Serviced offices in vacant office Real Estate

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Master Facility & Real Estate Management

Title assignment : Thesis

Name module/course code : Master thesis T.43050 / BUIL-1230

Name Tutor : Brenda Groen

Name student : Peter Oude Velthuis

Full-time / Part-time : Part-time

Greenwich student nr. : 001006545

Saxion student nr. : 2211210

Academic year : 2018-2019

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Management summary

Purpose; The research in the thesis aims to explore the alignment of vacant office properties to real estate preferences of serviced office concepts.

Design, methodology & approach; The research approach encompassed conducting semi-structured interviews with realtors and CEO’s of serviced office concepts in the greater Rotterdam-the Hague area, and the province of Gelderland. Open- and axial coding was utilised in order to uncover characteristics of vacant properties, and required real estate traits necessary to run serviced offices. Findings; Based on the interviews it was found that market segmentation had a tremendous impact on the required real estate characteristics. Primary traits of properties revolved around good accessibility of the property, and accounting for agglomeration dynamics. Secondary traits encompassed the quality level of real estate, ambiance, interior quality, and aesthetics.

Research limitations & implications; The cross sectional study focussed on a metropolitan area and a segment of the periphery of the Randstad. Furthermore the study focussed on a particular business centre archetype, the “serviced office”.

Originality & value; The research focussed on combining two occurrences on the office real estate markets; high structural vacancy, and the rise of serviced offices. The findings of the study supports real estate owners, and serviced office organisations, in seeking alignment between vacant

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Foreword

The thesis that lies in front of the reader forms the conclusion of a journey towards finalising the Master Facility and Real Estate Management. The master was chosen as both a challenge, and a means to expand on knowledge within the industries of facility- and real estate management. The study delivered, and the two year journey has been an interesting one.

The scripture within this document combines two significantly interesting topics; “the rise of serviced office concepts”, and “structural vacancy on the office real estate market”. A note worth mentioning was that the study originally intended to include a questionnaire targeting users of flexible office concepts. Even though this study phase was executed, the research endeavour had to be excluded from the thesis. Only 8 responses were received out of potentially 44,000 social media respondents. This was very unfortunate, as the expectancy was to obtain fascinating insights from the study. In line with the aforementioned I would like to express my sincerest appreciation for the realtors and CEO’s who took the time to elaborate on their field of work. Without their efforts, this thesis could not have been.

In finishing this work I would also like to thank my partner for her patience and support. It made the journey a better manageable one. Additionally I want to express my gratitude towards my lecturer Brenda Groen, PhD, MSc, for expanding my insights, and therefore contributing to a better product. In presenting the contents contained within this thesis I declare that the product is my work, and my work alone.

Yours sincerely,

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1. Introduction

Office properties exist not as a sole purpose, but as a ‘tool’ that adds value to businesses (van Beukering, 2014). When Real Estate does not meet organisational needs, three options are available; adapt the building, built anew or move to a suitable property (Jensen & van der Voordt, 2017). For the majority of office users the latter option will be most fitting. Research conducted by Bak (2018) shows that of the 48 million square meters of office Real Estate in the Netherlands 65% of properties is leased. This rental market gives users the liberty to move to another property more easily.

The relocation flexibility can be experienced in the Dutch office market, as office users will leave their current office property for an upgrade, when the opportunity arises (PWC, 2017; Cushman &

Wakefield, 2018; Brown & Teernstra, 2008; Bouwinvest, 2019). This can be painful for property holders, as vacancy levels were considered high in the nation, with sources indicating a 14% to 17% overall vacancy during the aftermath of the recession (Netherlands Bureau for Economic Policy Analysis, 2012; NVM Business, 2017; Bak, 2018). According to PBL & ASRE (2013) figures of that period shown by DTZ indicate that one million square meters of vacant real estate is of promising quality, four million square meters is of moderate quality, and a final 2 million square meters consists of disadvantaged Real Estate; poor quality in a unfavourable location. Even at the height of the current economic cycle, there are locations that still experience high vacancy rates (Dynamis, 2019; Bouwinvest, 2019). Seeing as even promising and moderate real estate is vacant, office owners appear to have difficulty attracting new tenants.

The expectation of experts is that high structural vacancy levels will remain (Koppels, Remøy, & el Messlaki, 2011; van der Voordt, 2007; PBL & ASRE, 2013). Even though a report by the bureau of economic policy analysis (2012) states that vacancy levels of more than 15% have been witnessed before on the Dutch Office Real Estate market, there are reasons to disregard the results of the past. The first reason for this lies in a declining workforce due to aging of the population (PBL & ASRE, 2013; Buitelaar, 2017; NVM Business, 2017). As a second reason new ways of working allows firms to reduce the required square meters per office worker (NVM Business, 2017; Savills, 2017).

On top of this development, the trend of urbanisation can be noticed in Europe. Within this

movement inhabitants relocate to urbanised areas, leaving rural environments behind (PWC, 2017). In metropolitan regions, space is scarce and expansion opportunities are limited. Municipality policies therefore focus on infilling existing spaces, which are often complex areas in decline, are polluted, and have a poor accessibility (van der Voordt, 2007).

When considering urbanisation in the Netherlands, a migration towards the four largest cities can be observed. As businesses are concentrating in these economic areas, a shortage of high quality real estate is developing (Dynamis, 2018; Dynamis, 2019; NVM Business, 2017; CBRE, 2019). Outside of the four largest urban regions real estate demand is diverse. Central business districts with good accessibility often remain in demand (Dynamis, 2018; Dynamis, 2019; Bouwinvest, 2019), while many other areas lag behind (NVM Business, 2017; Bouwinvest, 2019; Dynamis, 2019). As a result, office real estate seems to be in a dichotomy. On one hand demand for properties in A-locations will lead to higher prices, whereas the market will devaluate lesser preferred offices in other locations. To cope with the high Dutch vacancy levels, firms are transforming single tenant offices into multi-tenant business centres (Hartog, Weijs-Perrée, & Meulenbroek, 2018; Weijs-Perrée, Appel-Meulenbroek, de Vries, & Romme, 2016; NVM Business, 2017). For property owners, utilising flexible office concepts leads to a higher potential occupancy, maximising returns on investment (NVM

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Business, 2017). The selling point of the concept for office workers is that they provide flexible lease solutions in a serviced office environment. As business centres are beneficial to both sides of supply and demand, the market presence of these concepts is expected to increase annually (NVM Business, 2017; Savills, 2017; CBRE, 2019; Bouwinvest, 2019).

