Why Collaboration Matters in Commercial Real Estate

One of the notable changes in consumer behavior these days is they are willing to pay not only for the products but for the experience and this trend has been seen in commercial real estate as well.

When the world largest furniture retail company Ikea opened the 52,199㎡ mega store in Gwangmyeong, Korea in 2014, not everyone who had spent more than an hour in the 2000 car capacity parking lot just to find a parking spot was there for shopping. For them, Ikea was more likely a theme park with the attractions of nicely decorated rooms and in-store restaurants to hang around while they can browse for possible shopping.

Also, the Starfield Library in COEX Mall in Gangnam shows how a library could boost the sales of a shopping complex. Once this 2,800㎡ library with three giant bookshelves packed with approximately 50,000 books was open to the public free of charge in 2016, the sales of the shops around the library increased by 30% in 6 months.

Starfield Library in COEX, Seoul, South Korea

While conventional shopping was to buy a product that values what the consumers pay for, now they pay to have a good time, in another word “experience”. This changes the way of promoting products of sellers. The products start to be collaborated with something else to enable the consumers to have a good time during the process of purchase. While having a cup of coffee, you can now enjoy the scent of flowers or beautiful pieces of furniture that are selling at the same coffee shop. When you book a hotel room, you expect more than just a clean room with a firm bed in a convenient location. Now hotels offer a room filled with a karaoke machine, Wii, and DVDs to attract the guests who want to have a good time during their stay.

Collaboration between furniture store and coffee shop

Office leasing market is no exception. Newly built class A office buildings try to differentiate them by offering the amenities like a lounge area, conference room and cafeteria for the tenants. If the landlords are not capable or not willing to offer these factors, leasing the space to the office sharing service providers like WeWork, Regus could be an option for them rather than fighting against the unprecedented vacancy rate these days.

There are several reasons co-working space is becoming the next big thing in commercial real estate, more specifically in office leasing. Along with the fourth industrial revolution, businesses don’t need as much office space as before and the demand of collaborative meeting area is rising instead.

Communal Co-working Area of WeWork (Sorce:www.wework.com)

Office sharing service providers can serve the demand by offering smaller but nicely decorated and furnished offices that come along with all the necessary administrative services and the networking events for the possible business collaborations among the tenants.

Whether it is collaboration between businesses or collaboration of space and good time, the quote by Henry Ford, “Coming together is a beginning, staying together is progress, and working together is success” works in selling real estates too.

By LeAnn Yang