08 Jan Development Finance – How Flexible and Remote Working Influences Commercial Property Growth

Over the last thirty years and, more specifically, the last decade, the way people work has changed. Telecommuting has become an everyday feature of working life for many.

Businesses have developed to the point where many of their employees may come into the office once or twice a week. There are many businesses that never see their employees because all work is conducted remotely.

The surprising thing is that this will not reduce the demand for commercial office space. In fact, this trend may very well increase the demand for development finance as commercial leasing models change.

Remote work models are now implemented by so many businesses that it is estimated that half of the UK workforce will work remotely by 2020. Many telecommuters are treated as working from home.

The truth is, however, that many of them do need to use office space sometimes as frequently as once a week. Remote workers may still need to meet with clients or conduct a meeting that involves a group on a regular basis. Companies still need to provide training for their employees. Office space is still in demand.

While businesses have reduced the square feet they use in their offices to accommodate employees, space is still required for remote and flexibly contracted staff.

Development Finance For New Commercial Business Models

New business models are growing in the commercial leasing sector, which means more flexibility both for the lessee and the lessor. Lenders are finding themselves having to look at new models when considering development finance for new developers. The viability of long-term commercial leasing has reduced, and even large companies have recognised the shrinking need for office space at a single site.

Both leasing contracts and the office design needs that come with them now need to be innovative. Businesses leasing office space need flexibility and adaptability. They also need to have the flexibility to make changes to how much space they need. This, both in terms of growth and shrinkage.

New developers will find themselves having to take into consideration how the need for flexibility will impact on the development itself. Ability to remodel the interior of a building easily has become a critical deciding factor in more recent commercial leasing. These will all have to be considered when presenting the business model for development finance.

Companies such as Regus have seen this model developing for years and have become well placed to accommodate the changing market. They have created the capacity to hire an office space from a few hours to several years. Just because not everyone commutes, does not mean that they do not need an office or workspace.

Shared Workspace

The changing face of commercial accommodation has further been cultivated by the culture of shared and open workspaces. Commercial vendors can increase their income by hiring out short-term space in volume. Startups and single owner businesses have recognised the need to use commercial spaces to meet with clients and to present at meetings involving several people.

Despite the convenience of working from home, a commercial office space is still needed by these people. Interestingly, some models work well where the lessee pays a monthly rate whether they use the space or not. This shores up and potential losses for the lessor, while keeping the space open for ad hoc space hirers.

Multiple Locations

As developers build a portfolio of commercial space, they can find themselves leasing space to the same lessee across multiple locations. This can only happen with flexibility and a change in business model. Meeting this flexibility will need to happen in both commercial leasing and commercial building ownership.

The need for development finance will certainly not change. Rather, it is more likely to grow as developers adapt to the changing work models. Developing environments that grow with changing working patterns means that commercial property developers have a huge scope for profit.

Finding development finance that fits with your business model can be a daunting task. Especially in a rapidly changing world. At Belgravia Finance, you will find all the expertise and support when seeking out funding for your project. For a professional and confidential discussion call now.