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Managing Your Future Leasing Liabilities with Flexible Office Space

With new leasing regulations coming on board as soon as 2019, both owners and lessors of commercial office space need to start thinking outside the box if they don’t want to be holding the bag when the ball drops.

Currently, your company’s leases – whether they be property, vehicles, or other high-value equipment – do not have to be listed as an asset on the balance sheet. With the implementation of IFRS 16, due to comes into play in 2019, all that changes.

What does this mean for my company?

IFRS 16 has the potential to increase your company’s liability in several ways, as you will suddenly see a significant jump in total assets as a result of having to recognize a right-of-use asset and a lease liability. For a new company that is trying to stay lean, this could present problems.

Having fixed office space can exacerbate this issue. What, then, is the solution?

Should I buy my office space?

If you can afford to buy your space and turn it into a permanent asset, perhaps that is an option for you. However, there are probably just as many reasons not to buy. The added expense of upkeep and the depletion of your working capital, combined with a sudden inflexibility of a fixed location might not be the best decision for you.

Consider flexible office space as a viable option. It’s cost-effective, it’s agile, and it won’t tip your balance sheet in the wrong direction.

Do I really need fixed office space at all?

With the millennial trend toward remote working, many offices remain empty for the better part of the week. If you’re not using it, the money you are investing in square footage is being wasted on an unnecessary expense. By eliminating the workstations and offices you are not using, it solves several problems: it helps you reduce your dependence on fixed office space, reduces your monthly spend, and protects you from potential liability issues from IFRS 16.

Flexible office space solves the problems that fixed office space represents. It reduces monthly expenditures and supports workforce agility and productivity. Plus, your flexible office space agreements are, well, flexible.

The Benefits of Flexible Office Spaces

By implementing a short-term philosophy, it opens you up to other options as well as keeping your physical office space off the balance sheet.

Take a good look at how and where your workforce is spending their time, and consider what a flexible office space could do for you.

In general, companies are seeing a marked increase in flexible office space. It provides them with the ability to scale along with their company’s needs and gives them on-demand access to the services they want when they need them most.

Office Suites Strategies: flexibility when you need it most

If you’ve been considering shifting to a more flexible office environment, there is no time like the present. With IFRS 16 looming, being ahead of the curve is never a bad idea. If you would like to learn more about how flexible office space can benefit businesses, contact us today.

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How a coworking office design can help you retain current clientele and attract new business

In 2017, coworking is a major trend in office space design. Fueled by a growing population of millennials, remote workers, and freelancers, it’s a movement that is not going away anytime soon.

Office landlords and building owners would do well to see this as an opportunity to serve the workforce of the future – one that eschews the cubicle and opts instead for a more open, flexible environment.

A landlord’s advantages to establishing a coworking environment

As an owner of commercial real estate, you will attract more tenants by offering a flexible office environment that includes a coworking space. Some of these advantages include:

Coworking offers the opportunity for small businesses and startups to get off the ground more quickly

For a new company, the expense of establishing an office is often unrealistic, forcing young startups to work from public places or home offices in order to stay lean. By offering a coworking environment, it gives these companies the opportunity to get started, and once they are established in the building you may be able to offer them more flexible office opportunities as their need arises.

Coworking spaces create positive cash flow more quickly

A coworking environment can house more people and more companies than a standard office space, thereby maximizing your revenue per square foot.

Maintaining a coworking space can help you grow

If the coworking venture is successful, you may consider installing one in multiple locations, creating a sustainable revenue stream and helping grow your bottom line.

High-profile coworking leads to new tenants

The more populated your coworking spaces are, the more potential tenants you will be exposed to, which leads to increased revenue.

Attract Millennials with the coworking flexibility they demand

The millennial workforce demands flexibility, and they tend to shy away from traditional office environments. With a growing millennial workforce, these are the people you are catering to and your future tenants. Fulfill their coworking needs and you will always have their business.

Attract today’s top talent with convenience and ergonomics

Additional amenities like on-site retail, coffee bars, café’s, fitness centers and soft-seating lounges that can double as a workspace can also figure into the larger scheme of things. Mixed-use buildings such as these are in general more desirable to an inner-city workforce, attracting a working clientele that is within walking distance of their residence.

For the office space operator

There are also clear advantages to the office space operator in partnership with a building owner. First, startup costs can potentially be shared, and probably most importantly, it diversifies risk, minimizing the potential for failure and, by proxy, increasing the operator’s chances at obtaining seed financing.

An operator can approach a building or property owner with a proposal for coworking space that offers a split of the profits. If your location is good and your forecasts are accurate, you can promise a very attractive return in contrast to what they might make on standard office space with market-value rent.

If you are willing to foot the entire bill to equip and outfit the coworking environment, you may even be able to negotiate reduced or deferred rent in lieu of the upgrades you are making to their property. Outline the long-term advantages to partnering with you, which should detail the site improvements as well as forecasted financial gains.

Office Suites Strategies: taking your office property to new levels of success

Whether you are a landlord or an operator in search of your next conquest, a coworking space can help you achieve profitability and viability. Call today to find out how we can help drive value in today’s competitive market.