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BUILDING AND REAL ESTATE ECONOMICS MASTER OF SCIENCE, 30 CREDITS, SECOND LEVEL STOCKHOLM, SWEDEN 2020
Space-as-a-service: a disruptive concept for the real estate industry?
Alice Enström and Andrea Paulsson
DEPARTMENT OF REAL ESTATE AND CONSTRACTION MANAGEMENT
ROYAL INSTITUTE OF TECHNOLOGY
DEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENT
Abstract
The technological development has enabled structural changes in the real estate market and created a growing concept of space-as-a-service. Space-as-a-service has emerged from the concepts of sharing economy, digitalization and servitization to meet the demand for flexible solutions on the commercial real estate market. The idea of space-as-a-service is to offer simple and flexible access to spaces as well as providing extra services for tenants to create added value. From a sustainable perspective the intention is to decrease the need for new construction and take advantage of the existing building stock to meet demand for space.
Most of the previous research on the space-as-a-service concept focus on coworking and sharing spaces but not as much on the broader concept and its rampaging on the real estate market. This study aims to investigate if the concept of space-as-a-service is disruptive for the real estate industry and how real estate owners approach this development.
A qualitative research method was applied, using both structured and semi-structured interviews with real estate owners with property holdings in Sweden to get more in-depth information and understanding of the growing concept of space-as-a-service. The Theory of Disruptive Innovations was used as a framework for investigating disruptive signs of space-as- a-service.
The driving motives behind space-as-a-service are concluded to mainly derive from an observed demand for freedom of effort and flexibility in the real estate owners´ offerings. We can see a new complex competitive environment, where the real estate industry's service goes from selling “space” to offer a concept. This puts new requirements on real estate owners to justify for more than the location of their premises, in order to keep their competitive position.
What positions the real estate owners take in this new landscape differentiates. The attitudes towards space-as-a-service are generally positive, but the perceived risks are explicitly present. External actors and regulations also counteract the development. Thresholds and attitudes collide, making it clear that a change in mindset is needed. However, from the results of our study we can conclude that the concept of space-as-a-service fulfills the characteristics of a disruptive innovation, indicating that this evolution will be disruptive for the real estate industry.
Title Authors Department
Master Thesis number Supervisor
Keywords
Space-as-a-service: a disruptive concept for the real estate industry?
Alice Enström & Andrea Paulsson
Real Estate and Construction Management
TRITA-ABE-MBT-20547Inga-Lill Söderberg
Disruptive innovation, space-as-a-service,
digitalization, sharing economy, flexible leases
This Master thesis is our culmination of the civil engineer programme within the department of Real Estate and Construction Management at the Royal Institute of Technology in Stockholm (KTH). This thesis report comprises 30 hp and is carried out 2020-01-14 - 2020-06 05.
We would like to take this opportunity to express our gratitude to everyone who has played a part in the process of conducting this study. First, we would like to thank our thesis supervisor Inga-Lill Söderberg, Head of the Department for Real Estate and Construction Management, who throughout the process have assisted our work with professional criticism and valuable guidance. We would also like to direct our attention to Christoffer Börjesson at Fastighetsägarna Service and Stockholm, who gave us inspiration and helped us get in touch with experts on the subject. Thank you for always making us feel welcome to discuss ideas and challenges throughout the process.
Additionally, we would like to thank all interviewees who took the time to be a part of our study and provided the vital information on which the results are based upon.
Finally, we want to direct acknowledgement to KTH Royal Institute of Technology for the last five meaningful years, educating us to be ready to face our professional careers.
Stockholm, May 2020
Alice Enström and Andrea Paulsson
Sammanfattning
Den tekniska utvecklingen av teknik har möjliggjort strukturella förändringar på fastighetsmarknaden, där man går från att sälja yta till att erbjuda ett koncept. Yta-som-tjänst har växt fram från begreppen delningsekonomi, digitalisering och tjänstefiering för att möta efterfrågan på flexibla lösningar på den kommersiella fastighetsmarknaden. Idén med yta- som-tjänst är att erbjuda enkel och flexibel tillgång till ytor samt att tillhandahålla tjänster till hyresgäster för att skapa mervärde. Ur ett hållbarhetsperspektiv är avsikten att minska behovet av nyproduktion och dra nytta av det befintliga fastighetsbeståndet för att möta efterfrågan på lokaler.
Tidigare forskning relaterat till yta-som-tjänst fokuserar främst på coworking och delade ytor, men det saknas studier på konceptet ur ett bredare perspektiv och dess framfart på fastighetsmarknaden. Syftet med denna studie är att undersöka om konceptet yta-som-tjänst är disruptivt för fastighetsbranschen samt fastighetsägares inställning till denna utveckling.
Resultatinsamlingen genomfördes med en kvalitativ forskningsmetod, där både strukturerade och semistrukturerade intervjuer med kommersiella fastighetsägare i Sverige användes för att få en djupare förståelse för konceptet yta-som-tjänst. Studiens akademiska förankring grundar sig i teorin om Disruptiva Innovationer som används för att granska disruptiva tecken av konceptet yta-som-tjänst.
Vi kan dra slutsatsen att drivkrafterna bakom konceptet yta-som-tjänst främst är ökad efterfrågan på besvärsfrihet och flexibilitet i tjänsterna som idag erbjuds av fastighetsägare. Detta skapar en ny och komplex konkurrensmiljö som sätter nya krav på fastighetsägare, de blir tvungna att rättfärdiga för mer än bara läget på en lokal för att behålla sin konkurrenskraft. Vilka roller som fastighetsägare väljer att ta i detta nya landskap varierar sig. Attityderna mot yta-som-tjänst är generellt positiva, men det upplevs finnas flera risker som tillsammans med externa aktörer och regelverk motverkar utvecklingen. Resultatet visar att attityder och trösklar i utvecklingen motsäger varandra och att ett tankeskifte är nödvändigt i flera olika led. Resultatet av vår studie visar att konceptet yta-som-tjänst uppfyller karaktärsdragen för en disruptiv innovation och förväntas expandera till en bredare marknad framöver.
Titel Författare Institution
Examensarbete Masternivå Handledare
Nyckelord
Yta-som-tjänst: ett disruptivt koncept för fastighetsbranschen?