Drivers fuelling this development are the technologies that made it possible for many office workers to work time, space, and device independent (NVM Business, 2017; Savills, 2017). As a result

employees are detached from a fixed work environment. Secondly, the number of self-employed professionals in the Netherlands has increased (NVM Business, 2017), creating a demand for affordable flexible office solutions. Lastly the traditional long-term lease contract is under pressure (Haynes & Nunnington, 2014; NVM Business, 2017; Savills, 2017). Organisations require more flexibility in real estate options, due to the increasing pace of change in the world (Bernardes & Hanna, 2009; Lin, Chiu, & Tseng, 2006).

Regarding the structural vacancy that is present on the Dutch office market, and the opportunities that business centre concepts offer, the research proposed in this paper will focus on the potential to utilise serviced office concepts in vacant office real estate. The main question therefore is defined as:

“What are required real estate characteristics when considering exploiting a serviced office concept in vacant office real estate?”

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2. Literature Review

In exploring the potential to utilise vacant real estate for serviced offices, a literature review will present the current academic state of knowledge on these topics. In the following paragraphs the characteristics of vacancy, location selection, and business centres are elaborated on.

2.1. Real Estate characteristics and vacancy

2.1.1. Classification of vacancy

Vacancy is not a negative occurrence per definition. Hoendevanger, van der Voordt, and Wijnja (2017) argue that a healthy market has around 4% of vacancy, allowing businesses to make moves on the real estate markets. Hek et al. (2004) identify different types of vacancy; friction-, and start-up vacancy , vacancy due to economic cycles and structural vacancy. The first three types of

inoccupancy are considered a normal part of the real estate cycle, whereas longterm availability of space is seen as problematic (Hek et al., 2004). In defining structural vacancy, most definitions account for a period threshold of three consecutive years. Varying experts apply subtle differences though. For instance Koppels, Remøy, and El Messlaki (2011) consider unoccupied space structural when the property has had over 50% of floorspace vacant for at least three years. Brown, and Teernstra (2008) on the other hand consider structural vacancy when a property has had space for lease, which has been unused for over three years. In defining structural inoccupancy it is important to consider the abnormality. As 4% of vacancy is considered normal, structural vacancy should comprise of at least 5% of available floorspace that has been up for lease for at least 3 years.

2.1.2. Characteristics of vacant office properties

There are a number of reasons to why offices are vacant. In the case of office buildings Remøy and van der Voordt (2014) state that vacant properties are especially found in monocultural office- and business parks. These parks, developed in the 1980’s, lack a connection with public transportation, have few facilities, and possess limited parking possibilities, due to business growth over time (Brown & Teernstra, 2008; van der Voordt & Remøy, 2014). Hek et al. (2004) place the monocultural office park at a city’s edge, more than 2 kilometres from a connection to a highway and more than 750 metres away from a train station. In line with this statement a report by Dynamis (2019) elaborates on the preference of office users, selecting city centres of neighbouring municipalities, rather than settling in the periphery of a large city.

Besides the location, Real Estate quality appears to be of importance. Hek et al. (2004) found that in general, structural vacant properties were built between 1960 to 1980. More recent reports suggest that even real estate of moderate age, developed in the 1990’s, are vacant (Dynamis, 2019). The age of a property can impact its quality if it is not upgraded. This can leave the building to being

functionally obsolete. Out-dated elements can be described as the property having poor indoor climate systems, low quality to no insulation properties, a lack of IT-potential, and have a limited floorplan reducing flexibility for organisations (Brown & Teernstra, 2008; van der Voordt & Remøy, 2014; Hek et al., 2004). Often the buildings are poorly maintained (Hek et al., 2004), hampering the already low quality and dated aesthetics (Wilkinson & Remøy, 2011; Brown & Teernstra, 2008; Hek et al., 2004).

As there is an expected structural surplus of office properties on the market (van der Voordt, 2007; Buitelaar, 2017; Netherlands Bureau for Economic Policy Analysis, 2012), and many properties have already been transformed into housing (Remøy & van der Voordt, 2007; van der Voordt, 2007;

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Dynamis, 2019), it is interesting to consider if the market still reflects the characteristics of vacant office spaces that have been uncovered in literature. This topic will therefore be addressed as a sub-question.

2.1.3. Real Estate and vacancy research questions

In the previous paragraphs the characteristics of structural vacant real estate have been explored. As of the moment of writing this paper, the economy is at its peak, while many vacant properties have been transformed in the past years. It is therefore uncertain to which end the characteristics uncovered in the literature review reflect the current office real estate market. In addition it is interesting to consider in which manner the vacant real estate characteristics match the required property characteristics for serviced offices. Besides the building traits, it is of interest to consider the location characteristics in relation to the settlement criteria serviced offices are looking for. In the search for the manner in which vacant offices are suitable to host flexible office concepts the following sub-questions can be formulated:

 What are characteristics of vacant office properties on the current office market?  What are building characteristics required to host a serviced office concept?  What are location characteristics required to host a serviced office concept?

2.2. Regional and location selection factors

In considering a potential alignment between vacant office properties, and serviced office concepts, the factors that influence the selection of a region are of interest. The criteria on which organisations select their locations determine future financial performance, throughput, and solidity (Ho, Lee, & Ho, 2008). According to Rymarzak and Sieminska (2012) settlement criteria differ per trade, and firm preference. Furthermore local factors, including the natural, economic, technical, social, political landscape, and the regional role, have an impact on this consideration (Rymarzak & Sieminska, 2012). Table 2.1 shows elements of selection which have been uncovered from literature. Even though the financial factors appear to be the most dominant in office organisations (Adnan & Razali, 2015), the consideration for costs is not directly represented in the criteria. Karakaya and Canel (1998)

elaborate on this by stating that in selecting a site, aspects should focus on ensuring alignment with the organisational objectives. Factors like accessibility, presence of resources, stakeholders, and markets appear to be of interest in considering a region. A noteworthy element is the quality of life aspect that is mentioned in literature, as this is not an organisational oriented criterium.

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Table 2.1. Settlement criteria for organisations. (Ertugrul, 2011; Özdağoğlu, 2012)

2.2.1. Settlement selection dynamics

In giving an overall clarification on settlement criteria, central place theory (CPT), as described by Geltner, Miller, Clayton, and Eichholtz (2014), suggests the existence of a hierarchical interregional structure among settlements. This structure arises as certain business functions require a minimal market size threshold to be feasible, and in turn the function attracts more occupations that

synergise well (Geltner et al., 2014; Durmuş & Turk, 2004). Image 2.1 displays this structure in which the A-cities are the hubs, B represent the secondary municipalities, and the C-level represents the tertiary towns.

