Traditional office space rental agencies are now seeing new players pushing into their market, which may force them to trim their fees and diversify their services.
With today’s soaring prices, the mismatch between supply and demand, and the often highly demanding criteria for work and business space rentals, online ‘pure players’ are now ready to fight with the more traditional agencies to seize the lion’s share of this segment of the real estate market. Several newcomers have begun to address the issue of high prices with a radically disruptive collaborative business model. Already quite common in the Consumer to Consumer (C2C) home property market, the collaborative model has now spread to office space rental, exemplified by two French startups, Bird Office and Bureaux A Partager (‘Offices to Share’). These firms offer to put businesses or independent entrepreneurs looking for workspace to rent – as a one-off or on a more permanent basis – in touch with other companies that have space which is not being fully used. The emergence of such new players may enable small companies that find this kind of services prohibitively expensive to make use of them in future. Claims Bird Office co-founder Arnaud Katz: “We’re bringing flexibility to a market which has up to now been very rigid and rather opaque.” Meanwhile Frédéric Bleuse, Country Manager for Regus France, the French arm of a multinational corporation that provides serviced office accommodation in business centres worldwide argues that the newcomers are not real estate players in their own right, but "online brokers with a very different business model which still needs to prove itself profitable.”
So what are these ‘barbarians at the gates’ offering? Bird Office’s service is oriented more towards one-off events, such as a meeting, press conference, or professional training session, while Bureaux A Partager (BAP) offers larger spaces to let on a monthly basis. There is also Office Riders – another French sharing platform which enables professionals and businesses to rent people's private spaces as workplaces during the day – whose focus is currently firmly on the C2C market, but might consider expanding into B2B in order to broaden its market. Arnaud Katz explains the innovative idea behind his offering: “Bird Office enables you to book a workspace that suits your event with just a few clicks." A notable feature of the service is that Bird Office manages all contract issues, systematically using "a proper commercial contract for letting out work space." The service is primarily aimed at coaches, trainers, small businesses and business travellers that need space for an event, whether these will take place on an ad hoc or regular basis. In addition, on request, Bird Office can order in meals, organise interpreting/translating and reception services and book taxis, a service extension which helps to differentiate them further from their competitors. "We’ve learned from the requests our clients often make that there is a real need in this area, so we’re now trying to structure our services into a coherent package that clients can find out about easily on our website," says Katz.
Partnering with traditional agencies?
The competition from the new online ‘pure players’ has come as a rude shock to the traditional players in France – i.e. real estate agencies specialising in office property on the one hand and business centres such as those run by Regus, which charge for any and all extras over and above their ‘middle-man’ services. Arnaud Katz claims that Bird Office prices are 30 to 50% below market rates. Nevertheless, some players at least are prepared to work with the newcomers and pool their strengths, with a few long-established agencies displaying their advertising on the BAP site. Frédéric Bleuse insists there is complementarity between the different types of players, as the newcomers are essentially "websites which put people in touch with each other rather than real operators,” unlike what Regus is doing. Arnaud Katz also says the longer term aim is to "serve business centres and partner with larger firms”, although in fact these larger firms are essentially those traditional players with which Bird Office is looking to compete. They would also be charged on the same basis as other space providers advertising on the site. BAP will only charge a commission "for successful deals", and Bird Office is planning to charge its rental partners a maximum of 20% of the letting fee. In fact those advertising space for rent will surely find it very useful to have a service where everything is managed on a website, and all they have to do is welcome the tenants and ring up revenue from a space that was previously empty. At Bird Office, those with space to rent out decide the price for themselves, “although we’re quite happy to give them advice,” underlines Katz.