Contrary to popular belief, it’s not just tech start-ups that are using coworking spaces. Large corporate tenants are leading the way as shared working areas move beyond the realm of the SME.
So, how can commercial landlords find opportunities within coworking?
Due to the rise of large corporate organisations using coworking spaces, particularly with the demand for flexible working options and greater expansion solutions, the risk for landlords having to take on leases with only small start-up (high risk) tenants, that may not succeed financially, is limited. Owning a coworking office, whether an entire building or just one floor, means landlords can attract new small to medium-sized clients that are at the beginning of their business journey, as well as offering corporates an easier way to expand or contract in line with market conditions and employee expectations.
In addition, international businesses often send project teams abroad for a limited amount of time; they don’t need permanent space but do need desks, a kitchen and centrally-located meeting rooms.
Often clients wanting to work in a coworking space like WeWork or Hub are after very short-term leases, but that’s not necessarily a drawback. It’s industry standard for landlords to charge higher rates for these types of leases, due to lack of income stability. As a result, money can still be made here, especially in creative hubs like Melbourne where it seems that businesses are started every day.
Smaller start-up clients can actually be incredibly important to build good relationships with. Coworking space can provide them with a place to grow initially, before being able to sign a longer lease. Coworking offices are like business incubators, helping members grow into future (larger) office tenants.
With technology advancing the way we work and instances of coworking growing exponentially, the use of flexible working spaces will only increase. The good news for commercial property landlords is that there are opportunities to adapt and thrive in today’s market.
Contact us today on 03 9654 2311 for more advice on commercial property strategy in Melbourne.