Image 2.1: depiction of hierarchical interregional structure among settlements (The geography of transport systems, 2019).

In the Netherlands, the four largest cities of Amsterdam, Rotterdam, the Hague, and Utrecht can be marked as the central business districts mentioned in CPT. These centralised areas then serve a large territory referred to as the hinterlands. This region is subdivided in smaller urbanised centres with their territories containing even smaller hubs. (Durmuş & Turk, 2004).

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Geltner et al. (2014) additionally provide insight into centripetal-, and centrifugal forces, which are determined by the economies of scale, economies of agglomeration, and positive locational externalities. Some functions therefore reside better in the hinterlands, whereas other functions require a dense urban area. To show the effect of the centripetal- and centrifugal forces, graph 2.1 is included, displaying Location Quotients (Geller et al., 2014). The Location Quotient (LQ) expresses the representation of an industry in an area in relation to the national average representation of that industry. When presented in a graph, it shows how strongly the industries are developed in a region. Additionally, comparing different geographical areas shows that every region has a stronger and weaker developed economic base. As an effect, market conditions differ per area.

On a local scale, settlement factors determining real estate location demand revolves around the economic balance between the lower price locations at the city’s edge, travel cost, and the price of real estate in urban centres (Geltner et al., 2014; Durmuş & Turk, 2004). This balance is prone to change, and thus, what is in demand today can be obsolete tomorrow (Rymarzak & Sieminska, 2012).

Graph 2.1: Location Quotient of Provinces in the Netherlands in 2017. Substantiated by data of Statistics Netherlands (2019a; 2019b).

Location Quotient (LQ) of Provinces in the Netherlands

In the graph above, the location Quotient of the provinces in the Netherlands are displayed.

The LQ ratio is expressed as the number of regional jobs in an industry divided by the number of inhabitants of its region to the national ratio of jobs per industry divided by the number of national inhabitants. A LQ smaller than one indicates an industry is lesser represented than the national average, whereas a LQ larger than one indicates the industry is overrepresented in the area.

Noticable in the graph is that the provinces of Noord Holland, Noord Brabant, and Utrecht have multiple

overrepresented industries. This indicates a stronger economic market per inhabitant for those sectors. In turn this will attract organisations that require these markets to thrive, and repel those that are adversely affected by it.

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2.2.2. Location selection research questions

In exploring the potential fit between serviced office concepts and real estate properties, the regional preferences, and dynamics are of importance. Research into this topic may uncover

preferences that serviced office concepts have in regards to this subject. The following sub-question will therefore be included in the current investigation:

 What are regional factors in deciding where to settle a serviced office concept?

Factors uncovered in literature will be addressed in paragraph 2.3.5. Success criteria of serviced office concepts for providers.

2.3. Flexible office concepts – Serviced office concepts

2.3.1. Classification of business centre concepts

In classifying serviced office concepts, there appear to be similar constructs in literature. Firstly Gibson and Lizieri (1999) describe business centre concepts by stating that in these businesses customers rent fully outfitted workspaces, including additional IT and facility services. Weijs-Perrée, et al. (2016) in turn consider the serviced office concept as a part of business centres; a for profit endeavour set out to provide office solutions, including services offered in multi-tenant objects. Lastly van der Kar (2016) elaborates on both of the definitions provided by Weijs-Perrée et al. (2016), and Gibson and Lizieri (1999):

“A serviced office is defined as fully furnished office space within a building that is commercially let, sub-let or licensed to third parties on a serviced basis. The services will tend to comprise all of the building services and a menu of business support services. It is an umbrella term that includes hybrid forms of serviced offices and co-working offices.”

The aforementioned definition mentions the existence of hybrid forms of serviced offices. According to Weijs-Perrée et al. (2016) and NVM Business (2017) four types of business centre concepts are noted, which are presented in table 2.2

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Even though literature makes a distinction between these types of flexible office concepts, in practise these distinctions are difficult to uncover. Research conducted by van der Kar (2016) and Weijs-Perrée et al. (2016) showed that most business centres are hybrid concepts which are quite similar in regards to physical aspects, number of tenants, and atmosphere. NVM Business (2017) refers to the hybridisation of flexible offices as “intermingling” of concepts. Even though many business centres are rather similar, van der Kar (2016) states that serviced office suppliers can set themselves apart by the services provided within the concept.

Due to the hybridisation of flexible offices, it is complex to distinguish facility services supplied by providers. According to NVM Business (2017), the services offered comprise of administration-, IT-, print and copy-, postal-, reception and telephone operating services. Weijs-Perrée, van de Koevering, Appel-Meulenbroek and Arentze (2019), Weijs-Perrée et al. (2016), and van der Kar (2016) state however that there has been limited empirical research on the topic. Even so, a study conducted by van der Kar (2016) found eleven services, which were marked as important by a majority of end users. These services, displayed in table 2.3, can be considered as the minimal facility services offering.

Table 2.3. Eleven minimally required services in flexible office concepts (van der Kar, 2016)

In considering the relationship of the characteristics of business centres, and the required real estate properties, literature would suggest that the hybridisation of business centre arche-types (van der Kar, 2016; Weijs-Perrée et al., 2016; NVM Busines, 2017) will lead to similar property requirements. It is therefore interesting to investigate the potential differences in real estate trait preferences required by different serviced office providers.

2.3.2. Serviced office concepts on the market

In considering the business centres on the market, elements of geographical presence, and market segmentation were studied. On the notion of the geographic presence, NVM Business (2017) states that over 50 percent of flexible office concepts are settled in the Randstad, while 40 percent of serviced office providers reside in the larger municipalities surrounding the aforementioned region. A part smaller than 10 percent of serviced office suppliers is settled in the rest of the country. Based on estimations by NVM business (2017) flexible offices will concentrate further in the four largest cities in the nation, and the surrounding shell of municipalities.

The segmentation of the market is difficult to assess. Van der Kar (2016) postulates that it is too complex to dissect, due to the significant market differentiation. There are however some ambiguous

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signs of market division. When perceiving the presence of different concept types, Weijs-Perrée et al. (2016) state that in general the majority of business centres are focussing on the creation of

communities, in addition to offering strategically supplemental services. On the other hand NVM Business (2017) indicates that segmentation is present, as co-working spaces are concentrated in the Randstad, while flexible office concepts are more evenly distributed (NVM Business, 2017). Lastly, Savills (2017) recognised that serviced office providers are shifting their focus from small

organisations, and independent workers, to large corporations. This development is expected to differentiate flexible office concepts even more, as large corporations are expected to have different demands compared to small-scale office users.

