Why buy when you can rent – and why rent when you can subscribe? Only a couple of decades ago if you wanted something, you’d just buy it – and amortize out the cost of purchase over time. In some instances this model still makes sense, but the convenience of subscription models is increasingly common in today’s marketplace, and has moved from being an “online thing” to an intrinsic part of the modern consumer experience.
Without a doubt, the consumer subscription model is one of the biggest trends in 21st century business. At first, you only subscribed to online websites, then it became desktop software, and over time it’s crawled back up the pipe to include subscriptions for specialty foods, groceries, clothing, hobby supplies – and much, much more.
You get your rides from Uber, your airplane tickets and travel arrangements from Expedia and a monthly box of Japanese treats from a subscription box. According to McKinsey & Company, 15 percent of online shoppers have signed up for one or more product subscription services and 46 percent of online users are media subscribers. On average each of these consumers has 2 online subscriptions, but a surprising 35% of them have three or more.
We are experiencing a shift that will not only change how we shop for clothes, food and even media, but will also change how we live from day to day and eventually how we use commercial real estate space.
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People have transitioned from the desire to own assets for the convenience of attaining those assets on demand. For example, gone are the days of owning shelf after shelf of DVDs, instead, stream on-demand platforms like Netflix or Hulu are becoming more popular, services that can be accessed anytime, anywhere, without the need to own the content. The same is becoming true for commercial real estate. Corporate and individual users alike are replacing leases with flexible licensing agreements for office, industrial and retail real estate.
The NAIOP (Commercial Real Estate Development Association) states that up to 30 percent of corporate real estate portfolios will include flexible space by 2022, and 40 percent by 2030. Furthermore, the number of freelance jobs has been increasing at an astounding pace, which is contributing to the popularity of the flexible space.
In a report issued by Edelman Intelligence, the number of U.S. freelancers has increased by 8.1 percent, from 53 million in 2014 to 57.3 million in 2017. Additionally, the Freelancing in America Survey concludes that 50.9 percent of the U.S. population will be freelancing by the year 2027.
Technology, the way we work and interact, and the services we need to complete our jobs have changed exponentially.
The exponential surge in demand for a flexible working space is due to the fact that users are looking for flexibility and the convenience to find space on demand but that’s not the only reason that the space-as-a-service model is becoming more appealing. Not only are short-term spaces made available to small and large business owners, but customized services are available as well.
Traditional workplaces are evolving, and smart business owners and employees are searching for more than just a space or a job. People are looking for technology, workplace well-being, and hospitality all wrapped up in a well-designed space, and companies that are more open to non-traditional set-ups. The right combination of the above factors will also command a premium from the landlord’s perspective. Those landlords that do not recognize the shift in the user demand will dwindle and lose revenue rapidly. Furthermore, businesses that are not open to making changes that accommodate the global employee may not survive for very long.
Pretty soon, the need to own or rent brick and mortar spaces for offices will decrease and virtual work-spaces will make even more sense than before. Global is the new local — this shift in perspective is great for businesses because it gives everyone more options and promises new possibilities.
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