infinitSpace blog

The landlord’s guide to choosing a flexible workspace location

Written by Wybo Wijnbergen | May 22, 2024 10:07:36 AM

What makes a great workspace location?

Well, spoiler alert: there’s no simple answer. 

While historically a ‘prime’ location has been considered the gold standard, demand in non-prime locations has picked up too as the office market continues its evolution post-pandemic. 

With that, ideas of what makes the perfect workspace – and what makes a perfect location for a workspace – have had to shift. And a huge plus is that landlords now have more choice than ever before when it comes to picking a viable location for their next flexible workspace!

So, what should commercial real estate owners consider when sizing up potential locations? 

 

Five key factors

  • Rental income potential

Prime locations are known for commanding premium rents due to their prestige, exceptional transport links, and nearby amenities. The high demand in these areas not only translates to higher rental incomes but also contributes to substantial property value appreciation over time. Of course, it’s important to bear in mind that the initial investment and ongoing operational expenses in prime areas – for instance, high property taxes – can be higher.

On the other hand, non-prime locations often offer more affordable leasing options, making them appealing to smaller businesses operating on tighter budgets. While rental incomes may be lower than in prime areas, the diversified leasing options can lead to stable revenue streams. 

  • Property value appreciation

Properties in prime locations tend to experience rapid appreciation due to high demand and limited supply. That inherent demand drives up property prices, which leads to strong long-term capital appreciation for landlords. 

While non-prime areas may offer opportunities for value appreciation, the rate of appreciation may be slower. 

For that reason, landlords should carefully evaluate the long-term capital appreciation prospects of each location to maximise their investment returns.

  • Occupant diversity and stability

Non-prime locations, especially those on the outskirts of central business districts, may attract a diverse range of tenants. The affordability and diversified leasing options in these areas can contribute to stable occupancy rates and revenue streams. 

However, landlords should be mindful of potential challenges such as lower demand and the need for increased marketing efforts to attract tenants.

  • Employee wellbeing and work-life balance

Non-prime locations often offer a more relaxed atmosphere compared to bustling city centres characteristic of prime sites, promoting employee wellbeing and work-life balance. Additionally, proximity to residential areas can reduce commuting times for employees, adding to overall convenience. 

This can contribute to higher tenant demand and occupancy rates in non-prime locations, particularly among businesses keen on fostering a positive work culture.

  • Nearby amenities and transportation

Prime locations typically offer proximity to a wide array of amenities and excellent transport links. These amenities, coupled with the prestige of prime areas, attract high-profile tenants and drive-up rental prices. 

However, non-prime locations may lack access to certain amenities, which would then require initial investment in on-site amenities and transportation infrastructure – but these improved amenities would of course allow landlords to boost rent prices further down the line.

Carefully considering the accessibility of each location and the impact it might have on occupant retention is vital.

 

What can we learn from this?

It’s clear that the choice between prime and non-prime locations has no one-size fits all solution; picking a location will come down to the specific needs of the landlord and the type of occupants they aim to attract. 

By partnering with a workspace operator like infinitSpace, who will provide key insight into market conditions, local demand and business strategy, and then manage the project from conception to operation, landlords can be sure their decisions are well informed.

While location will in many cases be the most important aspect of this decision for landlords, it’s far from the only thing that matters when it comes to creating a great workspace. 

High-quality fit-out, great sustainability credentials, good public and vehicular transport connections, strong additional amenities – think beyond Republica’s enviable roof-top pool – and excellent on-site community management team are all crucial. 

By taking time to understand how these factors affect a location’s viability, landlords will have everything they need to thrive amid the competitive workspace market.

Keen to find out how infinitSpace could help you create your own flexible workspace? Get in touch with the team today.