Can ‘core to floor’ move the dial in a polarised office market?

A core to floor approach is the middle ground landlords are desperately in search of and has evolved as the answer to one of the biggest questions post-pandemic: where and how do we work? Unfortunately, WeWork and the fully flexible model has failed to maintain its appeal for commercial landlords although some of its lessons in community building, hotel-like service, as well as offering “more” in the office, still stick today.

“More” means fitted out spaces, perhaps cleaning included, or even food and beverages delivered daily. It also means hospitality-led services, a customer-centric approach to tenant engagement, and better quality amenities such as fitness studios, fancy showers and podcasting equipment. It’s the hotel approach combined with a traditional office model. The net result is tenants have less capex upfront but pay a premium rent. Landlords receive better rent and can demand longer term stays (three years typically).

It seems likely that the majority of office occupiers will continue to lease space for three years or more, so it’s time we upgraded our management to deliver the services their tenants expect and want.

Some investors have already made a call on prime office returns making a come-back much sooner than we might have expected. Office landlords have to choose their operators wisely to crystalise these expected returns.