Commercial hybrid offices Property futures Research

Hybrid office space – spin or a new horizon?

Q3 2015

In relation to office space the word ‘hybrid’ is now routinely thrown around as an adjective for everything from offices that simply enable more flexible working options, to those that have both open-plan and private space for employees to work in. Not to mention the ubiquitous ‘collaborative’ space, ‘co-working’ space, and ‘funky’ space.

In relation to office space the word ‘hybrid’ is now routinely thrown around as an adjective for everything from offices that simply enable more flexible working options, to those that have both open-plan and private space for employees to work in. Not to mention the ubiquitous ‘collaborative’ space, ‘co-working’ space, and ‘funky’ space.

In the dictionary ‘hybrid’ means: “a thing made by combining two different elements.” For example, Jungle music was a mix of House and Reggae, but it was a new, distinct, creation (not a good one of course!). Not just two similar elements existing side by side or a minor evolution of something already in existence.  

Reading much commentary today, you could be forgiven for thinking that half of London’s office space was suddenly being transformed into a radically different asset class. As opposed to the gentle evolution that is underway, with the blurring of the previously fixed boundaries between private working and meeting space.

So, can we look beyond the branding and find some commercial space that is genuinely a hybrid, and potentially a future new use class?

Maker Wharf operates “flexible, event and co-working creative space…” from two locations in East London, Haggerston and Bethnal Green, with one due to open in Palo Alto, Silicon Valley. It is significant in that although predominately office space, it also provides facilities such as 3D printing and laser cutting. It defines its tenants or ‘Makers’ as “… a person or thing that makes or produces something. They are seen as experts having a good deal of knowledge or skill in emerging technologies or crafts that will create the jobs of the future. Examples are 3D printing, food printing, robotics, wearables... “

Therefore it would be hard to designate it as pure office or industrial space given the tenants’ own activities within the space often blur the boundaries between office work and actual physical creation of products (or at least prototypes).

This is space that feels like a genuine step-forward. As 3D printing, for example, takes increasing amounts of space, where will an activity that is a mix of technology, design and clean manufacturing want to locate?

McKinsey’s ‘War for Talent’ is very much in play at this time in the employment cycle. Can an occupier employing highly-skilled tech staff afford to be located on a multi-let industrial estate, where on-site amenities, connectivity and the wider urban environment don’t fit their target employee profile?

It is these new occupiers fusing IT, design skills and lightweight manufacturing that have the potential to drive the development of a genuine new use class.

FABberz offers laser cutting, 3D printing, and design incubation from an office in Soho. Again it is not traditional office activities they are undertaking but a genuine blend of office and industrial activities.  As businesses like these expand, needing larger floorplates, they may have a much more significant design impact on offices than the historical steady shift in working practices – where the impact has been more about internal reconfiguration and bike racks, for example, than anything particularly radical.

In the future one can envision businesses in London wanting the right to operate a whole property as mixed space, where on any one floor you may have desks for computer design and general business administration, workspace areas for the 3D printers to sit, and a retail area for demonstrating and selling products, including click and collect facilities, perhaps alongside catering facilities as well. 

The growth of these ‘hybrid occupiers’ will pose unique challenges for landlords who have been used to incremental shifts in occupier demand, segregation of uses and tenants for whom real estate is incidental to their actual core operational business. Whilst planning authorities will have the difficult task of classifying business activities that blur the lines between use classes, ensuring that a rigid planning system does not hold back the growth of what is expected to be a key part of our future economy.

Make no mistake; the office and wider property market are in for a decade of serious upheaval, mainly driven by technological change, but also demographic change. It’s just that a few shifts in internal office configuration simply represent the tip of the iceberg!