Based on literature, it would appear that market segmentation is difficult to differentiate, although the market appears to show signs of division in terms of services, geographical, and organisational size.

2.3.3. Advantages of flexible office concepts for users

The advantages uncovered in literature show that organisations using business centres may experience different benefits. Firstly general advantages of outsourcing apply, as the organisation can focus on its core processes, while supportive services are provided (Weijs-Perrée et al., 2016; NVM Business, 2017; van der Kar, 2016). Additionally flexibility increases, due to short lease

contracts (van der Kar, 2016; Gibson & Lizieri, 1999; Weijs-Perrée et al., 2016; NVM Business, 2017).

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Besides general advantages, benefits can be specific to a profession, organisation, or industry. If activity based working, sharing services and working in a creative environment is perceived as an advantage, serviced offices are of added value (Colliers International, 2015; NVM Business, 2017). Additionally, Co-working spaces can be beneficial when an organisation prefers to operate in a community, and meet likeminded professionals (Colliers International, 2015; NVM Business, 2017; van der Kar, 2016). Lastly utilising serviced office concepts can result in financial advantages due to the efficient use of space, and pay-per-use concepts (Weijs-Perrée et al., 2016; NVM Business, 2017; van der Kar, 2016). Table 2.4 shows the different advantages uncovered in literature.

2.3.4. Characteristics of users utilising serviced office concepts

Users of serviced offices are a group of professionals who are willing to pay more per square meterin order to use a concept that adds value to them (NVM Business, 2017). According to van der Kar (2016), there are two types of office users. The first group are the organisational users, who are employed by the organisation hosting the surface area in which the flexible office concept resides. The second group are the professionals that work independent from a fixed workplace (van der Kar, 2016). Where large organisations consider utilising flexible office providers that have a global presence, local creative organisations select a specific concept within their region (NVM Business, 2017). It would appear that different office occupants would have diverse requirements for working space. A study conducted by van der Kar (2016) showed that the user preference for services is dependent on the services that the user sought for, in utilising the concept in the first place. Van der Kar (2016) therefore concludes that the group of office users are not homogeneous.

The office occupants which were uncovered in literature are presented in table 2.5. These office occupants work in the industries of financial services, business services (Gibson & Lizieri, 1999; NVM Business, 2017), information technology (Gibson & Lizieri, 1999), and other service organisations (NVM Business, 2017). According to NVM Business (2017) both the private sector and the public sector are represented in the business centres.

Table 2.5. Office occupants of flexible office concepts

2.3.5. Success criteria of serviced office concepts for providers

Literature uncovered four categories that encompass factors of success for business centres. The first category contains notions of financial performance. According to NVM Business (2017), serviced office concepts are often based on subscriptions, while the customer of the subscription is not

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present 100 percent of the time. NVM Business (2017) further claims that the occupancy rate of flexible offices is 67%. The quantity of active subscriptions therefore can make the concept more lucrative. Furthermore profitability can be increased by attaining a low vacancy rate, while cross-selling additional services (NVM Business, 2017). From another point of view, the lease fee impacts profitability. Selecting a property with a vacancy issue can result in a favourable fee, increasing the potential profitability of the offered concept (NVM Business, 2017; van der Voordt, 2007; Hek et al., 2004).

Besides financial performance, the location and property impact the potential success of a flexible office concept. According to NVM Business (2017) flexible office sites occupy between 1000 m2_and 5000 m2_{of surface area in 67% of cases, while in 33% 5,000 to 10,000 m}2 _{is utilised. Furthermore, in} considering the preference for office type, Savills (2017) indicated that flexible office providers prefer contemporary properties, while a smaller percentile of providers select a sub-contemporary object. Contrary to the statement of Savills, NVM Business (2017) indicates that suppliers of serviced offices search for real estate that has a distinguishing factor. Examples mentioned are raw looking business properties, churches, Public real estate and schools. Literature further suggests that the accessibility of the location is a critical factor. Studies conducted by Remøy and van der Voordt (2014), and Weijs-Perrée et al. (2019) indicate that reachability by bicycle, public transportation and car are vital characteristics for a business centre.

The finding that unique properties are objects of interest for business centres uncovers a third category: Image. Based on the previous paragraph it can be concluded that there is more to hosting flexible office concepts than selecting an A-quality office in an A-location. NVM business (2017) elaborates on this by stating that the uniqueness of a flexible office location contributes to the branding of the site. Therefore the image of the provider is critical to success.

The last category uncovered are the regional preferences. Flexible office organisations often choose to settle within the G4, and the larger province municipalities residing in the first shell surrounding the ‘Randstad’ (NVM Business, 2017). This is in part due to a threshold quantity of potential customers that is required for the concept to be lucrative (NVM Business, 2017). NVM Business (2017) further states that the location of settlement should be near public transportation junctions, preferably in a central business district, with abundant amenities in the area. Flex office concepts that are in different locations could function, however only if the concept accounts for a unique experience for customers (NVM Business, 2017).

On success factors of business centre concepts, NVM Business (2017) has proven to be a rich source of information. Unfortunately a limited number of other sources were found describing factors of success required for serviced office concepts. Even though NVM is a branch organisation

representing realtors, and therefore reflects the vision of multiple professionals within this industry, literature seems to provide little verification to the information provided by NVM Business.

2.3.6. Serviced office concept research questions

Based on the literature review, different types of business centres can be noticed, while in practise the real estate services offered on the market are rather similar (Weijs-Perrée et al., 2016; van der Kar, 2016). As concepts seem alike, it would appear interesting to find out what makes concepts stand out. Additionally it is unclear if preferences for real estate differ from office users in general. With the main question of the paper in mind, the following investigation adds value to the research;

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2.3 Conceptual model

Based on the literature review, exhibit 2.1 displays the conceptual model further research will focus on. Finding the real estate characteristics that are required in order to host serviced office concepts in vacant real estate, necessitates to explore the property and location traits of both vacant office properties as well as the real estate requirements of serviced office concepts. Furthermore, the general state of vacancy influences the properties that are vacant. Additionally, differences in serviced office concepts, and settlement criteria are expected to influence the location and property preferences.

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3. Research objective and questions

At the basis of this study lies the question under what circumstances vacant office real estate could be utilised to house a serviced office concept. While the nature of vacancy appears to be structural (PBL & ASRE, 2013), the need for flexible office space is increasing (Haynes & Nunnington, 2014). With these developments in mind, it is interesting to uncover criteria of consideration in order to determine whether a serviced office concept would be fitting in a property.

