Space-as-a-Service: Is It Right For You?

Space-as-a-service is the concept of commercial real estate space that is procured on an as-needed basis and that comes with all of the necessary services to make it plug-and-play for your employees. While co-working spaces like WeWork bill themselves as space-as-a-service, this movement goes well beyond just a co-working space. To understand its implications, think about the impact of cloud computing on IT or the impact of 3PLs on logistics operations.

Think About Everything That Goes Into Opening a Space for Your Business:

You have to figure out which buildings you want to occupy.
You have to figure out which ones have space for you.
You (or your tenant rep) work with space planners, other brokers, property managers and landlords to see if the space in the building is suitable for you.
Once you lease the space, you have formal plans drawn up and have the space built out.
During construction, you work with designers and interior planners to get the right furniture and fixtures.
You hire the staff that you need to make the office itself work -- like reception staff and low-level office support.
You work with your management and HR to put the right people in the the right place in your space.
You finally move in... Then the hard work begins.

In its purest form, space-as-a-service lets you call a provider (who offers predictable spaces), tell them how many desks you need, and move in soon after. If you need more control or customization, that provider can frequently give you a simple, predictable cost for everything you need to be productive in that space.

Once you are in your space-as-a-service location, the benefits continue. If you need more desks, call the provider, and if you need to let some space go, it is frequently a simple matter of making a call. The space-as-a-service provider takes care of everything for you with predictable cost and a high degree of flexibility.

While this offering might seem like the best way to occupy space, it has its drawbacks. Space-as-a-service is not a panacea. After all, IT departments still maintain their own data centers and server farms and many companies still have their own logistics departments.

The key drawback to space-as-a-service is that flexibility costs money. The services that they provide are similar to the ones that you would provide in your own space, but are subject to an additional layer of markup. In addition, the flexibility that the provide leaves them with the risk of vacant space which they amortize over all of their clients.

Beyond the potential cost issues, realize that when you lease your offices on a space-as-a-service basis, it usually is not your space. While some providers focus on tailoring your experience, it is ultimately not yours and the services are not provided by your people. Whether or not this is an acceptable tradeoff depends on your culture.

Ultimately, there is a larger trends towards providing a more tenant-friendly experience among many commercial real estate owners and managers. Concierge services at office buildings, clear leases at industrial facilities and the space-as-a-service movement are all trends towards making it easier for you to be a tenant, regardless of how you choose to occupy your space.