REFIRE
Charles Kingston - REFIRE
One thing looks sure. The rise of the Greens, and the accompanying pressure on their political opponents to match their voter-friendly social outlook, will require more and more political lobbying from the array of real estate interests to ensure a fair hearing and the overdue reform of the constipated planning and regulatory structures that are in danger of strangling future growth. Not an easy path ahead.
Among its many claims to fame, Berlin is recognized as the home of the Currywurst and the Döner Kebab. These culinary delicacies have fanned out across the world, and their provenance as originating in Germany’s capital is not disputed.
Less widely known, however, is the role that Berlin played in the birth of the Co-Working Space. Back in 1995 the Berlin-based hacker community c-space, which consisted at the time of 17 founding members, pooled their resources to create a form of “extended living-room” for its members, whose goal was the communal furthering of knowledge and skills in the hardware, software and networks relevant to their nebulous trade.
This included the free attendance at lectures, training sessions, workshops and other events of a cultural nature, to which access was permitted also to non-members. The idea was of a collaborative, supportive community, committed to helping each other. The coffee was good, and free – and more importantly, so was access to the internet, which was an exception in those days.
In other words, c-space, still referenced reverentially by veterans of the international hacking community of the era, had all the elements that make up a modern Co-Working Space. Only, as it turned out, it was twenty years ahead of its time.
At a recent real estate conference we attended, the director of a sizeable German property investor pooh-poohed the rising fad for co-working spaces, and suggested we were all getting carried away by the hype. It still all boils down to landlords and tenants, he suggested, as if we’d all return to the good old days of offering available office space and clinching ten-year lease contracts once we’d taken a good sniff of the smelling salts.
In a sense, it was refreshing to hear the unadulterated views of a real estate investor who clearly wanted to show his audience that he hadn’t drunk excessively of the Co-Working Kool-Aid. But sadly he left the impression that he hadn’t come to grips with the truly changing nature of work and the way the smartest companies are having to modify their office requirements to accommodate the new realities of communication in a digital era.
Art-Invest Real Estate of Cologne has, in the seven years of its existence, advanced to become one of the Germany’s leading developers, specialising in “manage-to-core” projects. It knows a lot about what’s happening in German offices, and is itself a major shareholder in Design Offices, Germany’s market leader in corporate co-working spaces, and the original provider of so-called Hybrid Spaces.
It has just produced the most comprehensive report on “Flexible Workspaces” that we have ever seen. Written by Holger Weber, head of research at Art-Invest, the report is the closest thing to a complete A-Z of the world of flexible working that you are ever likely to hold in your hands. A sort of “Everything you ever wanted to know about Flexible Workspaces – But Were Afraid to Ask” – presented in an eminently readable manner, with an admirably clear layout, free of jargon and free of prejudice.
It analyses the players, the business models, the histories and strategies of the WeWorks, Office Groups, Regus, Ucommunes, Tribes, Spaces, Rent24s and a host of other big names that are coming, inevitably, to an office near you - if they’re not there already.
If you’re not sure what the difference is between Business Centres, Co-Working spaces, Hybrids and Corporate Co-Working, and even Accelerator Spaces, then this is the place to look. The study examines how the co-working concept emerged out of Silicon Valley, and took hold in the world’s most dynamic and creative cities such as New York, London, Hong Kong and across China.
But it doesn’t bog us down in unnecessary detail. While explaining the operating strategies of the most important players, the report doesn’t lose sight of the critical questions real estate investors will always want answers to – like, who makes money out of this, and how can we position ourselves to make money out of this trend?
“Workspace as a Service” sounds like another irritating buzzword, until we start to understand how deeply integrated with other digital applications the more progressive of the workspace providers already are – and how they are leveraging this power to dovetail with the existing internal demands the big corporations are experiencing with their employees and work-flows. That’s why big companies like IBM, UBS, Airbnb, Samsung and Amazon are partnering with companies like WeWork to re-organise parts of their entire office infrastructure – and demonstrably earn more money in the process.
While Germany is, as always, chronologically about three years behind the curve, the trend is clear and the smartest players are already laying the groundwork for the next steps. To many old-timers it may all feel weird, but to survive the best property investors are having to re-think their learned assumptions.
In a press conference to launch the Flexible Workspace report last week, Art-Invest’s CEO Dr. Markus Wiedemann addressed an issue very relevant to developers like his company. Such companies in today’s world, he said, seem to have it all - investors in a project, bankers, technical advisers, service providers, and finally, buyers for the finished project.
But they are in danger of ending up having no customers, from whom they learn continually about their needs in a two-way dialogue with their partners. Much of the role of intermediation is disappearing into the maw of the WeWorks of this world, giving them extraordinary power over the investors in a property asset.
With corporates likely to remain the major tenants in an office building, future trends will nonetheless determine that flexible working in some form will make up to 30% of almost any modern office building. This will certainly provide new capital market products in Germany from which investors can later profit. They’d do well now to get their hands on this exceptional report.