Alice Enström & Andrea Paulsson Fastigheter och Byggande
TRITA-ABE-MBT-20547 Inga-Lill Söderberg
Disruptiv innovation, yta-som-tjänst,
digitalisering, delningsekonomi, flexibla hyresvtal
Table of content
1. Introduction ... 1
1.1 Delimitations ... 2
1.2 Disposition ... 2
1.3 Current situation on the real estate market ... 3
2. Literature Review ... 4
2.1 Sharing economy ... 4
2.2 Digital transformation and digital twins ... 6
2.3 Servitization of businesses ... 8
2.4 Space-as-a-service ... 9
3. Theories ... 12
3.1 Disruptive Innovation Theory ... 12
3.2 Diffusion of Innovation Theory ... 14
4. Methodology ... 16
4.1. Methodological considerations... 16
4.2. Choice of method ... 17
4.2.1 Structured interviews ... 17
4.2.2 Semi-structured interviews ... 17
4.3. Data selection and method approach ... 17
4.3.1 Structured interviews ... 17
4.3.2 Semi-structured interviews ... 18
4.4 Method for analysis ... 19
5. Empirical findings ... 20
5.1 Structured interviews ... 20
5.2 Semi-structured interviews... 24
5.2.1 Corporations... 24
5.2.2 Demand for flexibility and services ... 26
5.2.3 Real estate owner’s roles and pathways ... 28
5.2.4 Investments and current projects ... 31
5.2.5 Risks and thresholds ... 34
5.2.6 Predictions of space-as-a-service ... 36
6. Analysis ... 39
6.1 What are the thresholds for real estate owners to offer space-as-a-service? ... 39
6.2 What new roles will real estate owners take in the new demand-oriented environment? ... 41
6.3 Is the concept of space-as-a-service disruptive for the real estate industry? ... 44
7. Conclusion ... 47
7.1 Limitations ... 49
7.2 Further research ... 49
8. References ... 51
Appendix ... 58
1. Questionnaire for structured interviews ... 58
2. Template for semi-structured interviews ... 59
List of figures
Figure 1: Outline of the literature review ... 4Figure 2: The business model of the sharing economy (Kumar et al., 2018). ... 5
Figure 4: Allocation of adopter groups according to Diffusion of Innovation Theory (Rogers, 2003) .. 14
Figure 5: Illustration of the research process ... 16
Figure 6: Result of question about adopter group belonging ... 24
Figure 7: Allocation of adopter groups from results and Diffusion of Innovation Theory ... 42
List of tables
Table 1: Interviewees, their role and corporation ... 18Table 2: Result of question about flexible leases ... 20
Table 3: Result of question about coworking companies ... 20
Table 4: Result of question about risks for implementing flexible leases ... 21
Table 5: Result of question about digital strategy/plan to offer new services for tenants. ... 21
Table 6: Result of question about planned services for tenants ... 22
Table 7: Result of question about occupancy and optimizing space use ... 22
Table 8: Result of question about factors preventing to offer space-as-a-service ... 22
Table 9: Result of question about predictions of how the role of real estate owner will change. ... 23
Table 10: Roles taken by real estate owners in the space-as-a-service development ... 29
Table 11: Investments made by corporations ... 31
Table 12: Illustration of disruptive signs ... 44
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1. Introduction
In recent years concerns over ecological, social and developmental impacts have increased, leading to a shift in attitudes towards consumption. The growing consumption awareness and the emerging information and communications technologies (ICTs) have fueled the rise of sharing economy. The sharing economy is characterized by nonownership, temporary access, redistribution of material goods or less tangible assets (Kathan et al., 2016). From the sharing economy different arrangements for renting, sharing and borrowing assets have emerged to meet the demand for rapid and flexible solutions for transport, residence, food etc. Some well- known, unicorn-valued examples are Uber, Lyft, Airbnb, WeWork and Zipcar. The common denominator for these companies is changing their business models by transforming traditional products to services (Baum, 2017).
This phenomenon is highly debated even on the real estate market, where the concept of space-as-a-service has emerged. The concept of space-as-a-service is vast, yet coworking is the business model based on the space-as-a-service concept that has received most attention (Green, 2014; Spinuzzi, 2012; Orel and Kubátová, 2019; Moriset, 2014; Kojo and Nenonen, 2017). The idea of space-as-a-service is to offer simple and flexible access to spaces that are operational for instant occupation as well as providing extra services for tenants to create added value (Kojo and Nenonen, 2017; Harris, 2001). The intention is to serve customers, with their specific needs in mind and capture market segments that otherwise would not fit under a traditional lease (Green, 2014).
A higher level of value-added services can be provided to customers through digital methods (Coreynen et al., 2017). Data and digital tools are useful to explore unused assets and find inefficiencies and synergies as well as new insights about assets of value, and assets that could be valuable (El Saddik, 2018). Therefore, when a servitization strategy is adopted it often includes constructing a digitalization capability (Parida et al., 2015).
Consequently, recognizing space as a service suppose new requirements on property owners in terms of how to gather and analyze data about buildings and how they are used as well as creating additional services to yield added value. This development means leaving the traditional business model based on providing spaces with long contract duration and instead offering value-adding services and flexible on-demand leases (Green, 2014). This indicates an ongoing paradigm shift where real estate owners are driven by how to serve the customers instead of how to avoid vacancies.
The enlargement of digitalization and servitization is also transforming the competitive
dynamics. The competitive environment is extending and getting more complex since the
dividing line between traditional manufacturers and classic service companies is becoming
blurred. With new rivals emerging, traditional business strategies are disrupted and challenges
the real estate owners to interfuse services into the general strategies of the company
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(Vandermerwe and Rada, 1988). During the past years we have seen how digital technologies have created new business possibilities. New products, services and business models have disrupted industries (Matzler et al., 2018; Christensen et al., 2002). Hence, it is relevant to question if space-as-a-service disrupts the real estate industry. If the services become as important as the spaces the most successful companies in the future are the ones gaining competitive advantage by keeping customers through services that fulfill their demands and needs (Vandermerwe & Rada, 1988).
This study aims to investigate if the concept of space-as-a-service is disruptive for the real estate industry and how real estate owners approach this development.
1Three main research questions have been formulated:
• What are the thresholds for real estate owners to offer space-as-a-service?
• What new roles will real estate owners take in the new demand-oriented environment?
• Is the concept of space-as-a-service fulfilling the characteristic signs of a disruptive innovation?
1.1 Delimitations
The research is limited to commercial real estate owners with a property portfolio in Sweden and focuses on office space. As the study aims to investigate if space-as-a-service could be a disruptive concept for the real estate industry and how real estate owners approach this development - operators, tenants and members of the operators are not included in the study.
