Rent free

Despite a gradual shift in the lens through which real estate is viewed, price / cost remains a compelling factor for many. If you’re competing on cost then it’s a fairly tough proposition to beat a competitor that is offering the same product for free. Yet that is exactly what is happening in the case of some offices. A recent example comes from Manhattan based retailer Showfields, which has opened a coworking space at the top of its Soho store. There are no real estate costs for customers and the WiFi is free. The cost in this case is the requirement to sign up to a newsletter. From Showfields’ perspective the space will drive customers into its store, but also ‘build a community’, which it sees as essential to its growth. For the time being concepts like this remain niche; however, as vacant upper floor retail space is returned to the market this trend is likely to increase. The challenge for those offering office (and other) space using a traditional model is that those investors and operators who can derive alternative forms of value beyond rent should always be able to outcompete on price.