How Landlords Can Double their Rental Yield by Working with Kickstart
Commercial real estate across the world has seen rapid changes in recent years. Businesses in Pakistan and globally passed through major shocks that shifted their attitude towards offices. Major disruptions, like the pandemic, have reshaped our perception of office spaces, especially among young workers.
In these changing times, coworking spaces have gained massive popularity in Pakistan. The industry has come a long way since the time we launched our first Kickstart location in February, 2016. Our 1st location was a small 40-desk office. Today, Kickstart manages 3000+ desks across twelve (12) locations in Lahore, Karachi, and Islamabad, with an equal number of members using our spaces on a daily basis.
Why have coworking spaces become so popular recently?
This growth has been possible because coworking tenants save on Capital Expenditure, have a flexible lease that allows them to scale up or downsize on a few days’ or weeks’ notice, and don’t have to take up the hassle of setting up and managing an office. Moreover, the vibe, culture, and networking opportunities on offer massively enhance the experience of office for today’s workers, resulting in high wellbeing of team members.
1- Today’s office space tenant wants flexibility
The Pandemic caused many businesses to change their plans or shelf them altogether. Office spaces that were recently leased and outfitted at great expense were left vacant because the need for expansion and more workers disappeared.
Just when the businesses were recovering in 2021 and 2022, came the oil price shock which affected the economies globally. With soaring interest rates and high inflation, some businesses had to shelve their expansion plans again.
One of the startups that raised millions of USDs in capital and was expanding in Pakistan as well as the GCC countries reached out to us with an offer to let their furnish office space. They had spent hundreds of thousands of dollars to lease and build a nice office in central Karachi. The office’s furnishing and finishing was due to be complete in a couple more weeks when the need for more workers suddenly evaporated. The company had to resort to finding tenants to sublet the office space.
With these kinds of experiences in the recent past, it is easy for businesses to calculate that the flexible leasing model offered by the coworking spaces is the way to go.
2- SpaaS: Space as a Service
Saving on CapEx: Companies don’t want to spend their money and resources on setting up and managing an office. Smart financial leaders in the corporations and startups alike, have started to discard the notion of having huge CapEx heads on their balance sheets and are stating to opt for leaner month to month model.
“Smart financial leaders in the corporations and startups alike, have started to discard the notion of having huge CapEx heads on their balance sheets and are stating to opt for leaner month to month model.”
Hassle-free: Moreover, In the conventional leasing model, companies have to deal with real estate brokers, hire architects, interior designers, contractors to build the office and administrators to manage the office. Additionally they also have to deal with a plethora of regulatory bodies and government institutes. By opting for coworking spaces, companies are able to avoid all of this.
3- Office as an Experience
Today’s workers see the office as more than just a place to work. Millennial and Gen Z employees place high value on the overall office experience. They make career decisions based on the culture and atmosphere of the workplace. This experience is shaped by the atmosphere, quality, location, fellow colleagues, and the various events and activities happening at the office. A quality coworking space has the “end-user satisfaction” as part of its ethos.
Specialist Operator Understands the Nuances
It is the job of a specialist operator that optimizes all aspects of office buildings for users as well as landlords.
Leasing and building pristine office spaces, and running them efficiently everyday 365 days a year requires a specialist. It requires a team that has a viable business model, and has mature operations and sales functions which are adept at building and running offices efficiently and keeping healthy client pipelines .
Only then this model can solve for the flexibility, hassle-free experience and turn the profit as well.
Tried and Tested Financial Model
Our financial model is tried and tested and it yields return according to our projections. We have tested it (12) times in (3) cities across Pakistan.
Efficient Space Planning & Customer-centric Layouts
Building out a coworking space with an efficient, optimised layout requires knowledge of the workflow of communities that will come and join as tenants. With multiple iterations, we have figured out what is the best layout for any particular location. For anybody else, it will take years to figure out the perfect mix.
Building out a coworking space is a one-time job. Running it efficiently is a daily job which we do 365-days a year. Mature operations and sales functions are imperative to run it smoothly everyday.
Global Trends and Opportunity for Pakistani Building Owners
JLL predicts that around 30% of the entire commercial office real estate space would be coworking and flexible spaces by 2030.
With more and more companies option for Hybrid Office, the demand for conventional office space leases is on a decline. This however, also presents a unique opportunity for landlords & building owners to work with Kickstart.
Landlords and Kickstart can work together
Working in a management agreement with the landlord, Kickstart can manage the property and keep it occupied for the longer run.
Consistent Occupancy & Diversification of Tenants
The Coworking Model rests on diversification of tenants and keeping a solid sales pipeline to ensure the vacant spaces are quickly filled. Partnering with a coworking operator like Kickstart also gives landlords the opportunity to keep the building occupied for the longer run. By entering into a partnership, landlords can take advantage of coworking operators’ ability to onboard the clients.
Beautifully designed and Well-Maintained Building
Coworking operators keep a deep involvement in operations, with dedicated operations and maintenance staff managing and maintaining each property. With a sort of structure that coworking operators bring, the building’s upkeep is ensured for the longer run. Ask any landlord who has let his building to a quality coworking operator and they will tell you that now their building is in a much better shape and well maintained.
2X Yield on Rental Income
Partnering with Kickstart would not just be a simple lease-relationship. The landlord becomes a partner in the profits as well, which can potentially double their rental income.
“The landlords can double their rental income by partnering with Kickstart”
If you have questions and want to learn more about how the model works, you can reach out to us with your questions. You can also leave your details here.