Moreover, only the phenomenon of space-as-a-service have been investigated, details about contracts, agreements, economic parameters etc. are excluded.
1.2 Disposition
The study is structured as follows: First, a background about the current situation on the real estate market is given. In section 2 a literature review gives a more comprehensive background to the problem combining research findings from sharing economy, digitalization, servitization of businesses and space-as-a-service. This is followed by a presentation of the theoretical framework (section 3) chosen to guide the study and a methodology section (4).
Thereafter the results from the data collection are displayed in section 5. An analysis on how the results from this study related to earlier findings of other scholars as well how this can be related to the chosen theoretical perspective is given in section 6. In section 7 this analysis is summarized in a conclusion followed by a short discussion on limitations with the study and possible ideas for further studies.
1 This study was conducted in the spring of year 2020. When the spread of the Covid-19 virus was classified as a pandemic all over the world. Naturally, the interviewees’ responses were colored by the prevailing situation and affected the result of this study. However, we have chosen to not further analyze the effects of the Covid-19 virus since it was not part of our research questions originally.
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1.3 Current situation on the real estate market
Global commercial real estate investments reached an all-time high of US$800 billion in 2019, and the transaction volume rose by 4% from US$769 billion in 2018 (JLL, 2020a). The Swedish real estate market also had a strong year in 2019, with an investment turnover of 219 trillion SEK, also the all-time high value (Savills, 2020).
The rental office market in Stockholm and Gothenburg has shown great development with increasing rents and low vacancies in recent years. Office space is a scarce commodity in the CBD (Central Business District) areas and rents are anticipated to increase, albeit in a slower pace. A consequence of low vacancies in the CBD areas is the struggle for real estate owners to offer adequate alternatives in new leasing and relocation. The highest demand is for modern, space effective premises with a great degree of service (Svefa, 2019). New entrants such as coworking and interest for flexible office concepts are expected to carry larger market shares in coming years. This development has been the strongest in Stockholm and Gothenburg. However, from an international perspective, Sweden is far behind countries like England, USA and Belgium in this development (Svefa, 2019).
For year 2020, moderate global growth with late cycle dynamics were forecasted for the macroeconomic conditions. Potential threats were geopolitical tensions and slowdowns in case of spread of the Covid-19 virus. However, stimulations from low inflation and potential evolvement of geopolitical risks were seen as solutions to boost the economy (JLL, 2020b).
With the spread of the Covid-19 virus in the spring of 2020, the outlook has changed. Looking at the office market, with historically high rental levels, the performance of 2020 is expected to be affected by the delay of investment activity and a softer rental growth. JLL (2020b) expects office utilization rates to fall as remote working increases, making landlords with short-term leases the most vulnerable. Coworking operators are also said to be at risk. The outlook beyond year 2020, expect the widespread adoption of collaboration technologies to grow as the demand for remote working and investing are anticipated to increase with the spread of the Covid-19 virus. However, JLL (2020b) state it is unlikely to be a threat to the future office demand and that the rise of employment in relevant sectors will more than outweigh any impact on demand from home working. The rapid spread of Covid-19 across the globe has taken many by surprise, and the short-term impacts on economic growth, business activity and individual behavior are undeniable. Many countries are already feeling the effects.
The current consensus forecast is for a sharp shock to the global economy in the first half of
2020, followed by a bounce-back, the exact trajectory is unknowable (JLL, 2020c).
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2. Literature Review
The concept of space-as-a-service can be derived from several factors. In the following chapter these factors will be elucidated and how they have progressed in the real estate market into space-as-a-service. Moreover, nuances of space-as-a-service is introduced together with a declaration of observed possibilities and thresholds. The outline of the literature review is illustrated in Figure 1.
Figure 1: Outline of the literature review
2.1 Sharing economy
The term sharing economy was first introduced in 2008 and has since then grown rapidly.
Sharing economy refers to innovative peer-to-peer businesses which enables people to collaboratively make use of under-utilized goods and services through sharing-based activities on online platforms which are fee-based (Zhang et al., 2018). However, Muñoz and Cohen (2018) argue for the potential shift from original peer-to-peer interactions to more traditional platform-based non-cooperative models. This was the result from a review of Airbnb’s business model, which was initially founded to focus on optimizing under-utilized resources (empty bedrooms) among peers (i.e., a P2P platform). But over time, a growing number of listings are now offered by real-estate entrepreneurs instead of owner-occupied listings. This suggests a shift from P2P toward a B2C type platform according to Muñoz and Cohen (2018).
The sharing economy is characterized by nonownership, temporary access redistribution of material goods or less tangible assets such as money, space, or time (Kathan et al., 2016).
The phenomenon of sharing has existed since ancient times, but was usually limited to close
friends and family (Gerwe and Silva, 2020). Several concurrent developments sush as internet-
based technologies that facilitate connectivity, the global economic crises, the trend toward
reurbanization and an increased apprehension toward sustainable consumption have led to
the prominence of the sharing economy (Kathan et al., 2016). Some examples of companies
within the sharing economy are ridesharing (e.g., RelayRides, Uber, and Lyft), sharing of
accommodations (e.g., Airbnb), dining (e.g., Kitchit, EatWith) and local delivery (e.g., Instacart,
Postmates) (Zhang et al., 2018).
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Figure 2: The business model of the sharing economy (Kumar et al., 2018).
The business model of the sharing economy consists of a firm or service enabler which act as an intermediary between suppliers of a service provider and customers who demand underutilized goods and services, see Figure 2. In the case of Airbnb, the service provider would represent the host of accommodation, the customer would be the guest of the accommodation and the Airbnb platform would be the service enabler (Kumar et al., 2018).
The challenge is to effectively represent the reality and needs of a particular business and enact its intended value proposition (Muñoz and Cohen, 2018). Most empirical studies on the sharing economy have analyzed the effect of the entry of sharing-economy firms on incumbents’ performance, and the results are mixed. Some studies show that the services provided by Uber and Airbnb are replacing the traditional services offered by taxi drivers and the hotel industry (Chang, 2017; Guttentag and Smith, 2017; Xie and Kwok, 2017). In contrast, other studies have found no negative effects on incumbents (Kim et al., 2018).
Kathan et al. (2016) argue that there are two aspects to reconsider for companies when adapting their business model to the sharing economy. The first concerns the opportunity to share resources between peers. The idea of making resources a more fluid concept allows companies to refrain from traditional ownership of resources by using the resources only when required and sharing them on a temporary basis if not used. This reconsideration of a firm’s resources offers large potential to adapt according to how those assets are handled.
