Office environment as a unique experience

Interview with Hubert Abt – CEO & Founder of New Work and workcloud24

What are the trends for Q1 & Q2 in demand for flex / traditional office? 

The flex office concept is gaining popularity amongst larger companies and corporate occupiers. There are multiple triggers for increasing demand for flex office solutions against traditional offices.

• • Recession drives uncertainty and requires companies to keep their space flexible and optimize costs
  • Shared economy takes over in all sectors, and so it does in the real estate
  • Digitization allows office workers to work from anywhere, at the same time digital work also requires collaboration which works best in a collaborative environment
  • Because of hybrid work models, companies need to adjust their space requirements and change more and more to core flex leasing strategies
  • ESG compliance doesn´t allow companies to keep surplus space without commercializing it. So, every company which is in need to breathe within its space needs some portion of flex
  • Landlords realize that premium on rent can only be achieved with additional services because they more and more include flex in their product mix

Is there a decline in the demand for traditional office space?

Before the pandemic most companies were very much designed around the office and it was the central hub of their business operations. Today the average office worker is working 2.5 days from home and the trend goes to 3 to 3.5 days a week. Hence companies pretty much need to adapt their culture if they want to keep talents on board.

As a result, today we need about 30 % less office space compared to per pandemic. Yet I am not sure if we stop there. Long term it can also go as far as to 50 % reduction since AI comes in as a disruptive factor for office workers.

If and how you can combine ESG with the office market and what are the key trends?

The main pressure for ESG Compliance still comes from investors and banks. But more and more corporate clients ask for it as well. The demand is increasing exponentially while smaller clients are still not super sensitive to it yet.

While some may think that ESG is about saving energy it goes much further. The next generation of office users which are the highly skilled employees of today’s tenants, asking for inclusion, soft mobility and where the food comes from in the canteen. The operational model of leasing space on fixed terms and for a fixed period gets jeopardized. In the future, we will see more subscription- and Space in the Cloud models. 

In a nutshell, ESG is a game-changer, which is much more impacting the industry than the pandemic or the increasing interest rates. For every player who is not prepared it is causing a serious transformation risk. To give you an idea of what we are talking about: studies from McKinsey came to the conclusion that an average mixed-used portfolio, without any mitigation action, will lose 30 % of its value by the end of the decade.

What is a deciding factor for the choice of location of a serviced office?

It is hard to make a ranking list. For sure location in connection with connectivity to the public transport systems, still counts as number 1 but it is closely followed by the Quality of the Building, not only in terms of design but much more of ESG-Compliant operation. 

At New Work, we see increasing value in an aligned core & flex leasing strategy with the leasing team of the landlord and in a 360° Concierge Reception Service for the building which is the service point for all tenants. Not to mention the quality of the neighborhood and amenities like for example kinder garden, restaurants, gym, laundry services and drop boxes for e-delivery.

Are there going to be any changes in New Work’s product offer? What do the clients want? What’s changing?

The general shift is from space as an office to space as a service. While pre-pandemic it was sufficient to offer space on a plug-and-play standard on flexible terms with some random services, today Clients demand more. We need to create an office environment as a unique experience which adds value towards the home office.

While commuting is the number one roadblock for people to choose work from home above the office, number two is the possibility for collaboration which incentivises people to make the effort.

At New Work, Space in the Cloud made it up to the most popular product over the last 18 months. Companies only commit to 30% – 50 % of the total seats while on the peak loading days, employees book their workplace which is not included in the core commitment via mobile application.

More and more new places are created how New Work wants to develop in such an environment?

New Work is a boutique Operator with international experience and local exposure. Our list of clients proves that international corporations trust us, and we serve their needs in several countries and multi-locations, while our operational teams are understanding the mindset of the local market and we are able to identify the invisible fences of submarkets.

We are at the forefront of ESG compliance and digitization.

We, being majority family-owned shareholders at New Work, drive the company with an entrepreneurial spirit, which gives us an advantage over companies like IWG. We are an ideal partner for landlords who are looking for a committed partner, to implement the Space as a Service concept with an international brand into their buildings.

We don´t run over the market and sign leases. We come by invitation only. We invest together with the landlord with equal participation in the business.