PaaS

I come from the far west of England; the rugby-loving county of Cornwall. Because I was large, I had to play, but was never much good. My second-row buddy went on to play for Scotland and the British Lions, but I took up music lessons 🙂 Anyway, we had a saying when Cornwall reached the County finals, “last one over the Tamar Bridge, turn out the lights”, as busloads of Cornish traveled to support the county side!

If you are wondering what relevance this has to anything you may usually expect to read here, it just reminded me of the current direction of travel for office occupiers. i.e., out of the office – like we sped out of the county.

There was, in fact, far more drawing us back to our beloved county of Cornwall than there is for most daily occupants of offices. Aside from the Googles and Facebooks of our occupier friends, and some of the large employers that spend serious money on great workplaces, for many others the office is a dull place. You only have to see the hoards of people walking from their soulless business park to the local supermarket to buy today’s “Meal Deal” to understand how dull life can be for those unfortunate people.

No wonder, therefore, that cool cafes and co-working hubs are busier than ever. The legions of freelancers and entrepreneurs are being joined by corporate employees who just prefer somewhere better to work. I was talking to Neardesk last week, and they are experiencing ever-rising demand from people wanting to work closer to home. Not at home: that doesn’t work for everyone (many of us just want the separation of work and home life; or have too much home life going on to concentrate). But near to home, with a short commute, good coffee, and interesting people who don’t really care if you sit on the sofa and read the newspaper for a while. Nobody is watching – they’re amongst friends (or total strangers – either way, no bosses hovering).

If you don’t have to be at the office, why would you go? It may be in a great location, and you may want to go for lunch with the girl (or guy) from accounts. But, otherwise, why not wade through your emails at a desk closer to home, and actually get home before the kids are so tired that they just want to go to sleep. Or fit in that round of golf, now that the summer evenings are here? (not for me that one – golf is a good walk spoiled – certainly for my dog!). Or take some time cooking, instead of buying a pizza at 9pm. Or…or…whatever. Take some time back.

There will always be offices. But, we just don’t need to go there every day. And agile working means desk-sharing ratios can rise, so the expanding company does not necessarily need to take on more office space. Some call it space-less growth.

So, every 4th floor you occupy could be released, if more people stayed near home one or two days a week, and let someone else use their desk on those days. Or, every 4th office building – if you occupy a portfolio within a commuting catchment area.

If you manage the 4th office, switch off the lease on your way out….

Paul

@paulcarder

@occupiers

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By @paulcarderhttps://www.linkedin.com/in/paulcarder

Dear commercial real estate investor, What goes on tour, stays on tour, right? Usually…but I have recently returned from two conferences in the USA, and I feel I have to tell some tales. The first was the Global Workspace Association’s Annual Conference in Florida (@GWAssoc #GWABOCA2014), attended by various sized providers of workspace-as-a-service; mostly hospitality experts and marketers. They are ‘people people’, and I got the feeling that they have their finger firmly on the pulse of what people want from their working day.

The second conference was the International Facility Management Association’s World Workplace 2014 in New Orleans (@IFMA #IFMAWW14), attended by facility / facilities management professionals from around the world. Similarly, I found that many people there really ‘get it’ – that workplaces (offices, especially) are changing. And that change is permanent.

Permanent change…this is the key point really. It is not difficult, in most cities and towns, to drive five minutes from wherever you are, and to find vacant office space. And it will be easy to do so next year…and the year after. And so on. The owners of these vacant office properties may well know something that I do not. If so, I’d love to hear from them. But I just hear occupiers saying they are reducing the size of their office portfolio. And other things are changing too…

One change which was clear to anyone at the GWA conference in Boca Raton – the workspace-as-a-service (WaaS) market is growing. Occupiers (from the sole trader, and small business, through to large global corporations) are experimenting with workplaces leased for short periods of time. Some of the people I spoke with used phrases like “tipping point” and “exponential”. I didn’t take data away with me, but I’m sure it is available and would support these general views.

There are some places, like central London, where you would be forgiven for ignoring these changes. In London, there is a reported shortage of quality available office space. I’m sure that the same is true in other leading global city centres, where corporations will always be looking to attract and retain the best talent. But once you get to the fringes of these cities, or out into the smaller regional cities and towns, the agents (brokers) sign-boards are everywhere.