Services like Floow2, an online business-to-business sharing platform that allows companies
and institutions to share equipment, jobs, services, and professionals with each other—offer
new possibilities for companies to ameliorate their cost structure (Kathan et al., 2016). Matzler
et al. (2015) confirms this view and argues that given the context of the sharing economy,
companies should also consider reassessing the efficiency of their use of fixed assets. Matzler
et al. (2015) continues by instantiating Liquid Space, which is a collaborative consumption of
office space, tailoring workspaces and meeting rooms to the particular needs of renters. The
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idea is to connect corporations that have unused office space with those who are temporarily in need of it (Matzler et al., 2015).
The second aspect presented by Kathan et al. (2016) is that resources and processes in the sharing economy business models often are provided by the customers themselves. Uber is the largest taxi company in the world without owning the vehicles, and Airbnb the largest hotel chain without possessing real estate, shows great examples of this. These service enablers manage to utilize new technology by connecting the appropriate involved parties, those that own and demand resources and hence reduce the physical resources needed (Kathan et al., 2016).
2.2 Digital transformation and digital twins
The convergence of new technologies has led to an unprecedented wave of digitalization that is currently changing the entire economic structure, society and the way we live, work and consume (Legner et al., 2017). The digital transformation rampaging is evident, the most valuable companies in the world belong to the digital sector.
2Many of the digital changes are disruptive and completely changes industries; banking, media and hotel to mention a few (Matzler et al., 2018; Christensen et al., 2002). For companies to remain competitive they need to be able to ride the wave of digitalization.
Digitalization describes the processes of adopting and using technologies to create new products, services and business models (Rachinger et al., 2019). Digitalization leads to efficiency increases and cost reductions as well as it opens up for modification of relationships with customers and new forms of cooperation between companies. It creates possibilities to capture new client segments, penetrate new markets and offer new services that generate new sources of revenue (Krstić and Tešić, 2016). In turn, it also drives companies to reflect on current business models and strategically adapt them or even design completely new ones (Wirtz et al., 2010).
Some argue that data is the greatest asset of our time. Collecting big amounts of relevant data with the help of digital tools makes it possible to get a multidimensional view of users and their behaviors. Accordingly, it makes it possible to explore unused assets and find inefficiencies as well as apprehensions about assets of value, and assets that could be valuable (El Saddik, 2018).
To get a better understanding of the extensive data engendered by the smart, federated digital tools a tool called “digital twin” has been developed (Porter and Heppelmann, 2015). A digital
2Ranking: Amazon, Apple, Google. Microsoft, Visa, Facebook, Alibaba 2019. https://www.cnbc.com/2019/06/11/amazon- beats-apple-and-google-to-become-the-worlds-most-valuable-brand.html
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twin is a virtual model of a process, product or service. The twin replicates the physical world through artificial intelligence and data analytics and allows for monitoring, understanding and optimizing the functions of all physical entities. The pairing of the virtual and physical worlds offers real-time transparency and makes it possible to improve and optimize processes, products or services but also get insights of what will happen in the near future and prevent problems from occurring (Porter and Heppelmann, 2015; El Saddik, 2018).
In the real estate sector, a digital twin is not only beneficial for running and managing the building, it may also enhance the tenant experience. With real time data it is possible to get information about how tenants are using the buildings and their preferences. By using that information, it is possible to create solutions and improvements to
meet the demand of cheaper, higher quality buildings as well as offer new additional services (Johnson and Clayton, 1998). Therefore, the effects from digital twinning delivers benefits throughout the buildings´
whole lifecycle. However, every property owner now faces the issues of who should own and control the data that the buildings generate? Do they want to take that roll, or should they leave it to other actors?
The digital technology has also started a hasty evolution of the relationship between working environments and their users (Orel and Kubátová, 2019). The development has caused a rising trend of work individualization and self-employment as well as freelancing individuals, home- grown entrepreneurs and outsourced workers (Loorbach et al., 2016). Additionally, working practices are becoming more and more flexible and employers can use telework arrangements to save office space and minimize overhead costs (Pyöriä, 2003). The result from the changed working life, implies a reduced need of space.
Real estate owners have been slow to follow the development of digitalisation and the focus
has always been on the resource, rather than on the need (Green, 2014). Digitalization creates
new habits and expectations from people. This, in turn, changes the requirements for all actors
involved with people, including the real estate owners. Rigid collective solutions that do not
take the individual's wishes into account can meet a tough future. This indicates that real
estate owner needs to change their way of thinking. But how many of the conservative
property owners with limited R&D resources are willing to do this? And what does that mean
for one's own business model onwards?
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2.3 Servitization of businesses
Many corporations have gradually shifted their focus from exclusively delivering products to adding value to their core offerings through extending services. This transformation to
“servitization” is pervading most industries, driven by customer demand and the need to differentiate in order to stay competitive (Cenamor et al., 2017; Lodefalk, 2017). Corporations specialize their offerings to meet individual customer needs beyond their core business activities. Establishing and maintaining a relationship to the customers has received greater focus and is hoped to be retrieved through broader offerings (Vandermerwe and Rada, 1988).
For example, the automotive industry has entered a servitization economy. Among other things, they offer private leasing, which in practice is an offer of 'car-free car ownership'. The car is part of a comprehensive solution for the customer, they include financing, insurance, service and guidance. Volvo has also invested in petrol stations, roadside assistance and emergency systems (Vandermerwe and Rada, 1988). Other large Swedish firms like IKEA, H&M and Husqvarna have expanded their offerings from traditional purchases and established solutions where their products are shared, rented or reused.
Integrating product and service offerings has the potential to increase profits and are more environmentally and socially sustainable as utilization and competitiveness is improved (Mont et al., 2006). However, the outcome of satisfying individual customers service needs is often related to increased costs that must be compensated by higher revenues (Reim et al., 2015).
It has been observed that the returns rarely correspond to the increased costs, a phenomenon called the ‘‘service paradox’’. The challenge is to integrate services into the overall strategies of the corporation and adapt to several, dissimilar customer needs. Most managers are not prepared to operate with the complexity of servitization (Gebauer et al., 2005). They need to take advantage of the eruptive possibilities inherent in this shift and adapt their business models and operations (Kindström, 2010).
Through, adding services corporations can retrieve new business opportunities (Oliva and Kallenberg, 2003). It is possible to offer customers a higher level of value-added services by digital methods (Coreynen et al., 2016). Digitalization capability is regarded a key facilitator for advanced service offerings (Rönnberg et al., 2016). Adopting a servitization strategy often includes constructing a digitalization capability. Investing in intelligent and connected IT functionalities as well as analytic tools and recruiting new personnel allows for new value creation possibilities (Parida et al., 2015).
