The great ‘hotelification’ drive

24 May 2022

Originally published by Property Week.

In many city centre workplaces, these sorts of facilities aren’t unusual. But what about a coffee shop, a panoramic roof terrace or even a spa? While these perks are usually less common, they may not be for long.

Offices, it seems, are going through a ‘hotelification’ process: the transformation of standard office buildings into high-quality workspaces, with five-star management services and club-like facilities. Picture the design, aesthetic, comfort and customer service of a hotel, combined with the facilities of an office.

It is easy to assume this trend is a reaction to the pandemic: people are accustomed to working from home and employers need to lure them back with impressive offices. But, say those in the know, it has been building momentum for some time.

“Companies like Facebook, Amazon [and] Google have very quirky spaces, which are all about giving something back to the employee,” says Ryan Unsworth, development director at Opus North, a real estate developer in Leeds. “That’s filtering down to corporate space, and is in line with what hotels are doing, too: places like The Hoxton have an office feel to them. There’s a lot of crossover between business and leisure coming through.”

There is no denying, however, that the pandemic has accelerated the movement. As the world recovers from Covid, Unsworth says it is no longer enough to provide ‘just’ a workspace. It needs to be best in class, enticing and future-proof.

So, how exactly is this hotelification happening? Is every city centre office space being upgraded to mimic a five-star hotel? And what services are being offered to employees?

Centrally located, highly sought-after buildings are, of course, ripe for this type of development. Opus’s redevelopment of 12 King Street, Leeds, is a prime example.

Hotel aesthetic

When finished, it will boast a panoramic sky lounge, with cosy seating areas, as well as a roof garden and terrace. Inside, there will be a distinctive hotel aesthetic with books, plants and throws, as well as ‘luxe’ breakout lounges and inspiring spaces to encourage creative thinking, team collaboration and social interaction.

It will provide facilities for cyclists and runners, including a drying room, 72 secure cycle-parking bays and a dedicated cycle repair space, as well as 58 lockers, modern shower and changing facilities and on-site cycle hire.

Technology is also a priority. The building has achieved a ‘Platinum’ WiredScore rating, which means it has the highest scores on resilience, future readiness, mobile reach and choice of providers.

This type of office may seem worlds away from what is currently on offer, but it will become increasingly the norm, says Unsworth. “We’re already starting to see other businesses setting out on the same journey we have,” he says. “Occupiers are seeing that for them to be able to retain the best staff, they need to be in the best space. It’s a flight to quality.”

It is not just city centre buildings that are being hotelified. James Friedenthal, head of flex and asset transformation at property management company MAPP, says the trend is spreading to business parks, too. “You might have 20 or 30 separate buildings, each with different businesses in, and you can work in partnership with the owner and start to bring all those employees together,” he says.

‘Central hub’

“If you put a guest experience manager in place, you can give a consistent level of experience across the entirety of the estate, regardless whether you’re in building A or building B,” he adds.

“You can then have a think about what services you want to bring into play: part of that can be around the coffee shop and meeting rooms, and all of a sudden you’re creating a central hub for an exchange of ideas and interaction. There may be events you want to put on over the summer, or at Christmas.”

Aside from how a building looks, and the services it offers, other elements of the hotel experience are influencing the office industry, says Friedenthal. Increasingly, businesses want to control their length of stay and aren’t keen on long leases.

“Fundamentally, companies don’t want to be committing to a long-term lease on their balance sheet,” he says. “Traditionally, the short-term space used to be really predominantly the focus of SMEs [small and medium-sized enterprises], but great change is happening here. Now, we are seeing lots of global occupiers that are looking to get into flex space.”

All of these extra facilities clearly come at a cost, but how much precisely? Unsworth will not reveal exactly how much the King Street development has cost, but he says it comes in around 7% to 9% more than a standard office finish. “The funds we’re spending ensure the best occupiers and the best investment returns at the end, which is ultimately the goal,” he says. “We wanted to deliver an asset the city can be proud of.”

Although investment is needed when starting from scratch, Friedenthal says providing these sorts of services is not unduly expensive.

“You can be very sophisticated when starting with a blank sheet from a redevelopment perspective, but there’s also clever ways you can engage with the existing space in a building to give some competitive advantage to the building itself.”

Things like a prayer room, a welfare room and a kitchenette that offers refreshments and fruit daily, for example, can add value, without costing a lot, he explains.

It seems if landlords want to make their buildings attractive to businesses, they have little choice but to get on board with hotelification. If they don’t, their lettings may well suffer.

“We are seeing a very two-tiered market in London,” says Amy Soar, managing director of property management firm Helix. “Spaces offering these additional amenities are in much higher demand than those that don’t. I expect to see all buildings moving towards this level of service in the future; otherwise they will risk becoming vacant. The difference in void periods, rents achieved and rent-free periods is significant.”

There are those who want to push the hotelification trend even further.

Matthias Hollwich, an award-winning architect at HWKN Architecture, is designing a ‘work resort’ in a central London location. When finished, it will be like no workplace seen before, he says.

The concept, he explains, has been created because unlike previous generations of workers, for whom work was about purpose and professional worth, today’s workforce is all about experience.

“Employers have to offer employees experiences,” says Hollwich. “When employees do come into the office, there needs to be a really good reason. That means that you need to design a building that is different: it needs to become exotic; it needs to be an aspirational place,” he says.

“What do we want from life? We want to have a great time every day, and therefore our work needs to be exciting.”

Dream facilities

A work resort offers facilities many employees could only dream of: a spa with a sauna and steam room, a gym, a coffee shop, a restaurant, work ‘villas’ in which four people can meet, and work ‘cabins’ for one-to-one discussions.

Hollwich even envisions families coming too: your spouse could work in the coffee shop area while you have a meeting; your child could attend the on-site nursery. It could be open Monday through to Saturday, so you can be more flexible about when you work, and it may even have bedrooms on site for those who have long commutes.

Hollwich’s vision is so forward-thinking that it may seem fanciful, but he is convinced that it is the future. “At first, people may be critical; they may think it’s a gimmick. But this is happening, and when it works, you’ll see that people love to work in these spaces and, as a consequence, stay longer at firms,” he says.

Work resorts may be the ultimate in hotelification, but they are unlikely to be for everyone. Friedenthal says that while there is no doubt the office industry is going through a transformation, there will be a range of spaces available, developed to different standards, just as there is a range of hotels offering different levels of service.

“There’s a type of hotel for every need: whether it’s a low-cost or high-end hotel.

The commonality is they will know how to treat their customers extremely well, and their customers want to come back. That’s the principle that will be realised in the office market.”

Five ways to ‘hotelify’

Networking. Hotels are a great place for people to network, and offices should be too. Employees need a common space to connect and share expertise with others in the building.

Technology. Reliable, high-speed internet is an absolute necessity. “If your internet goes down for a two-hour period, no one can work,” says Ryan Unsworth, development director at Opus North. “Buildings should have three different types of internet access: there can’t be any technical glitches.”

Touch-free. Employees should be able to arrive at the office and make it to their desk without physically touching anything. This can be achieved by introducing the equivalent of a hotel keycard, which gives access to all spaces in the building, including lifts, lobby areas and desks.

Office hours. Buildings need to become more flexible about the hours they are open. Hotels are accessible 24/7; offices need to at least be available six days a week to allow employees to choose when and where they work, says Matthias Hollwich, an architect at HWKN Architecture.

Cycle friendly. Buildings need to go beyond having secure bike storage and offer enhanced facilities for cyclists. As well as showers and changing rooms, there should be equipment available to pump up tyres, check brakes and even book in bike services.

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