failure is dependent on understanding what isn’t working and then how quickly you are able to engage with the current operator of the workspace – these are the first key steps for landlords to take before reimagining their portfolio. Swift acknowledgment of operational challenges becomes imperative, and landlords must initiate honest and transparent discussions with operators, instead of hoping for market forces to flip in their favour and for office spaces to become financially viable again. This critical dialogue should set the stage for a well-planned handover if that outcome becomes necessary, underscoring the importance of a friendly transition to preserve customer satisfaction and the reputation of both the operator and the landlord. Timely action is paramount for mitigating further losses and maintaining a positive industry standing for the landlord and the operator, and critically to ensure that customers do not suffer as a result.
The devil is in the detail
To facilitate a seamless transition, a full handover between the landlord and the current operator is a must. This involves a handover of key information, agreed upfront, to provide the landlord or any new operator they appoint with valuable context, including the terms of the current customer license, key financial data, the operational costs, and any supplier contracts in full. Armed with this information, the incoming operator is better equipped to make informed decisions, allowing a smooth integration into the existing operational landscape.
Many operators of flexible workspaces will consider stepping into an existing supplier contract where it brings benefit. However, the choice between maintaining an existing contract or initiating a new one depends on several factors, including the specific circumstances of the operation and the goals of both the landlord and the operator.
Collaboration between landlords and operators is the linchpin for a successful transformation. Establishing a framework for the new operator requires a clear alignment of objectives, whether this is a focus on commercial success or a more visionary approach to servicing occupiers. This alignment ensures a smooth transferability to other buildings within a portfolio. For landlords envisioning the workspace as an incubator for clients, meticulous attention to amenity provision and service quality is paramount in attracting and retaining tenants.
A hospitality mindset
The first phase involves planning for a strategic shift in perception during the relaunch. This includes developing new branding, sales, and marketing initiatives aimed at generating demand at a commercial price point. The concept of ‘transformational performance’ becomes a cornerstone for increasing occupancy, emphasising consistent quality delivery at an attractive price. Agreement on quality standards and a commitment to maintaining these standards are essential for the successful relaunch of the workspace.
Reviving a failing flexible workspace operation may necessitate a comprehensive overhaul to enhance service quality. This process can involve upskilling staff to meet elevated hospitality standards, or collaborating with contractors for new fit-outs at an affordable price. Landlords must actively participate in these improvements, determining whether minor enhancements or a complete top-to-bottom refit are needed to enhance the space and attract the targeted customer demographic to the workspace.
Landlords can navigate the challenges with a strategic and collaborative approach by recognising the early warning signs, understanding the needs of the modern customer, and implementing a plan for quality enhancement, landlords can not only rescue their workspace operations, but position them for long-term economic viability and high levels of occupancy.
Calum Russell is the CEO of Covalt
Image: WeWork
March 20, 2024
Reviving flexible workspaces – a guide to saving failing operations
by Calum Russell • Comment, Property
Engaging with the operator, understanding the needs of the occupiers, and repositioning your office space is key to transforming poor performing flexible workspaces.
Turning operations around
The difference between an operation failing and being a failure is dependent on understanding what isn’t working and then how quickly you are able to engage with the current operator of the workspace – these are the first key steps for landlords to take before reimagining their portfolio. Swift acknowledgment of operational challenges becomes imperative, and landlords must initiate honest and transparent discussions with operators, instead of hoping for market forces to flip in their favour and for office spaces to become financially viable again. This critical dialogue should set the stage for a well-planned handover if that outcome becomes necessary, underscoring the importance of a friendly transition to preserve customer satisfaction and the reputation of both the operator and the landlord. Timely action is paramount for mitigating further losses and maintaining a positive industry standing for the landlord and the operator, and critically to ensure that customers do not suffer as a result.
The devil is in the detail
To facilitate a seamless transition, a full handover between the landlord and the current operator is a must. This involves a handover of key information, agreed upfront, to provide the landlord or any new operator they appoint with valuable context, including the terms of the current customer license, key financial data, the operational costs, and any supplier contracts in full. Armed with this information, the incoming operator is better equipped to make informed decisions, allowing a smooth integration into the existing operational landscape.
Many operators of flexible workspaces will consider stepping into an existing supplier contract where it brings benefit. However, the choice between maintaining an existing contract or initiating a new one depends on several factors, including the specific circumstances of the operation and the goals of both the landlord and the operator.
Collaboration between landlords and operators is the linchpin for a successful transformation. Establishing a framework for the new operator requires a clear alignment of objectives, whether this is a focus on commercial success or a more visionary approach to servicing occupiers. This alignment ensures a smooth transferability to other buildings within a portfolio. For landlords envisioning the workspace as an incubator for clients, meticulous attention to amenity provision and service quality is paramount in attracting and retaining tenants.
A hospitality mindset
The first phase involves planning for a strategic shift in perception during the relaunch. This includes developing new branding, sales, and marketing initiatives aimed at generating demand at a commercial price point. The concept of ‘transformational performance’ becomes a cornerstone for increasing occupancy, emphasising consistent quality delivery at an attractive price. Agreement on quality standards and a commitment to maintaining these standards are essential for the successful relaunch of the workspace.
Reviving a failing flexible workspace operation may necessitate a comprehensive overhaul to enhance service quality. This process can involve upskilling staff to meet elevated hospitality standards, or collaborating with contractors for new fit-outs at an affordable price. Landlords must actively participate in these improvements, determining whether minor enhancements or a complete top-to-bottom refit are needed to enhance the space and attract the targeted customer demographic to the workspace.
Landlords can navigate the challenges with a strategic and collaborative approach by recognising the early warning signs, understanding the needs of the modern customer, and implementing a plan for quality enhancement, landlords can not only rescue their workspace operations, but position them for long-term economic viability and high levels of occupancy.
Calum Russell is the CEO of Covalt
Image: WeWork