Digitalization opens up a range of new business opportunities for a variety of players with their
unlimited versatility through interconnected systems, products and services. This means
lowered thresholds for different actors to enter new arenas (Krstić and Tešić, 2016). For
example, Netflix and Spotify have disrupted the film and music industry. The Swedish company
Klarna challenged bank offices, Uber has changed the taxi operations and Airbnb the
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hospitality industry. These servitization innovations have paved a way for service models and engendered tensile impacts on other categories and businesses. The expansive effect of digitalization and servitization is changing the competitive dynamics. The phenomenon has broadened the competitive environment, making it more complex. New rivals emerge and impact traditional businesses; extending the boundaries of and disrupt business strategies (Vandermerwe and Rada, 1988). This has previous studies covered, but servitization, and particularly its influence on the real estate market, has received limited attention.
Today's real estate owners are facing a rapid pace of new types of issues, challenges and opportunities. Often of a character that real estate actors did not need to reflect on before.
Trends such as digitization, individualization, sharing economy and sustainability affect society as well as real estate companies. It strikes many real estate corporations that the transformations that are taking place in other industries most likely will affect the real estate industry in a more pervasive way than before. Will new players enter real estate related areas with new offers? Will the real estate industry become even more focused on services in the coming years? From what previous studies shown, we could expect that the real estate who are able to develop services based on genuine user needs will have good odds for finding new sources of revenue.
2.4 Space-as-a-service
The construction and real estate industry have historically worked with linear models but since the demand for increased sustainability in all dimensions grows, a change to circular models has become crucial. The mindset has changed and is aiming for “access rather than ownership”. This has created a sharing mentality where the view on property, real estate and management is more sustainable (Brinkoe et al., 2015). The greatest resource efficiency that can occur in the construction and real estate industry is to use existing spaces more efficiently so that less new construction is required. The growing popularity of the sharing and collaborative consumption enables for feasibility to optimize space use by allowing different types of use and users at different times of the day or different times of the week (Brinkoe et al., 2015). Van Den Dobbelsteen and De Wilde (2004) outline a short-term example where a cinema can be used as conference space during the day.
The convergence of new technologies used to analyze, plan and optimize utilization capacity creates a more flexible way of using spaces in buildings, which is a trend that continues to dominate more and more. At the same time has the digital technology had an impact on business processes and the way people work (Gibson, 2000).
As organizations evolve, so do their property resource requirements; the demand drivers for
office space are changing and it is clear to real estate owners and managers that workplace
solutions need to be developed. Both human and physical resources need to become more
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flexible, so that they correlate with the mobile business environment (Gibson, 2003). Though, flexibility is an excessive notion it is a great challenge to create strategies best suited for different properties, at different locations, with different usage, to become more flexible in terms of physical layout, financial contracts and functional opportunities (Gibson, 2000).
A property is by its nature an inflexible resource and it is widely discussed how to reach greater flexibility from a resource like that. All these factors have eventuated in several types of new office arrangements distinguished from the traditional office model (Gibson, 2003). The new arrangements can be encapsulated into the space-as-a-service business model. Space-as-a- service models are based on simple and flexible access to space as well as providing a suite of services for tenants to create added value (Kojo and Nenonen, 2017). The model that has received most attention is the concept of coworking. Coworking-spaces are driven by the digitized and sharing economy (Belk, 2014) and aims to utilize space by shared workspaces and flexible lease terms (Yang et al., 2019). The flexible lease terms are enabled through hourly payment or temporary or long-term memberships (Rus and Orel, 2015). Coworking-spaces are typically open every day, around the clock and entails everything from digital connectivity to furniture as well as administrative tasks such as insurances, cleaning, waste disposal etc.
(Bouncken and Reuschl, 2018). The tenant is served with all these tasks not related to their core business.
The choice of renting or leasing office spaces is related to the need of spaces and the need of spaces varies according to the size of the firm (Dettwiler, 2008). There is often a mismatch between the firm activities at a specific time and its spaces, a growing firm that needs to expand their space often has compressed its activities within its currently available space until a certain threshold is reached (Dettwiler and Bröchner, 2003). For smaller companies and startups coworking spaces or other flexible lease terms may be a crucial solution. While for larger companies it can be a great complement as the business temporarily grows. With that in mind, the sharing of spaces and flexible leases creates an opening for landlords to capture a market segment that otherwise would not fit under a traditional lease (Green, 2014).
The research about coworking is extensive however other nuances of space-as-a-service models are not as exhibited in the literature. Maybe that’s because the distinction between coworking spaces and other types of space-as-a-service models is, in practice, vague. What differentiates coworking offices is the intention to impel tenant collaboration and interaction (Appel-Meulenbroek et al., 2019). Though, other forms of serviced spaces, fully operational and convenient for instant occupation are increasing (Harris, 2001). The intention is to serve a specific group of customers in the best way, with their specific needs in mind. This has affected the industry's perceptions of the tenant-landlord relationship and transforming the real estate business (Kojo, and Nenonen, 2017). This also puts requirements on real estate owners to offer space on-demand solutions to meet customers mobility needs (Becker, 1999).
Yet, office landlords have been slow adaptors to this (Green, 2014). One of the reasons for this
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slow adoption is that short-term, flexible agreements often are considered to be equivalent to high risk for the landlord. Negotiations between a landlord and an occupier have traditionally been seen as adversarial, with the gain of an occupier considered to be the loss of a landlord and vice versa. However, the introduction of flexible lease terms allows for a restructuring of this relationship. Flexible lease terms do not necessarily increase risk, it rather re-allocates risk and reward between investor and occupier, enabling both parties to attain their objectives (O’Roarty, 2001). In fact, offering customers the possibility to choose different lease terms such as fixed prices, pay-per-use, or hybrid models, enhances customization and alternates responsibilities, which in turn, foster greater value creation. Great benefits are expected from these new revenues and pricing models (Rachinger et al., 2019). More entrepreneurial landlords see new business opportunities in using their existing business relationships with tenants to market a suite of services. Yet, this may generate problems in the valuation if a significant proportion of the revenue yields from additional services, because the risk profiles of income flows from services differentiates from pure property income flows.
Mcallister (2001) concludes that these need to be split into two main assets, a tangible property asset and an intangible business asset, with its own market price and worth.
