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Future trends after Covid-19: What are the hot topics?
June 2020,
Roger Krieg MRICS, CEO Office LAB AG
Office LAB is the market leader of Swiss coworking providers.Coworkers work more efficiently with us because they work in anenvironment that is tailored to their needs, making work simplyinspiring. We also offer added value with our partners and initiativesand enable great networks and important market access.
Office LAB – More than an office.
Vision
Economic signals after Covid-19
Current situation
➢ Europe risks a recession for 2020
➢ Increase of non employment rate from 2.9% to 3.3% (April 2020), risk to climb up to 4% by end of the year forSwitzerland
➢ Strong short-term government debts of approx 40 billion related to Covid-19
➢ Risk of 2nd wave
➢ Debts of companies and uncertain business development perspectives
But:
CFA indicator points to upswing in summerThe CS-CFA-Society-Switzerland-Indicator, which measures analysts' expectations, now (end of May 2020) stands at +31.3 points, as CS announced on Tuesday. In the previous month, it had already recovered from its dive in the wake of the Corona crisis and was positive again at +12.7 points. In comparison: In March it had dropped to a multi-year low of -45.8 points.
How companies react on Covid-19
What SME companies consider now:
➢ Stop investments and focus on current cash flow
➢ Stabilize and reduce costs (infrastructure, people)
➢ Boost in digital business and processes
➢ Preparing for post Covid-19 (phasing in new normal, recover business, adapt business model)
➢ Prepare for next crisis (2nd wave or new crisis)
➢ Build up a BCM Plan
➢ Adapt Workplace to new hygienic standards
How to adapt to new workplace standards?
Meeting Rooms
Current
New Normal
Social Space Team Space
Source: Steelcase / Navigating Whats next May 2020
Tenant view: flexibility & resilience
Technologies CO
VID
-19
Portfolio
ORGANISATION & CULTURE
Demandoffice space
Home officeremote work
2019 2020 futuretomorrowtoday
Thesis 1: drastic workplace reduction expected
"The trend towards a multilocal work culture
will be significantly accelerated by Corona.
According to industry experts, the decline in
Office space turnover already up to 25 percent
(Q1 2020 compared to Q1 2019).“
ZIA. – Die Immobilienwirtschaft 14.04.2020
Thesis 1: drastic HQ workspace reduction expected
New workplace concepts outboundExpl. coworking, corporate coworking, splitting offices, shared offices
100%
70%
Dedicated Non territorial Alternative
Working@home
Volume before Covid-19
Meeting / workshopclient projects
After Covid-19New work conceptsReduction of fixed office space
Reduction of existing workspace fromcorporates HQ up to 30% to 50%.
New workplace concepts• Human centric designed• Starbucks generation• More functional and social• High quality, best performance
Cost / budget shift to employees- New Swiss regulation for remuneration
of expenses and home office space arein discussion
Thesis 2: Overnight digital shift for shops
Online trade will grow by 10% in 2018 and by 8.4% in 2019*. In 2020 this figure will be massively higher and above all sustainable
* VSV Versandhandel.ch
Thesis 2: Online and offline, effects on rent space
9’426 EUR / m2
Rev
enu
e E
uro
/ m
2
Rea
l Est
ate
Today in Germany (2019)
Amazon (2019)Many shops are dying because their business model no longer meets current needs. Corona has only increased this effect. The shops that have come through the crisis will build their digital business massively.
The consequence for property owners are:
Shops in Core / Core+ : demand still stabile
Shops in Value add: decrease (turnover / m2 to deep)
Warehouses / logistic areas : increase parallel to e-shop revenue
3’076 EUR / m2
Thesis 3: Risk of value loss, B / C locationsYoung people and middle agers want to live and work in the center and be a part of a urban community.They want to work in the city or at home, but not in a «second class» real estate or location
Value added / enhanced
➢ Receive more pressure for commercial space
➢ Real estate and space must differentiate themselves from classic offers
➢ Existing properties have to be renovated and brought up to the latest standards.
➢ The owner invests in standardized office spaces, and makes available for tenants on demand
Thesis 4: Shift of capex to opexNEW tenant are looking for:
➢ Less crises exposure➢ Easy adaptable to business needs➢ Risk avoiding➢ Capital in core / running cost in infrastructure➢ Share common and project space
Real estate owner try to:
✓ Decrease lease duration / flexibility of space✓ Provide new smart services / service on demand✓ Invest in tenant fit out upfront, ready to use now✓ Reduce investment and risk for tenants✓ Provide serviced space as team offices, coworking,…
Thesis 5: Digitalisation takes on speed
The new pressure comes from inside, because people want to have the comfort.Previous digital markets were opened up for marketing reasons.
push force pull / push force pull force
Thesis 6: smarter cities are safer cities
AI object-analytics AI object-tracking AI speed heatmap
AI bicycle-tracking AI origin-destination traffic© SWISSTRAFFIC AG 2020
Tracing App
Thesis 7: Subscription economyC
ap
ex /
lo
ng
term
1990 2000 2010 2015
Opex /
Short term
Reduction of capital invest
& service when needed
=
flexibilisation and risk
reduction for clients
2020
Thesis 8: new BCM
Workplace Strategy
Business Processes
Environment
Disaster / Recovery
People / Ressources
Data Protection
Market / Sales
Product Performance
Business Spec.
Thesis 9: adapted FM Services
➢ New services from FM Providers
➢ Monitoring for critical areas
➢ Occupancy tracking / management
➢ Flexibilisation and adaption of services
➢ Digital solutions
Source: Apleona Germany May 2020
How Office LAB act on COVID-19
Office Space / building marketing
Property management on site
Office design
Flex / fix desk
Office space 3rd party
Fully prepared offices
Team offices
Sp
ace
Ma
na
ge
men
t
Fa
cili
ty a
nd
Pro
pe
rty M
an
age
men
t
Meeting / Workshops / Community
Community management
Concierge services
Office management
Co
wo
rkin
g /
Wo
rkp
lace
Serv
ices
Owner representative
Managed building services
➢ Coworking as enabler for a dynamic building
➢ Services for all the tenants
➢ Owner representative
➢ Combination of tenant and service contract
Who are the winners?
➢ Real estate companies and suppliers offering flexible solutions for tenants
➢ Quality vs. quantity
➢ Core / core+ / warehouses
➢ Spaces offerings in attractive and strategic locations
➢ Work life balance
➢ Companies offering flexible working models (employer branding)
➢ Coworking spaces