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Flexible office market is developing much faster, and since February, this year has entered an active phase. This is definitely a trend and some pandemic response from the office real estate

Flexible office market is developing much faster, and since February, this year has entered an active phase. This is definitely a trend and some pandemic response from the office real estate

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01.04.2021 (№ LDaily #17)

Flexible office market is developing much faster, and since February, this year has entered an active phase. This is definitely a trend and some pandemic response from the office real estate

Yulia Lytvynenko, director of the IWG network in Ukraine, told LDaily about the trends in the flexible offices market and the company’s plans.

LDaily: In Ukraine, before the situation with COVID-19, the field of coworking was actively developing – both international networks and local players were developing. How do you assess the potential of the flexible space market in Ukraine and in the world? How will COVID-19 affect this business?

Y. Lytvynenko: The potential of flexible workspaces is undoubtedly high. Even before the pandemic, the new generation was not ready to limit itself to the schedule and place of work. Quarantine restrictions only showed that it is possible to be effective without a permanent office space. Today we are beginning to live in a new reality, where the work schedule from 9 to 18 is a thing of the past. Employers need to understand this and adapt to change.

It is important to realize that the term “flexible office” – or “flex office” – we mean an office for any period without fixing it and for various formats of organization: coworking, private office, office for a few days or a month, meeting rooms. Flex solutions provide an opportunity to choose the format of work for different team members: someone is used to working from the office at his desk, and someone changes location several times a day, for others, it is important to work near home or kindergarten, near the meeting. Finding inspiration in different locations can also be important.

The future lies in flexible spaces. Companies should already think about flex solutions. It is important that businesses, regardless of their size, can choose the business center they like, without overpaying for square meters, and if necessary – easily expanded.

LDaily: How do you assess the commercial real estate market today?

Y. Lytvynenko: It is expected that quarantine measures have negatively affected commercial (namely office) real estate. Currently, the market is in decline. No rise is expected until the second or third quarter of 2021. Towards the end of the year, the situation should stabilize, and in the first or second quarter of 2022, a very slow recovery is forecasted.

However, as I mentioned above, the market for flexible offices is developing much faster, and since February, this year has entered an active phase. This is definitely a trend and some pandemic response from the office real estate.

LDaily: How has the vacancy of Regus offices changed? How has the rental rate changed in your company? What will happen to rental rates in flexible spaces in Ukraine?

Y. Lytvynenko: Vacancy has increased by about 15% since the beginning of the pandemic. However, after the first lockdown, occupancy increased and aligned with the before pandemic rates.

We did not close any office space; on the contrary, we opened two new Regus locations – Avenue 53 and Regus in BC Volodymyrskyi – to meet the growing demand.

Rates were slightly reduced, and we provided discounts and deferrals to our residents during the pandemic. There is still a special offer for the first months of the lease.

LDaily: If you look at the office residents, who are they?

Y. Lytvynenko: The target audience is international and Ukrainian businesses from various sectors: agricultural, industrial, construction, social sector, representative offices, associations, IT, and investment companies.

LDaily: Big businesses are increasingly renting flexible workspaces completely or in part. Is this a trend due to the popularity of coworking or the lack of regular offices?

Y. Lytvynenko: This trend is due to convenience, the desire for innovation and networking, as well as the rationality of funds.

Convenience – because coworking provides a comprehensive service that saves a lot of time on organizational and administrative issues. Even more: when it comes to the network, as in the case of IWG, team members themselves choose locations that are convenient for them. Permanent residents can use any coworking Regus or Spaces in the world and Ukraine with a fully prepared office infrastructure. You can find and book the necessary premises through a special mobile application.

Innovation and networking – each location is different from each other. Even in our network, you will not see the same business centers. They are all with different designs, different views from the windows, different teams that create different atmospheres at the locations. The opportunity to change the usual atmosphere and work in other business centers inspires and increases the resource potential of everyone.

Networking is the key to success today. Business connections and collaborations are quickly established in our business centers. Partners easily find each other and create successful projects.

Rationality of funds – because the format of flex solutions is much more profitable compared to standard rent. Traditional space lease involves investment in repairs, furniture, maintenance of communications and premises, cleaning, payment for related services. In addition, all of the above requires a time investment.

LDaily: How will the new working conditions (remote work, flexible schedule) change the demand for coworking in Ukraine?

Y. Lytvynenko: Paradoxically, they will only increase demand. I believe that we have all experienced the advantages and disadvantages of working from home. Especially the disadvantages: not everyone has the opportunity and desire to work at home. I observe the trend of renting a job individually – employees want to pay the rent themselves if the company decides not to allocate funds for it.

In addition, many people do not have the opportunity to focus at home, or the home space does not inspire, reduces productivity. Of course, there are those who are comfortable working from home, but still, they have a need for meeting rooms or workplaces for a short period.

LDaily: What are Regus’ plans for this year?

Y. Lytvynenko: We do not plan to stop, so we will continue to develop the network. Today, the IWG plc network in Ukraine is represented by two brands – Regus and Spaces. Regus offices can be found in 11 business centers: Horizon Tower, Kyiv Podil, Gulliver, Horizon Park Business Center, Podil Heritage, IQ center, Silver Breeze, Forum West Side, Avenue 53, and in the “Volodymyrsʹkyy” Business Center.

On March 15, we opened a new Regus location, located in the “Volodymyrsʹkyy” Business Center (11 Petro Sagaidachnoho St., near the Poshtova Plochcha metro station) with a total area of 1,200 square meters.

So far, all our spots are located in Kyiv, but we will soon announce the opening of new locations in other cities of Ukraine. Each opening is a considered decision of all parties; our partners have a real opportunity to observe how our business copes with the crisis.

 

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