Here's How Workspaces Evolved in 2019, and How They Will In 2020
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The times are changing. 2019 has almost come to an end and we are witnessing an unprecedented rise and evolution of the workspace industry. The year marked the progression of the workspace sector from co-working spaces to serviced offices. The year saw the standardization of the co-working space as it grew from a novelty to a norm. Within the co-working space too, there was much disruption witnessed as the sector verily outdid itself.
We witnessed the emergence of serviced offices, the latest offering of the co-working space .These ready-to-move and ready-to-work serviced offices are the latest models in the flexible workspace solution frontier. As we move forth to the coming year, we must take a look at the historic breakthroughs that were achieved this year and what we can expect in 2020.
Trends Witnessed In 2019
One of the seminal changes witnessed in 2019 were the apparent modifications in the serviced office sector’s client profile. The client portfolio rocketed from freelancers and SMEs to large corporate and multinational companies. In other words, the sector that was hitherto a small fish territory began attracting the big fishes or prominent players. The massive rise in the area of space leased by corporates increased by a staggering 21 per cent in 2018 alone.
This indicates the growing pertinence of the agility factor in the corporate real estate sector. A JLL study—after analyzing the leasing trends in the major metropolitan cities of India—revealed the surge in proportion of mainstream corporate and established entities in the total co-working space leased. There was also the occurrence of joint ventures and acquisitions.
These trends have also ushered in globalization of the service providers as they are the harbingers of the workspace revolution as the market space for flexible workspaces has increased by 50 per cent globally. Corporate organizations too are seeking larger and more agile workspaces which has ushered a global preference for flexible lease terms. These numbers are expected only to increase in the coming years as the service providers are constantly looking to scale their offering in accordance with the dynamic needs of their clients.
Major developments that disrupted the industry
Among the important developments that disrupted the industry in 2019 was the sharp drop in leasing prices in some of the largest flexible workspace markets despite increasing demand. With the change in the nature of the corporate demand and the rise of the lifetime value of occupiers of the flexible space, the primary players of the sector can now offer discounts of up to 20 per cent on the market price to attract customers.
Reimagining real estate by rethinking the concept of space itself has happened for the first time. Service providers in the space today see a space as not only a site of work operation but as a holistic service replete with end to end service packages that includes hospitality, administration and information technology, among others.
It is akin to a model that provides a seamless platform for enterprises that outsources the entire sourcing, designing, building and managing of the office which helps them direct all their energies in running the business.
The emergence of proptech and the digital transformation therein has redefined the real estate sector, and has ushered an era of innovation and disruption. The growth of proptech can be attributed to the deep tech innovations and the upsurge of global investments in the sector. Technological innovations such as smart buildings and hi-tech furnishings also act as leverage in improving employee experience in an attempt to stay competent and retain talent. According to the global proptech survey conducted by HexGn, around 80 per cent of the real estate players view proptech as a powerful business enabler.
Demand for clean technology and green spaces
The climate change and the depletion of natural resources such as oil and gas have led to the development of cleaner and alternate modes of technology across all segments. Sustainability is the keystone for the plethora of budding business models that are emerging in the real estate sector. The concept of eco-friendly structures such as green building solutions are now dominant trends that are here to stay. The green building segment attracted investments of $1.8 billion cumulatively from 2005 to 2018 displaying a CAGR of 29 per cent during this period globally and the numbers are only expected to rise in the next five years.
The market is currently at an embryonic phase but is projected to multiply with an influx of service providers and the green spaces that they offer. A fitting mix of value services such as feasible rentals, better infrastructure, technologically superior facilities and amenities along with immediacy to work will soon become the established market norm, and 2020 is expected to be the year when this transition finally happens.