This in turn can be interesting for the fields of facility management and real estate, as the results attained from this topic can help professionals who are involved in finding new purposes for vacant properties.

In the remainder of the thesis this relationship between vacancy and serviced offices is investigated. The starting point will be the main question.

3.1. Objective and main question

In line with the described objective of the study, the main research question is defined as:

“What are required real estate characteristics when considering exploiting a serviced office concept in vacant office real estate?”

In the study beneficial characteristics of vacant properties are linked with the facility requirements of a commercial business centre concept. As the question contains multiple elements, a division in sub-questions is required.

3.2. Sub-questions

The defined sub-questions focus on answering partial sections of the main question. The topics of interest have been uncovered in the literature review. In determining the order in which the sub-questions are listed, the topics that appeared strategic by nature were addressed first, followed by the questions that were tactical considerations:

1. Are there different characteristics required for the different types of serviced offices? 2. What are regional factors in deciding where to settle a serviced office concept? 3. What are location characteristics required to host a serviced office concept? 4. What are building characteristics required to host a serviced office concept? 5. What are characteristics of vacant office properties on the current office market?

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4. Research methods

In the previous chapter the main- and sub-questions were defined. In this section the research design, a general plot describing how the research was conducted (Saunders, Lewis, & Thornhill, 2012), is elaborated on. The paragraphs down below will focus on the research method, data collection, operationalisation, and sampling.

4.1. Research method

In order to answer the main question, the choice of research strategy should focus on obtaining the best potential results, regardless of applying quantitative or qualitative methods. This pragmatist view (Saunders, Lewis, & Thornhill, 2012) is common in business studies (Cooper & Schindler, 2014). The research approach of the presented investigation can be characterised as deduction, as the research aimed to delve deeper into an existing body of knowledge.

The strategy that was chosen is one of surveying (Saunders, Lewis, & Thornhill, 2012), in which interviews were conducted with realtors, and CEO’s of serviced offices (SOC). By interviewing different professions involved in daily activities surrounding the research question, a better

understanding of the subject was expected to be achieved. Furthermore as the studies found in the literature review encompassed quantitative methods (van der Kar, 2016; Hartog et al., 2018; Weijs-Perrée et al., 2019), a qualitative approach was expected to contribute to a deeper understanding of the industry.

In interviewing both realtors and serviced office representatives, the study encompassed two phases. These were best conducted in the aforementioned order. Information uncovered in a preceding phase could then be implemented in the research of a following phase. Based on the work of Saunders et al. (2012) this approach can be considered a “qualitative study”. With the outline of the research described, the study activities will be expanded on further in the next paragraph.

4.2. Data collection techniques

For the study on the potential of vacant office space hosting serviced offices, semi-structured interviews were selected. Saunders et al. (2012) described these types of interviews as an open conversation organised around topics of interest. Due to the open ended questions, in-depth information was ought to be obtained (Tracy, 2013; Cooper & Schindler, 2014).

The first phase of semi-structured interviews targeted realtors. As realtors mediate between supply and demand, these professionals were expected to have a thorough understanding of the real estate market. The goal of the interviews was to result in an overview of the characteristics of vacancy in the real estate market, in addition to characteristics they perceived to be in demand for serviced offices. Conducting interviews on the state of office vacancies was preferred as gathering quantitative information was considered to exceed time and financial constraints. In order to conduct the survey, access to realtors had to be arranged in addition to audio recording gear. The second phase of the study encompassed semi-structured interviews conducted with CEO’s of SOC’s. Even though the literature review uncovered some useful information, it was unclear if this overview was complete. Besides property features, CEO’s of serviced offices were expected to have a good understanding of what their clients required. In-depth interviews in this case allowed to gather characteristics on this topics, including the reasoning as to why these were deemed important. The in-depth consultations therefore were projected to result in a better understanding of required

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property features and customers of SOC’s. In order to be able to conduct these interviews, access to serviced office professionals had to be organised in addition to audio recording gear.

4.3. Operationalisation of Data collection techniques

In the aforementioned paragraphs the research method was defined as multiple semi-structured interviews. Exhibit 4.1 displays the approach to this research in relation to the conceptual model, and the research questions. In tackling the main question, the insights of realtors are used to determine the characteristics of vacant properties. In order to gain an understanding of the required real estate traits, locational preferences, and settlement criteria of serviced offices, all participants will be consulted. Lastly, the participating SOC’s will be requested to elaborate on their concept in order to gather information on how their business case translates into real estate preferences.

Exhibit 4.1: Operationalisation of data collection techniques

4.4. Data analysis

For the analyses of the in-depth interviews, a codebook was utilised based on the literature review. This step created a variable guide that allowed breaking down the interviews into elements more effectively (Cooper & Schindler, 2014). Open coding of transcripts was then used to dissect the interviews into elements (Saunders, Lewis, & Thornhill, 2012). After filling the codebook the position of the elements was reassessed to ensure mutual exclusivity (Cooper & Schindler, 2014). Finally, axial coding was utilised to allow for categorisation of these elements (Saunders, Lewis, & Thornhill, 2012). This resulted in a qualitative interpretation of data. From a quantitative viewpoint, the coding tables were designed to display the number of participants that elaborated on a certain element. In case views diverged between realtors and serviced office representatives, the number of mentions per profession were displayed. As shown in the paragraph on operationalisation, triangulation was achieved by cross referencing responses of realtors and agents of serviced offices.

4.5. Sampling

Due to the restricted timeframe of the study, a limited number of interviews could be conducted. Therefore a proper consideration had to be made in selecting samples. For the research it was both

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important to represent the whole real estate market, while simultaneously focussing on the regions where the business centre concepts had a presence. Unfortunately, this trade-off could not be attained properly with the limited time at hand. The study therefore focussed on a metropolitan area, and the ‘ring of cities’ surrounding the Randstad, of at least 150.000 inhabitants. For the research the metropolitan area of Rotterdam-the Hague was selected. The region rivals Amsterdam in terms of inhabitants, while the presence of two large city cores may provide more opportunities of insights. For the ‘ring of cities’, the province of Gelderland was selected. Within the region, three large municipalities of more than 150.000 inhabitants are located, providing multiple opportunities for serviced offices to thrive. Additionally, selecting the province of Gelderland reduced travelling costs while conducting the interviews.