If I was a commercial property investor, holding tertiary offices, I might be thumbing through the last chapter of my property investment and development textbook. Those diagrams we remember from college, on the ‘property cycle’ – the last stage being redevelopment and/or sale. There just does not seem, to me at least, to be a long-term demand for the soul-less suburban and out-of-town office building. People can (and do) work in so many places today – from home, local ‘hubs’ near home, and many workspaces provided by GWA members. On the days that they do commute to their company office, I’m sure they will prefer a trip into the city HQ – the cool ‘mothership’ where all the money has been spent. But not the boring business park, where the highlight is someone selling sandwiches from the back of a van at 11.30am, and the coffee comes from a jar in the cupboard.

So, my next blog, perhaps “101 uses for a dead office”? All ideas gratefully received (I will quote you, unless you wish to remain anonymous!).

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In November, I wrote about Place-as-a-Service (PaaS), based on the now common term SaaS (Software as a Service): http://occupiersjournal.com/place-as-a-service-paas-time-to-join-the-connected-world/

The article was supply-side focused. I was considering the changes, already being seen in a small way, in how workplace accommodation is provided. Regus is the most well-known, globally; but there are many new entrants – in fact, who really knows how many?

Looked at from the user perspective, is this simply the consumerization of workplace accommodation? In a similar way that cloud-based IT and personal devices have been picked up by users? Not provided by the corporation (usually, the employer), but paid for by the consumer?

Where is this going? How far will it go? Of course, we do not know.

Will flexible accommodation, on flexible terms, reach a plateau? That seems unlikely.

Will agile working become universally accepted as simply the most efficient and effective way of working? That seems likely.

When people can truly work almost anywhere, at their choice, will they choose to commute to the corporate workplace? That remains to be seen. There are many ‘push/pull’ factors at play here – the need to belong to the wider ‘group’, recognition, immersion in corporate culture, versus time and cost to the individual.

How will corporations (employers) react? Or, indeed, plan for this eventuality? IT had its BYOD (Bring Your Own Device), and that spread rapidly. Will our sector have its own BYOD? Buy-Your-Own-Desk? And charge its use back to the company? A Regus account will do that already; how many others will follow?

So many questions!….what are yours?

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Software-as-a-Service (SaaS) is now well known, and ubiquitous. Why buy, and maintain, software tools when they can be ‘hired’ in minutes online?

So, why do we ‘buy’ Places? Or lease, which, under today’s accounting rules, looks much the same on the balance sheet.

Place-as-a-Service (PaaS) has been, and will continue to be, slow to catch up with other ‘services’. Because, investors and their managers are quite happy with the status quo. They sell, or lease, the real estate – and the occupier (tenant, or owner) must provide the rest. The interior design, the fit-out, and the ongoing workplace alignment and facilities management.

PaaS is not new – companies like Regus have been built on the principle. But, they only deliver Place-as-a-Service on the fringes of the typical corporate portfolio. Why?

Any size of organization, using predominantly ‘office-type’ space, could potentially buy PaaS for their entire space portfolio.

One monthly invoice…..

Reducing the in-house occupier team to (1) someone to manage the PaaS contract and administration, (2) a Director of Place, and perhaps a few ‘relationship managers’ with expert knowledge of the core business units, and ability to negotiate and ensure that they get what they need from PaaS.

Everything else sits under the PaaS provider. Everything.

And everyone on the supply-side works for the PaaS provider. If they have deep pockets, they do their own real estate development, and management. Where do the ‘landlords’ fit in? They don’t. All the agents, surveyors, property managers? They work for the PaaS provider.

Service charge management? Doesn’t exist. It is all part of the PaaS single invoice.

Who gains? the CUSTOMER, at long last! The businesses, government organisations, charities, and all the other ‘customers’ who have long had a duff deal from uncaring Landlords, and a real estate industry and professions focused on the property barons and money-people.

Watch Regus! But also, who else will enter this market? There will need to be several, for a competitive economy. Will a rich and talented entrepreneur like Richard Branson enter this space (excuse the pun), with his focus on the customer first?

Or maybe the Duke of Westminster (London), who owns 300 acres of some of the most expensive real estate in the world, will become a PaaS provider? Grosvenor has Serviced Offices already. And very deep pockets, from family wealth going back to the 17th Century.

CORE PaaS : will be those spaces needed by organisations over longer time-frames (like HQ space)

FRINGE PaaS : will be spaces for people to work around their territory, and closer to home – knock on effect being improved sustainability, and choice of workspace for employees and contractors.

Watch PaaS……it is time to change the world of ‘places’ for organisations and users. Who will drive this forward? We wait to see…..

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