The valuation of Co-Working Spaces An integrated academic and practical view

Abstract

Background: In times of digitization and globalization, the use of flexible workplaces is becoming more and more established on the international and German real estate market. Although this form of collaborative work between different companies and individuals started in the 1990s, it has only recently emerged as a fast developing hype within the real estate industry. Neither provider, nor Investors have long-term experience in running and holding Flexible Workplaces. Accordingly, the real estate valuation as well is facing challenges to determine a suitable market value for a property with this type of use. The flexible and time-limited rental of desks or offices as well as the cooperation with third parties through the provision of service offer no historical series of numbers for economical margins and utilization. Accordingly, there is currently very limited market information available for a meaningful valuation. Moreover many valuers in the market still lack of sufficient experiences of how to approach this new phenomena which starts to be a significant factor within the office market. Area of research and questions to be addressed: When it comes the valuation of Co-Working Spaces, the following questions are currently among the key issues raised by real estate academics and practitioners alike and should be addressed in the meeting: What kind of co working space models are applied in the market. Are there clear definition and area-ratios of flexible workplaces? How are they structured and what kind of challenges does this pose to the valuation? Positive and negative location and property qualities? How are they different to existing operated properties eg Hotels What are the key performance indicators such as construction costs, utilization, lease agreements, rent. How can this be reflected in the valuation. What valuation models are to be applied? Multipliers and yields at flexible-office-buildings? Requirements on flexible-office-buildings from investor’s and bank’s point of view? Will fexible-office-buildings develop to an own asset class? Prof. Dr. Florian Hackelberg MRICS, Professor for Real Estate Valuation at the HAWK University of Applied Sciences and Arts in Germany, will introduce the outlined topic from an academic perspective, while M.Sc. Dipl.-Ing. (FH) Matthias Kirsten MRICS, valuation expert of Value AG the valuation group will share his view on the latest trends and developments in the market.