Focussing multiple interviews in a geographical area was expected to increase the opportunity to attain data saturation. An additional benefit of researching two different areas in-depth was that it could uncover potential differences for large metropolitan areas and smaller urbanised regions. In terms of the amount of interviews to conduct, Saunders et al. (2012), and Tracy (2013) stated that minimally five interviews needed to be executed, in order to attain a data saturation. Therefore, five professionals per interest group were interviewed.

Interviews with Realtors

In order to uncover the present day characteristics of structural vacant office properties five realtors were consulted. The realtors were selected by accessing the register of Vastgoedcert, in order to pre-select professionals that had an adequate knowledge level (Vastgoedcert, 2019). In addition the register allowed to filter professionals that were active in the geographical research area. A follow up web based inventory was conducted to focus on real estate agents that specialised in business centred real estate. This resulted in three participating realtors who were active in the greater Rotterdam-the Hague region, while two realtors were selected residing the larger cities in the province of Gelderland. In table 4.1 the participating realtors are displayed.

Participating organisation 1- Realtor Gelderland 1 2- Realtor Gelderland 2 3- Realtor Suburbs 4- Realtor Rotterdam 1 5- Realtor Rotterdam 2 Active region of Serviced Office Concept

Active region of participating

department Greater Arnhem area Greater Nijmegen area Suburbs Rotterdam area Greater Rotterdam Area Greater Rotterdam Area Geographical segmentation Nation wide Local area Local area Local area Nation wide Table 4.1: Characteristics of participating realtors

In contacting realtors the same organisation was approached twice, once for the region Arnhem and once for the region of Rotterdam (Realtors 1 and 5). This was due to the limited number of realtors being represented in the vastgoedcert register, and the willingness of participating organisations. Even though the same organisation was contacted twice, the interviews were held with different professionals with knowledge on the area in which they are active.

The questions that were presented to the realtors can be found in appendix 1, and covered the current state of vacancy on the real estate market, characteristics of vacant properties, and real estate preferences of serviced office concepts.

Interviews with serviced office concepts

For the research into the required real estate characteristics of serviced offices, five SOC’s were targeted to be interviewed. By focussing on the serviced offices archetype, a similar basis between

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participants could be attained, regardless of the region in which they were conducted.

Geographically, two concepts were selected with activities in the greater Rotterdam-the Hague area, one serviced office provider was a national player, while two serviced office organisations were settled in the province of Gelderland.

Organisations were selected through an inventory of potential candidates via web browser. Deciding on participants based on an (web-based) inventory is a method that was used in multiple studies conducted in the industry (van der Kar, 2016; Hartog et al., 2018; Weijs-Perrée et al., 2019). Selection criteria were the region of activity, and whether the provider appeared to be a SOC, rather than another type of business centre. Providers matching the criteria were contacted, and the request was made to interview the professional that selected real estate from which the concept was exploited. This resulted in interviewing the CEO’s in all of the participating serviced office concepts. In table 4.2 a general overview of the participating serviced office providers is displayed.

Participating organisation

SOC Arnhem SOC Provinces SOC National SOC Rotterdam 1

SOC Rotterdam 2

Active region of Serviced Office Concept

Active Region Greater Arnhem

area Overijssel, Gelderland, Utrecht. National Metropolitan area Rotterdam, The Hague Metropolitan area Rotterdam, the Hague Number of locations 2 6 35 4 16

Table 4.2 Overview interviewed Serviced Offices

Of the serviced offices that were willing to participate in this study, two providers are active in the provinces outside of the Randstad, while two providers are predominantly active in the metropolitan area of Rotterdam-the Hague. The last serviced office concept is one of the larger workspace

providers, and is active throughout the nation. Based on the number of locations, three provider are comparable in size, ranging from two locations to six locations. One of the providers in the

metropolitan area offers workspaces in 16 sites, and the nationwide performing organisation is represented in +/- 35 locations.

The topic list that was discussed by the participating CEO’s of the serviced offices is displayed in appendix 2. The subjects encompassed the required real estate characteristics, provided services in combination with focus groups, and factors of success.

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5. Results

This chapter will focus on the results obtained via the interviews with the realtors and the CEO’s of the serviced office concepts. The presentation of the findings will be structured in two segments. In the first section the stage is set by elaborating on the characteristics of the participating serviced office organisations. The second section will focus on presenting the findings through addressing the research sub-questions.

5.1. An overview of participating serviced offices

In table 5.1 an overview is shown on a limited number of fundamental characteristics of the

participating serviced offices. As described in the sampling section, SOC Arnhem, and SOC Provinces are active in the provinces surrounding the Randstad, while SOC National provides services

nationwide, and the remaining SOC’s focus on the greater Rotterdam-the Hague region.

Participating organisation

SOC Arnhem SOC Provinces SOC National SOC Rotterdam

1 SOC Rotterdam 2

SOC Activity in municipality sizes (Statistics Netherlands, 2019a)

G4 X X √ √ √ 100.000-plus √ √ √ X √ 100.000-minus √ √ √ √ √ Payment construction Lease √ X X √ √ Membership X √ X X √

Pay per use X √ √ X X

General concept information

Property acquirement Freehold Cooperative Leasehold Freehold Leasehold

Primary activity focus - Serviced offices

- Conference hub - Serviced offices - Conference hub - Serviced offices - Serviced offices - Serviced offices Primary focus group Office users Coaches Healthcare Multiple users Multiple users Strategy Differentiation Differentiation Differentiation Focussed cost

leadership Focussed cost leadership Minimally required size per

location to be profitable +/- 5000 sqm < 1000 sqm < 1000 sqm 2000 sqm 1000 sqm Table 5.1: Serviced office characteristics participators.

In running serviced office concepts, the participants run sites in both large and smaller municipalities. Based on the classification provided by Statistics Netherlands (2019a), a distinction is being made by considering the number of inhabitants in a city. The G4 represent the four largest cities within the nation, while the G100.000-plus, and G100.000-minus, consider municipalities counting a population of more than 100.000, and less than 100.000 residents respectively. Logically, the two Serviced offices in provinces do not have a foothold in one of the four largest municipalities, as they currently focus on locations outside of the Randstad.

In considering the range of municipality sizes, the smallest settlements in which the participants are active houses around 40 thousand inhabitants. The largest metropolitan municipality Rotterdam accommodates a population of 644 thousand (Statistics Netherlands, 2019b).

The serviced office providers can be differentiated further by considering the payment method for its customers. One provider in Gelderland, and the nation-wide organisation operate a pay-per use construction, in which a shared desk is invoiced per hour. Membership cards are utilised by two

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SOC’s, represented in Gelderland and the metropolitan area, and are valid for a month. Lastly lease constructions for the duration of at least one year are the applied method of renting out fixed workspaces for three serviced offices. Noteworthy is that the participants freeholding properties have chosen the lease option as a payment method for fixed workspace, whereas the pay-per-use concepts rent out shared desks, and are active in smaller municipalities.

