Why landlords work with Flexspace operators
For most people, this meant being a pure landlord to a flex-space operator. With COVID-19 having a significant impact on the flexible office sector, they are trying something else: to work with operators to deliver a flexible offering themselves!
Industrious, one of the leading flexible operators based in New York, has entered into partnership agreements with around 40 major office owners, according to Jeff Johnson, the company's vice president of sales.
For London-based Knotel, management agreements make up a quarter of the portfolio, consisting of a mix of rent and turnover.
"Larger flex operators with a growing portfolio are the ones creating these types of deals," said Tashi Dorjee, Australia and New Zealand, JLL. "They have the resources to create an economically attractive business model, guide the design and construction process, plus they can train and manage employees on-site, and fill the space to generate revenue."
These partnership agreements appeal to landlords because they receive a larger share of the revenue while taking the initial risk of installing furnishings. In addition, the risk of renting out space to flexible operators who are vulnerable to economic changes is reduced.
"The simplicity of flexible leases saves tenants money, while the hospitality aspect helps attract talent," says Dorjee. "For property owners, they see the opportunity to tailor flexible space to their building, as well as shape the experience for the tenant they want to attract"