In this transformation, when the real estate industry's service goes from selling “space” to
offering a concept, different real estate owners will have to take different positions and find
out what to do for themselves, and what to let external parties do. How the real estate owners
think regarding their business development in this new landscape is not yet fully covered in
the existing literature.
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3. Theories
The aim of this study is to investigate if the concept of space-as-a-service is disruptive for the real estate industry and how real estate owners approach this development. In this section the theories of Disruptive Innovation and Diffusion of Innovation will be presented as well as how these will be used to assist the analysis and answer the research questions.
3.1 Disruptive Innovation Theory
Christensen et al. (2015) outline the significance of theory and describes disruption as a process where a smaller company with fewer resources successfully challenge incumbent businesses. Specifically, it occurs when incumbents focus on improving the products and services for their most demanding customers, which generally are the most profitable. When doing this, some customer segments are exceeded, and the need of others are ignored.
Entrants are said to be disruptive by targeting the overlooked segments by gaining a foothold through delivering a more suitable functionality, most often at a lower price. This leads to entrant’s taking more market shares by delivering the products and services that incumbents’
demanding segments require, while preserving the advantages that drove their early success.
When customers are starting to adopt the offerings of the entrants in volume, disruption has occurred. Christensen et al. (2015) argues for the term disruptive innovation to be seen as an evolution of a product or service over time, rather than being referred to at a fixed point.
Disruption of Innovation Theory has been used in former studies to investigate the disruptiveness of several actors in the sharing economy like Airbnb and Uber (Zach et al., 2020;
Urbinati et al., 2018), technologies (Dhillon et al., 2001; Schiavi and Behr, 2018), as well as disruptive real estate (Yderfält and Roxenhall, 2017; Sitek, 2018; Montgomery et al., 2018).
The characteristics of a disruptive innovation are outlined by Montgomery et al. (2018) and illustrated in Figure 3. A disruptive innovation is signified by introducing a new or different product or service to the market with a different price or cost structure than previously.
Enabled or driven by technology it typically instills a different functionality of offer that is
appealing to a different market segment, thus introduces new customers to the market. The
functionality is often considered limited, compared to what incumbents on the market are
offering, and it underperforms on many issues significant to the mainstream market
(Montgomery et al., 2018).
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Figure 3: Characteristics of a disruptive innovation (Montgomery et al., 2018).
Disruptive innovations often mean creating a business model very different from the one used by incumbents (Christensen et al., 2015). Disruptive business models are finding out how new products or services create and deliver value within a firm’s value network, and how infrastructure is aligned with new value delivery. The business models offer a unique pricing which generate attractive profits with a discounted price in the low margin business arena. It establishes a new cost structure for new value capture configuration. According to Zhang et al. (2018), incumbent managers fail to rethink cost structure, which plays a compounding role in the effectiveness of changes that are made in the business model. The values and capabilities that made incumbent firms successful before may hinder them from experimenting with new business models within their traditional value delivery configuration.
Hence, incumbent firms might be slow to efficiently respond and work on organizational changes for new business models (Zhang et al., 2018).
Schiavi and Behr (2018) argues for the disruption of business models to arise at times when emerging technologies and innovations become critical through an existing business model.
This is because the commercialization of a new technology or an innovation process requires
companies to understand the cognitive role of business models, especially when the
opportunities presented by them do not fit into existing business models. Most managers
understand that significant, new, sustainable growth comes from creating new markets and
ways of competing. But few of them make such investments. Why? Because when times act
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good and core businesses are growing robustly, starting new generations of growth ventures seems unnecessary; when times are bad and mature businesses are under attack, investments to create new growth businesses cannot create enough profit quickly enough to satisfy investor pressure for a fast turnaround (Christensen et al., 2002). Hwang and Christensen (2008) highlight the fact that many companies fail to be able to unite disruptive technologies and innovations to new business models. Therefore, it is understood that disruptive business models arise to replace existing business models, either by their restructuring or by the creation of new models, aiming at a unique value proposition (Hwang and Christensen, 2008).
The criteria’s in this chapter describing disruptive innovations will be used as a framework for answering the thesis’s research question. It will be examined if the characteristics of space-as- a-service fulfills the characteristics presented in Figure 3 in order to investigate if space-as-a- service is a disruptive concept for the real estate industry.
3.2 Diffusion of Innovation Theory
The process of adopting new innovations has been studied for over 30 years, and one of the most popular adoption models is described by Rogers (2003) in his book, Diffusion of Innovations. Rogers (2003) describe adoption as a decision of full use of an innovation and rejection as a decision not to adopt an innovation. All potential adopters do not adopt to the new product at the same time. On the basis of which phase an individual is adopting the new product or service, adopters can be classified into adopter categories: innovators, early adopters, early majority, late majority and laggards. Rogers (2003) applies the normal distribution of time from market introduction to adoption, see Figure 4. Further, the traits of each adopter category will be presented.
Figure 4: Allocation of adopter groups according to Diffusion of Innovation Theory (Rogers, 2003)
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Venturesomeness is almost an obsession with innovators, which leads them into more cosmopolite social networks, out of the local circle of peer networks. They are eager to try new ideas. The innovator must also be willing to accept an occasional setback when new ideas proves to be unsuccessful.
The early adopter is considered be an "the individual to check with" before implementing a new idea. This adopter category generally acts as a local missionary for speeding the diffusion process. The role of the early adopter is to decrease uncertainty about a new idea by adopting it and thereafter conveying a subjective evaluation of the innovation to near peers in their interpersonal networks.
The early majority adopt new ideas just before the average (𝑋̅), see Figure 4. They interact frequently with their peers, but seldom hold leadership positions. The early majority's unique position between the very early and the relatively late to adopt makes them an important link in the diffusion process.
The late majority adopt new ideas just after the average (𝑋̅), see Figure 4. Adoption may be both an economic necessity and the key to increase network pressures. Innovations are approached with skepticism and cautiousness, and the late majority do not adopt until the majority have done so.
Laggards are the last to adopt an innovation. They are the most local in their outlook of all adopter categories and their point of reference is the past. Decisions are often made in terms of what has been done in previous generations and laggards primarily interact with others who also have relatively traditional values. When laggards finally adopt an innovation, another idea my have entered the market and is already used by the innovators (Rogers, 2003).
Laukkanen (2016) argues that although understanding adoption behavior is important, identifying adoption barriers arguably represent a greater opportunity for practitioners.
