Spaas (space as a service) is changing commercial real estate and retail

How does SpaaS work?

Spaces-as-a-Service is a new, emerging business model that has recently gained traction in the real estate industry. It’s commonly used in the technology sector by companies like WeWork, which provide coworking spaces for start-ups, entrepreneurs and other small businesses. As the name suggests, SPaaS is based on a simple premise: landlords rent out space to their tenants while also providing them with a suite of services that enable their tenants to easily utilize the space. That entails everything from digital connectivity to furniture, fixtures and even the staffing required to operate their businesses.

A technology-based paradigm shift

SPaaS is constantly evolving and can be implemented in various ways, but it’s always based on a simple concept: leveraging technology to improve space utilization and efficiency in the workplace. Technology is fundamentally changing the way businesses operate, how people work and live, and where they do so. The exponential growth of high-speed connectivity, the widespread use of handheld devices, and access to cloud computing have all enabled this transformation.
Together, these technologies are re-shaping the way in which we as a society and workforce use and occupy space.

Retailers are starting to adapt to space-as-a-service

Just as retail giants like Amazon, eBay and Alibaba have disrupted supply chain and logistics, we are now in the midst of a retail revolution led by startups and tech giants alike. The rise of e-commerce has created opportunities for retailers to leverage on technology to create more flexible, efficient and scalable solutions to address the growing needs of a more demanding consumer market. Space-as-a-service is a new concept which addresses these challenges by shifting the focus from owning the physical space to providing flexible and adaptable solutions to retailers.

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In essence, SPaaS allows retailers to gain access to dedicated store space on a short-term basis, either through rental or lease agreements, effectively giving them the flexibility they need to scale up their operations according to seasonal demand or even better, based on real time inventory demand data. A retailer can therefore expand its operation in multiple locations at will without having to deal with the burden of building, maintaining or paying for expensive long-term leases. This not only provides flexibility but also translates into cost savings for the retailer which can instead focus on developing and selling its product.

How commercial real estate will change due to SpaaS

The value and success of commercial real estate will grow in proportion to the quality of “user experiences” that are built around physical assets. Landlords will need to harness data analytics and other “big data” tools in order to better understand how their customers interact with the physical asset or building.
In this way, they will be able to tailor specific amenities and offerings for specific tenants in order to maximize the use of a space and its revenue streams. For example, an office tenant may want more collaboration areas for employees, versus a retail tenant might want more storage options for customers.
With SPaaS, landlords become service providers who use their existing assets and location as a platform to provide value beyond what’s currently being offered by traditional commercial real estate offerings.

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