On the topic of freeholding or lease holding, the participants seem to be somewhat evenly represented in the regions. One of the metropolitan providers and the nation-wide provider

leasehold their properties. This is opposite to two providers who choose to own their properties, one settled in Gelderland, and the other residing in the metropolitan area. The last serviced office

provider has a cooperative model, in which the concept is free of lease due to a “symbiotic” relationship with property owners.

A further element to note is that the serviced offices representing the province of Gelderland seem to differentiate their concept by creating a hub function in their area. It is common for these concepts to rent out their conference rooms to external customers, who are often residing in the direct vicinity of their locations. This allows these organisations to generate extra revenue. Strategy-wise, the serviced offices seem to run either a differentiation strategy or a focussed cost leadership strategy (Daft, 2014). In addition different types of users are targeted. The SOC’s active in the metropolitan area have multiple sites that each focus on a market segment. One serviced office supplier focusses on the office user in general, and the last two serviced offices providers have a specific focus group, even though office users in general are welcome.

Differentiation in the offered facility services appeared to be limited, even though variances in organising services can be noted as lease holding organisations are dependent on the property owner. Another interesting difference is the application of automation, which in concepts replaces certain service staff functions. For a more extensive overview of the services that are provided, appendix 3 can be consulted.

5.2. SQ1.: Different characteristics for different types of serviced offices

This first paragraph of chapter five will focus on the results related to the sub-question on the different characteristics in serviced offices. Sub-question five was defined as:

“Are there different characteristics required for the different types of serviced offices.”

In discussing the differences in services, the topic of market segmentation appeared to be a critical driver. The structure of the paragraph will therefore consider the results on segmentation obtained from the interviews with the realtors and serviced office providers.

5.2.1. Interview results on segmentation

Serviced office providers consider segmentation of the market a critical factor of success. Once a market segment is targeted, the provider can seek to add value to the focus group. As such, it defines what is provided, the location, and real estate characteristics. Based on the interviews five angles of segmentation were uncovered. The open and axial coding table can be found in appendix 8.

Price based segmentation appears to be a general means of dividing the market. Three serviced offices stated they execute a price based strategy. One of the participating SOC’s further mentioned that for the various industries different prices are calculated. These prices impact the quality level of

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the services provided. Quality in this sense is seen by participants as property quality, aesthetics, representation factor, quality of interior, and the presence of service staff. Apart from the latter, the demand for quality seems to impact the required characteristics of office properties directly.

Related to price based segmentation, organisational size seemed to be an additional means of separating the market. According to two realtors, the large serviced office providers in the nation focus on the larger corporations, whereas the smaller SOC’s target small businesses. Not all realtors agreed on the perceived added value of serviced offices for larger organisations however, as this is thought to create a continuity problem. The added value for larger organisations therefore is

supposed to come from flexible housing solutions for temporary activities, or creating a hub function in a part of the country.

Quote Realtor Gelderland 1:

“However those large employers, the unemployment agencies, the municipalities, the

governmental institutions that lay off people, they will consider that in the long term. However, they will not contract a flexible lease concept for 5000 people. Because they will have a whole other risk, that the landlord cancels the flexible contract from one moment to another. Because that is possible, I mean, the moment I want flexibility as a tenant, the landlord will say I want to be flexible too. In the case I run into another tenant, I can cancel the contract, and I can evict you in half a year. Well, Philips would not let that happen”

A difference in organisational size segmentation, noted by one realtor, is that smaller organisations accept a lower quality for a lower price, while corporate customers of serviced offices prefer premium services. Reasons for this segmentation difference were not mentioned.

Another utilised form of segmentation, which was uncovered from the interviews, is dividing the market into industries. Even though the participants would accept all sorts of office users, four serviced offices had properties for which a clear focus group was selected. Healthcare in particular seemed to be a growing segment. In order to attract the focus group, facilities were provided that met the specific working requirements for that industry. As an example, one provider targeted coaches by having placed informal seats in the secluded offices to support casual conversations between coach and clients. Another provider placed treatment tables in office rooms as these were required by their focus group, the healthcare professional. A drawback of focussing on a particular office user seemed to be that by selecting one group to tailor the facilities to, it would appear that other types of users are repelled.

Quote SOC Provinces:

“Those are the more creative entrepreneurs. Yes, they will not join us as naturally. We have the more, decent entrepreneurs may sound somewhat negative, though the certainty seeking entrepreneur”

While organisations provided market segments with facilities tailored to the industry’s preferences, participating serviced offices reported that there has not been a differentiation of services between customers of different trades. On one hand, this could indicate that the demand for the provided services were uniform. After all, many of the office professionals only require a laptop, while they can work from practically anywhere. From another perspective however, this could have been the

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result of pre-selection, in which certain professionals became customers due to the attractiveness of the existing service package. Based on the remarks of the serviced offices, it would appear that within a focus group, the demands for facility services were uniform.

The implications of industrial segmentation on the functional specifications of office space seemed to impact the requirements of the location and the property. On the first element a property would not attract a certain type of professional if it were situated in an unfavourable location for that industry. Segmentation would require a serviced office supplier to consider alignment of the settlement area, and the focus group. Elements of the property appeared to at least comprise of the layout, and the look and feel. Does the building support activities by offering the right mix of spaces, and do the exterior, and interior represent the industry. These latter factors can be altered when stakeholders are prepared to invest.

More subtle market segments that were uncovered revolved around agglomeration dynamics, and transportation. On the dynamics of agglomeration, it would appear that organisations have a preference for city centre’s as a settlement location. As a result, many serviced offices can be found in these areas. Besides settling in the hearth of municipalities, serviced office concepts can survive in the periphery of a city, according to one realtor.

Quote SOC Rotterdam 2:

“You have a company that comes from there and the employees come mainly by car. Those will often not settle in the centre. They will choose to be closer to the (city)ring.”

Related to agglomeration dynamics is the segmentation based on the preference of transportation. In general, multiple participants mentioned that for younger generations, there is a larger acceptancy to travel by public transportation. For these age groups, this could perhaps be a trade-off between the preference for city centres, and accepting that it comes with a choice in transportation type. Besides the preference for public transportation, customers can prefer to travel by car. This can either be the result of personal favouritism, to professional necessity, e.g. the car is required to do business. The location within an agglomeration therefore seems to be critical in attracting the target group of a concept.