Diffusion of Innovation Theory have been used in studies to investigate consumer adaption to services within the sharing economy like Uber (Min et al., 2019), internet banking (Ozdemir and Trott, 2009; Laukkanen, 2016; Jiang, 2009) as well as technological innovations (Antioco and Kleijnen, 2010; Macvaugh and Schiavone, 2010).
In this study, the theory will be used to investigate where real estate owners see themselves
in the development of space-as-a-service in order to draw conclusion about what roles and
approaches real estate owners undertake in this development. Even if their perception may
not show their actual adopter group, it indicates how rapidly they will embrace and adapt to
the concept of space-as-a-service.
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4. Methodology
4.1. Methodological considerations
The aim of this study is to investigate if the concept of space-as-a-service is disruptive for the real estate industry and how real estate owners approach this development. Since the concept of space-as-a-service is relatively new there is not much theory explaining the phenomenon and data is hard to find, therefore, a qualitative research design was applied to get more in- depth information and understanding the growing phenomenon (Berggren and Silver, 2009).
Since a qualitative research method is focusing on understanding a phenomenon, rather than predicting or explaining it (Bhattacherjee, 2012), this method choice was most suitable for our research. Qualitative research can derive its conclusions from empirical experience in order to broaden perspectives on the researched question. This thesis is abductive and moves between theory and empiricism in order for the understanding to gradually emerge (Saunders et al., 2016).
In order to provide insights and cast light on the degree of ripeness of the concept space-as- a-service and real estate owners’ attitudes towards the development, structured interviews were conducted. Further, semi-structured interviews were formed from the results of the structured interviews to gain deeper knowledge about space-as-a-service, thresholds and business models.
By applying both structured and semi-structured interviews we were able to gain various insights, aspects and opinions about the subject of matters. Figure 5 below visualizes the research process.
Figure 5: Illustration of the research process
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4.2. Choice of method 4.2.1 Structured interviews
The degree of ripeness of the concept space-as-a-service on the Swedish real estate market and real estate owners’ attitudes towards the development is examined through structured interviews. The key feature of structured interviews is that it is organized around of a set of predetermined questions. The questions are mostly “yes” and “no” type of questions (Alshenqeeti, 2014). Because of current circumstances with the Covid-19 pandemic, face-to- face interviews could not be conducted. Instead, a mail questionnaire was created to be interpreted as structured interviews. The respondents got to answer the questionnaire anonymously. This was made in order to increase the reliability of the answers and to reduce biasing errors caused by characteristics of the interviewer (Seale, 2018).
4.2.2 Semi-structured interviews
The interviews were held to gain knowledge about the phenomenon of space-as-a-service, thresholds and business models on the Swedish real estate market. The interviews focused on the signs of the space-as-a-service concept being disruptive and real estate owners’ new roles in the new flexible environment. Further, the interviews also cover perceived risks in offering space-as-a-service as well as predictions of the concept’s progression.
Semi-structured interview is a category of interview methods recognized as an informal, conversational or a “soft” interview type. This technique fits research of a smaller kind and is flexible, which makes it appropriate for this study where the subject is relatively new with not much former research (Clifford et al., 2016). Some questions were set on beforehand, however the interviews also consisted of some wider questions to create discussion, as well as letting the interviewees talk freely in order to retrieve as much information as possible (Saunders et al., 2016). This also made it possible to shape the interviews as it progressed (Clifford et al., 2016). The order of the preset questions did vary depending on the flow of the conversation. The intention of a semi-structured interview is that the interviewee has a wide range of knowledge on the subject to sufficiently answer the questions.
4.3. Data selection and method approach 4.3.1 Structured interviews
A list of the largest commercial real estate owners in Sweden was collected from Datscha.
From that sample were municipalities deselected since they are non-profit operators. Some
land, industry and farm owners were also sorted out from the sample whereas their
businesses and property stock were not considered interesting for the study.
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After the cull, the sample remained of 33 real estate owners. Through their websites contact information to employees with a suitable role or title for the subject of matters was collected.
The questionnaire of the structured interviews was constructed in Google Forms and sent to the respondent sample by email. One week after the questionnaire was sent out, a reminder email was sent.
The questionnaire of the structured interviews consisted of four sections with a total of 19 questions. The questionnaire was initiated with questions about the respondent’s property holdings; its location and number of square meters. Further sections focused on digital transformation and development, utilization, and lastly on space-as-a-service and business models. The questionnaire consisted of both closed and open-ended questions. The respondents were asked to add a comment or explicate their answer on some of the closed questions. For more, detailed information about the questionnaire structure and questions, see Appendix 1.
4.3.2 Semi-structured interviews
For the semi-structured interviews, 9 experts on the subject of matters were contacted through email. The contact information was found on the company’s websites. The contacted interviewees mainly had a position of innovation or digitalization management and were informed of the scope of the interview to be able to determine if they could contribute to the study. If not, they were asked to forward the question to someone suitable for the subject.
By interviewing people with different backgrounds and professions, different perspectives of how real estate owners act and think about the about space-as-a-service and inertia factors for the revolutionary business idea were collected. Interviewees are listed below in Table 1.
Name Corporation Professions
Christoffer Börjesson Fastighetsägarna Stockholm and Service
CDO
Petter Bengtsson Zynka CEO
Jesper Swedenborg Vasakronan Rental manager
Julie Améen & Peter Werneman
Atrium Ljungberg Business Developers
Niclas Ingeström Castellum CDO
Daniel Svartling Wallenstam IT & Innovation
manager
Peter Karlsson Akademiska Hus Innovation Manager
Anders Bodolla Hufvudstaden Business Developer
Mats Hederos AMF Fastigheter CEO
Table 1: Interviewees, their role and corporation
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Each interview was prepared with some brief background information about the interviewee and the company they represent in order to get a better understanding of their knowledge and business focus. A short interview script was also prepared with some preset questions.
The interviews have been held face-to-face, but mainly online through video meetings via Microsoft Teams. The online interviews are an adaptation that has been made due to Covid- 19 restrictions.
The interview guide used as a base for each interview is presented in Appendix 2. The interviews were held in Swedish to avoid misunderstandings and to receive ample answers from the interviewees.
4.4 Method for analysis
The results of the structured interviews were summarized in Excel and analyzed by using the Pivot Table tool. Pivot Tables provide an interactive view of the data by arranging and rearranging statistics in order to explore trends. These trends were combined with the open- ended questions to get a more comprehensive understanding of the results.
All semi-structured interviews were performed digitally and transcribed, further the collected data was structured on the basis of themes that emerged jointly between the interviewees.
