Șerban Marghescu, City Lead Mindspace Romania: Employees are how the office space market will recover

At the beginning of 2022, the conversation is starting to shift from “how the pandemic affected the office market – or any other market” to “how the office market will recover”, and the answer is “employees are how the office space market will recover,” according to Șerban Marghescu, City Lead Mindspace Romania.

”In a recent study, Colliers revealed that the total demand for modern office space increased by 23% in 2021 to 263,000 square meters and that new demand is up 47%, reaching 104,000 square meters. If anything, these numbers show that recovery is underway and that the office market is bound to once again become the thriving industry we once knew.

However, the question remains: will the market take this period of recovery as the opportunity to innovate or will things just go back to the way they once were?

Quite simply put, we are not the same. Working from home (or from any other place, for that matter) as a day-to-day reality has changed our perspective on the office for good. Employees had all the necessary time to bring their homes to the same level of functionality as their (former) offices, so why would they commit to coming in and facing both the commute and the safety issues that accompany crowded spaces?

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The answer is simple: they won’t, at least not wholeheartedly – and this means that both companies and landlords will have to step up their office game and provide employees with actual value and benefits to return to their office. Long gone are the days when the occasional lunch or free coffee were enough, especially since Millennials and Gen Z want more. Besides wanting to work for companies that they can feel connected to in terms of vision, mission, values, and objectives, they also want flexibility, sustainability, and advanced technology.

Keeping up with employees’ demands can be a struggle, especially when those demands concern the physical office space; it’s hard to provide flexible schedules when your office doesn’t have 24/7 access or create spaces that support collaborative work when these need to be attuned to three generations working from the same location. These types of situations are what flexible space operators aim to solve.

On the landlord side, it’s more about the ability to attract diverse types of companies to their buildings through the flex space offering. Through management agreements – a model that is gaining both momentum and recognition worldwide and is inspired by the hotel industry – a partnership is established between the landlord and the flex operator, allowing increased profitability and greater flexibility for the landlord, while providing a relevant response to today’s market landscape. In the past two years, Mindspace signed six management agreements with landlords in Europe, Israel, and the U.S., including for its recent launches in Israel and Philadelphia.

On the employer side, it’s important to note that there are five main differences between traditional leases and flex spaces: costs, a flexible contract, size restrictions, compliance, and amenities.

1. Costs

The flex space provides a more cost-effective solution. The average deposit is only one month and a half, about four to eight times smaller than that of traditional leased offices. Furthermore, costs tend to be stable and are fully transparent, and companies can forget about moving costs and ongoing operations overhead.

2. Flexible contract

Companies who choose flex spaces benefit from more flexible terms, with a minimum commitment of one month, compared to traditional leases where there’s a minimum commitment of 5-years commitment and no contingency plan to exit in the case of negative economic circumstances.

3. Size restrictions

This is one of the most debated aspects when choosing the space for your team. Flex gives you the freedom to react to positive and negative economic demands, according to your company’s needs; you can shrink and contract with relative ease when needed, as well as grow during favorable times. And this has proven to be especially important during the past two years, with the rise of work from home and the hybrid work model – many companies needed less space and more flexibility for adjustment, which is exactly where flex came in.

4. Compliance

With flex space, everything about compliance is delegated: your provider will offer a safe working environment and will take care of implementing local market restrictions and guidance. In turn, you can give your fullest attention to your core business, as you benefit from assistance and having your team as safe as possible.

5. Amenities

The perks of a flex space enable employers to offer special amenities to their employees: conference rooms designed to bolster creativity, 24/7 access, digital platforms, event and lounge areas, showers, kitchens, parking spots, happy hours, and specially tailored events are just a few examples.

The proof of the advantage of flexible office space is, actually, in the demand – in comparison to 2019, at the end of 2021, it was companies coming to flex space operators and seeking them out. And it’s also brokers who now have a better grasp on the benefits of flex spaces and, thus, showcase it to a wider variety of companies. To look at some figures, the demand has just about doubled: before the pandemic, it was three out of ten companies that were looking for flex spaces, now it’s six out of ten.

In 2022, it will take all of us to bring the market back to life – from operators to landlords, to companies, and, more so, to employees. If we don’t offer employees the reasons to come into the office, these signs of recovery will remain just that, a sign.”