Space-as-a-Service: The Future of Real Estate

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space-as-a-service

It is not uncommon for organisations to construct and design spaces that are well-suited to accentuate the employee experience. This capital investment is directed towards enhancing productivity by improving the value of a space, thereby providing services that are custom-based depending on the job. Hence, the name, Space-as-a-Service. 

While one intends for the space to serve its purpose over a long period of time, the space usually turns into a liability that needs maintenance and refurbishment time and again as the organisation evolves. Due to the requisite of larger funds for redesigning, the space fails to provide effective contribution to the development of the organisation. 

Therefore, more recently, the interests of corporate firms have shifted towards incorporating technology to maximize and optimize corporate spaces for dynamic workflows and experiential journey. Modern technologies aim to utilize the owned and shared workspace across the realms of efficiency, sustainability, staffing and digital connectivity so that the designed space can complement the utilization of other services in an organization. 

This is possible by virtue of space’s upgradability and adaptability. Proptech looks at this internal environment as a service to be provided and focuses on ways to simplify the building, management, and occupancy of these spaces. Let’s see how. 

Space-as-a-Service, What is It?

It is common knowledge that space is one of the most under-utilized commodities when we talk about office complexes. The commercial real estate industry is trying to channelise the power of this space, in an effort to enhance its sustainability and adaptability through a concept known as space-as-a-service (SPaaS). 

SPaaS refers to the combination of a physical location alongside the provision of essential amenities to provide an all-encompassing experience. To simplify it further, the concept aims to combine real estate with extra ordinary user experience (UX). 

How?

The proposed model for using space-as-a-service encompasses a wide range of creative spatial solutions that try to cover any and every need or demand of the employee to enable them to deliver optimum work output. This cannot be achieved unless we work with a combination of the intra-company aspects of work and employee culture, coupled with the company’s external image in relation with other companies. 

The concept of space as a service represents an overhaul in the service model to focus on solutions that are more personal and tech-centric. In the fast-paced business atmosphere that combines technological devices and concepts ranging from cloud computing and predictive analytics to smart buildings and artificial intelligence, the workplace is definitely the central point of the model. 

The workplace is impacted by the interaction of them all. Therefore, all its facilities are kept up to date in order to incorporate spatial solutions to keep up with and provide the environment required to facilitate the use of such technologies. 

In What Ways is this Model Executed?

SPaaS banks upon the changing nature of the real estate business model and focuses on expanding its reach to the novel concepts of co-living and co-working spaces, besides provision of essential services from furniture to staffing. The concept of utilizing space-as-a-service extends far beyond a mere real estate or proptech invention. It is a creative step towards enhancing productivity and the overall working atmosphere and experience for the employees.

1. Coworking Spaces

A coworking space is an arrangement that is created to allow workers from a broad array of companies to collaborate and work together in a productive environment. Recently, coworking spaces are popping up in many cities as the new way of working and sharing. 

The increase in the frequency of startups and the initial costs of setting up is the most prominent reason for the development and popularity of such spaces in recent times. This allows for convenience and cost-saving as a result of common infrastructure, equipment and amenities. 

2. Brandboxing

It is a proptech invention that refers to allowing smaller brands to open their stores in malls as a part of the coworking model. These spaces are often made of modular walls and lighting that can be re-positioned to custom tailor store configurations as per the owner’s needs. The concept eliminates long-term leases, high rents, capital expenditure and operational logistics making it easy for online merchants to scale and test the success of their brick and mortar store before planning on procuring a permanent location.

Why is the Space-as-a-Service Model Gaining Popularity?

First and foremost, the idea of space-as-a-service focuses on combinations of non-traditional work practices, settings and technological advancements that supplement or replace traditional offices. The incorporation of these elements greatly enriches the overall functionality of a space besides allowing creativity to breed amid a setting that possesses the tools required for innovative ideation. 

Here are some factors that have made the concept of Space-as-a-service very popular. 

Increased Focus on Enhancing Productivity

The nature of demand and supply itself has evolved greatly. In a labor market that is characterized by increased competition for high-performing and talented employees, designing space-as-a-service helps in turning the environment of the company around. Not only by retaining the employees by ensuring a sense of satisfaction in them, but by saving on additional expenses. 