This thematic analysis was made with the aim of creating an overall picture of the final results of the interviews.
Based on the theories presented in Chapter 3, the results were discussed an analyzed to
answer the research questions.
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5. Empirical findings
The empirical findings consist of two parts, namely the structured interviews followed by the semi-structured interviews with experts on the subject. The structured interviews were performed to investigate the degree of ripeness of the concept space-as-a-service on the Swedish real estate market and real estate owners’ attitudes towards the development. The semi-structured interviews aimed to gain knowledge about the to the phenomenon of space- as-a-service, thresholds and business models on the Swedish real estate market
5.1 Structured interviews
The questionnaire was sent out to 33 commercial real estate owners with property holdings in Sweden. By way of introduction, the respondents answered questions about the size of property holdings and location of these. The size varied between 100 000 square meters up to approximately 4 000 000 square meters leasable surface. The respondents represent property holdings in all of Sweden, mainly concentrated in Stockholm and Gothenburg.
To get a perception of the attitudes towards flexible leases, the question if the respondents see a positive potential in using flexible leases was asked. A clear majority of the respondents answered yes, see Table 2.
Question Yes No
Do you see a positive potential in using flexible leases? 25 8
Table 2: Result of question about flexible leases
When asked if the real estate market´s new coworking companies (eg. WeWork) have led to the real estate owner´s questioning their business model, a majority of the respondents answered no, see Table 3. Out of those ten respondents who said yes, nine see a potential in using flexible leases. However, those respondents who did not question their business models because of new coworking companies, 16 of 23 respondents see potential in flexible leases.
This shows that regardless if the respondents question their business model or not, it is insignificant for their attitudes towards flexible leases.
Question Yes No
Has the real estate market´s new coworking companies caused you to question your business model?
10 23
Table 3: Result of question about coworking companies
23 of the respondents also see a risk in having flexible leases. The risks identified for
implementing flexible leases are several. Table 4 below illustrates the risks mentioned by
interviewees.
21 Identified risks
High administration, high tenant turnover and high economical risks Risks in short lease periods and how to secure earnings
Insecurity in cash flows
Higher liquidity risk with short-term leases
Risks in valuation, that banks will perceive it riskier and value the property lower Insecurities in legislations
Higher risk for vacancies in depressions and in current circumstances with an ongoing pandemic
Hard to analyze potential investments (debts) that needs to be written off during the leasing period
Table 4: Result of question about risks for implementing flexible leases
Some respondents also mention positive aspects of implementing flexible leases. Several respondents answered that extended leasing can be enabled thanks to flexibility. Respondents also see this type of leases as an opportunity to at a greater extent meet customer demand.
Another respondent comments that “it is just in our heads” and the fear to not succeed is one of the reasons why corporations choose not to offer flexible leases. Further, a respondent answered that continuance is important for their corporation since they initially invest for the tenant and often adjust the premises according to the needs and wishes of the tenant. Lastly, there was one respondent who felt insecure of what space-as-a-service and flexible leases would mean for their corporation overall.
Further, the question if the real estate owners´ have a digital strategy/plan for coming years to offer new services to their tenants was asked. A fine majority of the respondents answered yes, see Table 5. Out of those 17 who answered yes, 13 of the respondents have started a partnership with an external company to enable digital services to their tenants.
Question Yes No
Do you have a digital strategy/plan for coming years to offer new services to your tenants?
17 16
Table 5: Result of question about digital strategy/plan to offer new services for tenants.
The respondents were thereafter asked to specify what kind of services they planned to offer
their tenants. Similar services were mentioned by several respondents, the most frequently
mentioned are summarized below in Table 6.
22 Planned services for tenants
Sharing services, booking services, community services, self-services App with supplier offers
Active development of space-as-a-service for specific target groups Digital information
“My pages”
Parking spot services
Developing coworking spaces
“Plug and work”- offices Digital keys, digital access Meeting services
Catering services
IoT services (Internet of Things) Error report services
Table 6: Result of question about planned services for tenants
As seen, there is a wide span of services that are planned for the tenants. However, the concept of space-as-a-service also include optimizing the space use, whereby the question of measuring occupancy was asked. Out of all 33 respondents, there were nine corporations that measures occupancy in some way. However, it was only four that uses the data to optimize the space use, see Table 7. Adding services to tenants is more common than measuring occupancy among the respondents.
Question Yes No
If you measure occupancy in some way, do you use the data to optimize the space utilization?
4 5
Table 7: Result of question about occupancy and optimizing space use
When asking the respondents what prevents them from offering space-as-a-service, there is a range of obstacles identified. These are summarized below in Table 8.
Factors preventing to offer space-as-a-service
Too low demand in relation to total demand VAT rules and contractual forms
Current business model is successful Internal working methods, processes Premises not adapted
More or less fully rented offices Hard to get market establishment Requires more administration
Have not come so far in the digital development
Table 8: Result of question about factors preventing to offer space-as-a-service
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Several respondents expressed that when the current model works and the business is successful, there are no incentives to change it. Further, one respondent deemed they already offer a service today with well working premises.
To get a perception of how the respondents look upon the future of the real estate market and what changes to expect, the question how the respondents think the role of the real estate owner will change was asked. The quotes in Table 9, summarizes the respondents answers and represents the overall picture of the predictions of how the role of real estate owners will change.
Predictions of how the role of real estate owner will change, quotes from respondents.
Will approach the role of service provider.
Will be able to offer a much wider range of services than just premises / housing.
Property owners have the opportunity to develop the offer and value network around their properties and can create new values for customers and users and also deliver a more sustainable product (higher utilization rate).
You want to start seeing the properties as a platform where you can pick the services you want. I.e., that our properties become like an app store.
It will be much more flexible and customer oriented.
New opportunities to streamline costs and find new revenue.
From product development to "as a service".
Maybe not so much, but definitely the way we work and meet our customers.
May mean less need of space and increased desire for flexible contract forms.
Changed business models, management methods, other supplementary services.
Renting premises on-demand will increase. Tenants will demand more flexible products in the future as the digital transformation causes companies to grow and shrink at an ever- faster rate. It must become easier to adjust costs according to revenue.
Basically, it will be the same, but service level requirements will increase, and we must take responsibility for owning data, managing customer experience and developing new business.
Changes will occur but to a minor extent. The use of digital tools will increase for operation and maintenance. However, the foundation is still physical buildings and premises, which will never be an industry depending on digitalization.
Table 9: Result of question about predictions of how the role of real estate owner will change.
