In the world of commercial property, few sectors have seen as rapid a shift as flexible workspaces. From co-working hubs to managed offices, these spaces offer an agility and adaptability that traditional leases simply cannot. Yet, despite our sector’s pace of innovation, we have a massive problem that is stifling our growth and maturity.
The frustration is palpable, especially when it comes to valuation. For years, it’s been a common refrain in our industry: "Valuers just don't get it." We hear countless stories of valuers and financiers struggling to attribute a sensible market value to the flexible income streams generated by landlord/operator partnerships that are outside of the traditional lease mould, such as management agreements. They’ll often value a flexible space at zero, or only consider the reversionary value once a management agreement expires, even if the operator is well-established.
It's easy to point fingers, but perhaps it's time to turn the mirror on ourselves. Because the truth is, the valuation challenge isn't a failure of valuation methodology; it’s a failure of available, verifiable data.
The data desert: Our industry’s biggest self-inflicted wound
Flexible workspace operators, quite understandably, view their performance data as proprietary. Pricing strategies, occupancy rates, average revenue per desk, membership churn—these are all closely guarded secrets, crucial for competitive advantage. The result is a data desert. Valuers attempting to assess a flexible workspace under a partnership agreement are flying blind. They lack the foundational, independent data points necessary to conduct a credible valuation.
The consequences are severe. When faced with uncertainty, valuers and financiers will always default to conservatism. They sideline the value of the flexible operation entirely, treating our unique, revenue-sharing models as high-risk, unquantifiable anomalies. Furthermore, our industry lacks any universally recognised quality standards or rating systems. Is a "premium" co-working space truly premium compared to another? What defines a "boutique" serviced office? Without a consistent framework, comparing different operators is a futile exercise. This absence of qualitative benchmarks further erodes a valuer's ability to confidently assess any limited comparable data that might exist.
The flexible workspace industry, by collectively guarding its data so tightly, is inadvertently creating a massive self-inflicted wound.
Your data, your future
The journey to an investment-grade future for our industry doesn’t begin with a collective effort. It starts with a simple, personal question for every operator: “Do you have easy, exportable access to your own data?”
You cannot share what you do not have. Many operators, particularly those with fragmented systems or legacy software, struggle just to compile a simple report on their own occupancy or revenue per square metre. They are held hostage by their own processes. For them, the idea of contributing to a shared data cooperative is a non-starter because they lack the foundational data control to begin with.
Your data is the most critical asset your business holds. It's the only way to genuinely understand your own performance, make informed decisions, and prove your worth to potential investors. The ability to easily access, analyse, and control your own performance metrics isn't a nice-to-have, it's a prerequisite for growth. Only once you have a firm handle on your own data can you even consider the next, more significant steps toward industry-wide transparency.
Tired of being undervalued? It's not you, it's your data. Take control of the conversation.
The gold standard: Lessons from the hotel sector
To understand what’s possible when a sector gets this right, we only need to look at the hotel industry. Hotels operate on management agreements, revenue shares, and fluctuating occupancy rates (literally fluctuating day by day), yet financiers and valuers comfortably assess their market value.
Why? Because the hotel industry has built a robust ecosystem of transparent, third party verified data. Organisations like STR tirelessly collect, verify, and disseminate critical performance data across markets globally. A valuer can easily access reliable benchmarks for a 5-star hotel and confidently apply an appropriate valuation methodology. The industry also benefits from widely recognised and trusted quality rating systems - the familiar 'star' ratings - which allow valuers to accurately segment the market and ensure they are comparing apples with apples. This is the path our industry must follow.
The path to maturity
The flexible workspace sector has already proven its essential role in the modern economy. We have created a model, innovated, and responded to customer demand at a rapid pace, but now we need to focus on building the foundational infrastructure that underpins mature, investment-grade asset classes.
This requires a collective commitment from every operator:
- Take control of your data: First, ensure your own business has systems that provide easy access to and control of its performance data. If you can’t generate a report on occupancy, revenue per seat/desk, or your operational costs, you'll never be taken seriously by the wider investment community.
- Establish a data cooperative: The industry must establish an independent entity responsible for collecting, anonymising, verifying, and disseminating key performance indicators across different flexible workspace segments and geographies. This data would be invaluable not just for valuers, but for operators themselves to benchmark their own performance.
- Develop quality benchmarks: While a rigid "star" system might not be perfectly suited to our sector, developing a set of transparent quality criteria and service standards would provide valuers with a more nuanced understanding of different flexible workspace products.
This is the only way to unlock our industry’s full potential as an investable asset class, and therefore the only way the sector will meaningfully grow and flourish. We know that the market for operational real estate is thriving, with an emphasis on creating experiences through hospitality-led services and activated amenities. We know that we don’t ‘just provide desks’ - we’re creating experiential HQ Venues that are designed to foster human connection and collaboration, and to compete with the comfort of a home office. But to succeed in this new era, we must prove our value in a way that the financial world can understand.
Stop blaming the valuers. The solution lies within the industry itself—and it starts with your data.
