April 06, 2020
Bisnow interviewed Michael Kloppenburg, senior consultant for flexible office solutions at Avison Young, and Daniel Levinson, chairman, CRE Holdings, subject matter experts for NAIOP’s new Real Estate as a Service course on the REaaS model.
Coronavirus has not been easy on flexible office providers.
With their customers working from home for the foreseeable future and their leases sunsetting, companies that offer short-term office space are on the ropes compared to traditional office operators, who may be hanging on to five- and 10-year leases. In the face of flagging revenue, flexible office companies have taken drastic measures to cut costs, with some providers laying off as much as half of their staff.
Despite this tangible setback, some industry professionals believe that in the long run, the coronavirus outbreak will not hamper appetites for "real-estate-as-a-service" models. In fact, they believe that the recovery from the crisis could serve to drive up demand for flexible office space.
“This is no doubt a severe stress test to the business model,” said Michael Kloppenburg, senior consultant for flexible office solutions at Avison Young. “But the strong operators and owners positioned to survive the effects of this crisis will be rewarded with even greater focus by enterprise occupiers looking to apply flexibility to their real estate portfolios.”
Over the last decade, Kloppenburg has tracked the rise of real-estate-as-a-service models, watching them spread from modest shared offices to sprawling, on-demand suites rented by the nation’s largest companies. The momentum and use of these kinds of spaces should survive and thrive on the other side of the current economic crisis, he said.
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