Co-working: Ending a hype or future prospects for the office real estate market? High-ranking industry experts discussed this question with numerous guests from all areas of the real estate industry at the 2nd REC Building Experts Forum on October 31st in the Frankfurt Palmengarten.
With Prof. Dr. Thomas Beyerle (Catella), Dr. Rüdiger Freiherr von Stengel (Art-Invest), Udo Stöckl (Avison Young) as well as Tudor Popp (Hotspot) REC Partners was able to recruit four competent experts who understand the current hype and future perspectives of the co-working market from the perspective of investors, consultants and operators.It was also about whether co-working is more than just a temporary phenomenon or whether this development will affect the office property market in the long term and thus become a serious factor in this asset class.
Co-working structures are establishing themselves
For Thomas Beyerle, after his introductory overview of the co-working market, it was clear: "The co-working structures have come to stay." For him, flexible offices are part of the sharing economy, which has become increasingly established over the last few years and which, in relation to the design of the working world, promotes the transition from pure efficiency to greater flexibility. "The catharsis that a major global advocate is currently undergoing can only be welcomed and labeled as a learning curve from a risk-return point of view," he relativized what he considered to be exaggerated hype about co-working and actual market power. Because: "The intrinsic value of the idea and thus the core of the business in the office space market comes through better." Beyerle also pointed out that the co-working share in terms of the total area of office real estate, especially in the metropolises, is still low.
Coworking: fad or innovation engine?
Rüdiger von Stengel then went into the question of what significance co-working has today for the office real estate market: a balance for peaks in demand, a driver of innovation or just a fad? Using the example of the company DesignOffices, which he helped establish, he evaluated the potential of co-working due to the developments of recent years as well as the future prospects for the providers of flexible offices quite positively. In particular, the development of the branch is driven by the needs of large companies that want to benefit from new, dynamic forms of work, such as design thinking and working in virtual teams to accelerate innovation. And for that, co-working spaces with their environment, which has been liberated from the rigid corporate requirements, offer the best conditions with a comprehensive range of services.
Even if the cost of a single full-service workplace in the centers of large German cities seemed at first glance to be quite high, they would certainly pay off in proportion to the cost of owning office space for larger companies. Von Stengel distinguished clearly between the various co-working providers, which now cover the entire range of very different options: from decentralized co-working space for freelancers to so-called flexible office centers for corporate customers, which he believes are best positioned for the future.
Consolidation of the co-working market
Avison Young's Udo Stöckl considered the development of the co-working market a bit more skeptical from a consultant perspective. In his view, the c-oworking hype will weaken as soon as the economic situation worsens. He also pointed out that, for example, shorter-term leases impose high obligations in the light of flexible transformation to the needs of corporate customers, the operator and the owner. Overall, he expects consolidation of the co-working market and a clean-up of the branch. In addition, he critically questioned the service promise of the co-working provider, which often does not live up to the claim with regard to the quality of flexible workplaces.
Thereafter, Tudor Popp, co-founder of Hotspot, introduced his eponymous co-working brand, which will opens its first co-workingspace in Bucharest on December 1st. He was confident about the success of his ambitious concept. The demand for well-equipped, ergonomic workplaces in a health-promoting atmosphere with plenty of natural light in a sustainably built, state-of-the-art and representative office building is high. Hotspot's concept is based on a healthy mix of corporate tenants established in Bucharest and small and medium-sized companies that want to settle in Bucharest.
After the subsequent lively panel discussion, the experts drew despite a very different view on detail issues in the end but a common conclusion. They are convinced that there may be a slowdown in the rapid growth in the co-working market and that the momentum of the hype will subside. However, the topic will remain an integral part of the office real estate market in the future.
About the persons:
Prof. Dr. Thomas Beyerle is Managing Director of Catella Property Valuation GmbH and Head of Group Research in the Catella Group. He is also professor for real estate research at Biberach University of Applied Sciences and lecturer at various real estate and higher education institutions. He is active on the gif board and heads the ZIA working group "Transparency and Benchmarking". He is also a member of the Advisory Council of the REC.
Dr. Rüdiger Freiherr von Stengel is the founder and shareholder of the investment and management company Art-Invest Real Estate, which he has built since 2010 into a leading project development and investment company based in Cologne. Since 2019 he has also been a member of the Supervisory Board of Deutsche Immobilien Holding AG. Until 2010, as Managing Director of IVG Funds and IVG Investment, he developed the institutional and then the private funds business of IVG.
Udo Stöckl has been spokesman of the management and principal of Avison Young in Germany since 2014. He is responsible for the expansion of the German business and accompanies North American institutional clients entering the German market. He has been with the firm since 2011, initially heading out of Toronto into cross-border transactions in Europe and North America.
Tudor Popp: After more than 10 years of experience in the Austrian real estate market in 2006, he founded REC immpuls together with German partners in Bucharest, now a wholly owned subsidiary of REC Partners GmbH. In 2019, he introduced a new brand in the co-working market together with REC Partners and Hotspot.
About REC Partners
REC Partners GmbH is an international team of engineers, architects and economists with offices in Berlin, Bochum, Frankfurt a.M., Hamburg, Cologne and Bucharest. Over the past 15 years, the company has supported clients across Europe in developing, managing and improving real estate projects totaling more than 10 million square meters. REC Partners employs around 80 people in Germany and Romania.
More information about REC Partners: www.rec-partners.eu/en
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