Lastly, communities, and co-working were discussed. In striving to create a community it seemed some participants actively pursued the creation of a communal environment, while other SOC’s assessed it as being non-critical for their concept. Communities and co-working spaces were therefore found to be segmentation tools. Appendix 7 elaborates more extensively on this topic.

5.3. SQ2.: Regional settlement factors for serviced offices

The second paragraph of this chapter focusses on the information uncovered on settlement factors for serviced offices, in order to answer sub-question four:

“What are regional factors in deciding where to settle a serviced office concept.”

The paragraph will start by considering the input provided by realtors and SOC’s on the interregional and agglomeration dynamics of the real estate office markets. This section is followed up by

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5.3.1. Regional and agglomeration dynamics of real estate markets

On interregional and agglomeration dynamics realtors provided remarks that elaborated on the workings of the office market. Appendix 9 shows the open and axial coding on the topic, derived from the interviews.

The participating realtors explained that for the Netherlands, the real estate market is dictated by the pace of the Randstad. The four largest municipalities residing in this area, contain the largest central business districts in the nation. Even though there is an exchange between interregional markets, one realtor remarks that the hinterlands are mainly dependent on autonomous growth.

Location Quotient

Diversity of industries was mentioned as an enabling market factor by participants. As a means to visualise the economic base of the geographical area of this research, data was uncovered from Statistics Netherlands Statline (2019a; 2019b) to calculate the Location Quotients (LQ) of the cities of focus. The results are displayed in table 5.2, in which the LQ’s of 0.95 and up are colour coded light green (lower values) to blue (higher values), in order to indicate industries that are around the national average or overrepresented in the area. In the closing row of the table, the number of LQ values of one or higher are counted for each of the municipalities. For a complete overview of the LQ values of all the municipalities in the provinces of Zuid Holland and Gelderland, the appendices 5 and 6 can be consulted.

Table 5.2: Location Quotients of the G100,000 plus municipalities in research area. Reference year is 2017. Based on data from Statistics Netherlands Statline (2019a; 2019b).

In order to examine the relationship between the number of inhabitants in a municipality and the diversity of its industries, statistical analysis was conducted by considering the LQ-values of all the municipalities in the Netherlands. The data used in the examination was obtained from Statistics Netherlands. It was found that there was no relationship between the number of inhabitants in a city and the number of LQ quotients that were above the value one. Additionally no relationship

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that more factors are involved in creating an industrial diverse market. In appendix four the conclusions are substantiated.

In line with the aforementioned it would seem that there are opportunities for serviced office concepts in smaller municipalities. Two of the participating SOC’s are active in cities counting less than 50.000 inhabitants, and so strengthen this notion. The risk of oversaturation seems significantly higher though, as it was stated by three participating realtors. The reason for this lies in the smaller economic mass of smaller towns.

Agglomeration dynamics

On a local scale there appears to be a competition between the different office locations, based on quality and prices. Often city centres appear to be the preferred settlement location, as these areas hold more amenities, and dynamics. While centre locations are in demand, the prices are higher, while the fees in the periphery tend to be lower.

Another local dynamic appears to be accessibility. Participants agreed that car accessibility in city centres is often troublesome, while public transportation becomes a more interesting means of travelling. In the periphery however, accessibility by public transportation is often of lesser quality, while reaching a location by car seemed the better alternative in the eyes of the participants. Inhibiting and enabling factors

A last topic to present in relation to settlement criteria are market inhibiting and enabling factors. Realtors foresaw market traits that limit the potential of SOC’s, when there is a scarcity, or surplus, in quality or quantity of real estate. Additionally if property owners on the market provided small scale offices themselves, it could inhibiting possibilities to exploit a profitable serviced office concept. Enabling factors mentioned by realtors were diversity of the industry within an agglomeration, higher market share of smaller enterprises, and a strong administrative regional function. Furthermore somewhat higher vacancy rates were required, as there is more real estate to choose from, while potentially lowering the lease- or acquirement fee.

5.3.2. Settlement selection elements

In considering settlement selection elements, topics of researching market potential were mentioned, in addition to amenities. In table 5.3 the coded input provided by the participants is displayed. As insights of serviced office providers and realtors differed at times, the table accounts for the number of the remarks originated per role of participant.

According to the participating serviced offices it is sensible to conduct market research prior to starting up a new location. One of these steps is to consider the presence of competition. The service providers are aware of, and mention their advantages over similar concepts. Additionally, remarks on differentiation are provided as a means to compete on the market.

On market potential all five serviced offices admit to considering the possibilities the market provides. For potential new locations the SOC-organisations contemplate on the fit between the property, the concept, and the area.

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Number of participants

mentioned item Open code Axial code

Realtors SOC's

3 Competitors are considered

Competitor potential

1 Strong brand

1 Is mindful of oversaturating the SOC market

1 Limited competition in periphery

2 Differentiation

1 Competitive through business efficiency

5 Considers market potential of SOC

Market potential 3 Considers if focus group fits property and concept

1 1 Cross selling potential in BCD's

3 Office organisations attract other office users

Office users attract office users 2 Office park attract office users

1 Office parks attract amenities

Location amenities 4 Amenities are critical

3 Concept does not consider amenities

1 City centres provide amenities 2 2 Lunchroom / restaurant

2 Supermarket

1 Provides own amenities in property

1 Leisure

1 1 No demand for quality of life aspects 2 3 Dynamics / experience is critical

Dynamics 2 Some areas require dynamics

1 2 Dynamics are attractive traits for users Table 5.3: coding of settlement selection elements

A factor that would appear to be important to the real estate office market is that office users attract other office users, according to three realtors. Office parks are therefore seen as attractive

environments for office based workers to settle. As such, these locations are natural places for serviced offices to exist, providing an alternative to the traditional office lease market.

Quote Realtor Rotterdam 2:

“Large SOC parties want to settle where office space is offered. So that there is an alternative, for the current supply.”

In selecting a location, the importance of amenities in the area appeared to be ambiguous. Even though four realtors suggested that local amenities were critical for serviced office concepts, three of the serviced office providers stated that they did not consider amenities in selecting a location. One of the participants attributed this reasoning to the lack of interest of his customer. Even though amenities were not considered to be critical by these SOC participants, lunchrooms and

supermarkets were mentioned as a preferable factor in an environment. Furthermore one of the remaining serviced office providers stated he housed a corporate restaurant. As the catering service was open to the public, the concept created its own amenity within the environment.

Delving deeper into the amenities, only a realtor and serviced office provider responded on the topic of quality of life facilities by stating there was no demand for it.