Besides, an increasing number of people have now begun preferring the work from home culture. This might be a result of the pandemic-imposed fears or simply a desire for comfort. Telecommuting, in fact, has proven to benefit organisations in a sense that it increases employee engagement and reduces stress, absenteeism and work-life conflict on the part of the worker. 

Hence, the ‘need’ for traditional offices is not dwindling, per se. The demand for spaces that can be used whenever needed, are equipped with smart real estate features, and don’t compromise on connectivity is the new norm.    

Changing Employee & Labour Norms

The changing work atmosphere is focusing on freelancing, contact-based, ad hoc or short term jobs that do not even require the sharing of a physical space. A static or stagnant office might not even be compatible with this trend. Instead, convenience and flexibility are the dominant requisites. 

Besides, people definitely prefer services over products and a work culture that allows comfort over everything else. Demands shift and so do the workforce’s preferences. Younger generations believe that the old work environments that are yet to update themselves with the latest technological innovations are not only outdated but also stifling. They prefer modern workspaces that allow a certain degree of ownership and control. 

The space-as-a-service model focuses on an employee-centric view of things. Therefore, it analyses and takes into account, habits, behaviours and needs of the individuals using the workspace and designing it such that a specific one-time cost delivers a solution for the long term. 

Great Cost Savings

As a matter of fact, almost every organization wants to carry out their business operations in a cost-effective manner. The space-as-a-service business model caters to this particular need of companies. The organizations who operate their business on this model can use the office whenever the need arises, save on unnecessary expenses and get access to all the amenities and civic utilities at a fraction of the cost. 

Location Flexibility

Along with a lot of lessons that the 2020 pandemic has taught us, it has offered a clear picture that working on flexible terms, with a choice to work from a preferred location is possible. The space-as-a-service model works exactly on the ‘no-strings-attached’ principle. While employees spend less time and resources on commuting, thereby improving their productivity. Organizations can trim down on their utility and other bills to a very large extent. 

Plus, owing to higher pricings, it may not be feasible for a company, especially recently incorporated startups and MSMEs to lease or own an office space in the premium localities of the city. In this aspect, the space-as-a-service business model plays a significant role as commercial office spaces are generally located in well-connected and upscale areas. 

Prevents under-utilization of Space

The most important practice is to ensure that any space that is owned, on a lease, or rented is optimally utilized. It should not turn into an under-utilized facility. Any investment in terms of leasing a new commercial real estate space or even redesigning it must be well thought of so that it yields well in the future. 

Even though the concept of space-as-a service might appear to be a costly affair to begin with, it ensures that the facility is designed, keeping in mind the norms of sustainability and efficiency. Therefore, it acts as a one-time investment that does away with the need to revamp over and over again. This also means that the design works in cognizance of the user’s health and welfare, hence turning into a smart investment. 

Multi-purpose, Mixed-Use Spaces are New Business Norms

The changing business sphere encourages the use of a space for providing multiple related services. Mixed-use buildings drive a higher traffic as compared to a complex that offers one type of services, for example, only grocery or only hardware stores. Therefore, it is always wise to think about investing in a space-as-a-service commercial space with prospective co-tenants.

Not only can this increase earnings through the rent received but also ensures smart sharing/ pooling of certain resources. In addition, it simplifies the process of upkeep and routine maintenance work that ensures the functionality of a space over a long period of time. 

The Takeaway?

After the evolution of software as a service (Saas), effective use of space-as-a-service is the next big thing in the real estate industry. In fact, Saas directly affects the concept of space by allowing accessibility of services online via a subscription, rather than bought and installed. This, in turn, influences the perception of physical space by the service providers and puts on landowners a responsibility that happens to be beyond mere property management. 

When the work “space” is designed based on a service model that supports the dynamics of people who will use it, the outcome is increased engagement, satisfaction, happiness, collaboration, and innovation for the employees. The physical part of the office space, as a standalone product, will be fruitful only when combined with amenities that facilitate user experience. 

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