Will Subscription Be the New Standard for Workspace?

The late British theoretical physicist, cosmologist, and author Stephen Hawking famously said, “Intelligence is the ability to adapt to change.” This principle is especially relevant in today’s commercial real estate industry, which faces radical disruption thanks to advances in technology, changing operating models, and shifts in consumer behavior.

In an unpredictable world where industries can be revolutionized overnight, it’s no surprise that customers are demanding greater lease flexibility and the ability to scale their space usage up or down at will. Flexibility is now a competitive advantage and companies are increasingly considering the idea of pay-as-you-go for many elements of office space. In other words, subscription is becoming the new norm.

Better Without Buying

In many industries, a subscription model already provides the essential flexibility customers need. For example, subscriptions have been highly successful in the software space. Before Software-as-a-Service (SaaS) and popular cloud-based options such as Salesforce, companies had to buy and own copies of each type of necessary software. Under the subscription model, companies rent software through a licensing agreement, which is hosted and delivered over a network, and they never have to deal with upgrades, compatibility, or maintenance.

In much the same way, workspace-as-a-service removes the burden of operational complexity, so businesses no longer have to worry about setting up their IT, furnishing their conference rooms, or stocking their kitchens.

The mainframe and server industry was similarly disrupted by Amazon Web Services (AWS), an on-demand cloud computing platform that allows enterprises to rent their computing capacity in the cloud, eliminating waste and lowering costs.

With the rise of fractional-use services, such as Uber and Airbnb, we’ve seen a surge in the number of subscription startups in consumer categories ranging from clothing to furniture. Even Knotel has introduced its own subscription service for modular office furniture and design.

Flex is the Right Fix

Could the subscription model work in the notoriously rigid world of commercial real estate, known over the decades for its high upfront costs and long-term commitments? After all, this is a landscape where just getting into an office—finding a broker, searching for property, negotiating and signing a deal as well completing a buildout—could take six to 12 months.

Today’s sped-up, competitive, uncertain business environment is making the traditional lease untenable for most companies looking to stay nimble. Companies must be able to expand when they need to and only pay for what they use. That means ensuring that space is aligned with people, so that companies can access more space when headcount increases or reduce their usage when headcount shrinks.

In other words, businesses require greater flexibility in how workspaces are configured. They expect more networked office locations that can scale up or down if necessary, and they want to reduce the amount of time and resources spent on maintaining spaces that are comfortable for their employees.

That might be why a survey from Deloitte found that flexibility will be the key to future CRE success. Over half of the survey’s 500 respondents aim to invest or increase investments in properties with flexible leases, and 44 percent plan to do so for flexible spaces.

Time to Hit Subscribe

Now, for the first time, companies have access to flexible leases, and subscription license agreements for furniture and supplies. Thanks to innovative flexible workspace platforms that draw on data and insights, the modern office is being reimagined altogether to help businesses better align space with people, while reducing waste and inefficiencies.

The subscription model is a huge pivot for commercial real estate. The traditional way of consuming and delivering something so essential to business—space itself—is being turned on its head with flexible workspace, eliminating the high total cost of ownership, upfront investment, and the disposition costs associated with breaking a lease.

The world is making the leap to subscriptions—are you?