December 4, 2020

Techspace wants to grow in Europe

The British Flex office provider Techspace recently opened its second location in Berlin. After a small pandemic interlude, the company is looking to the future with renewed strength.

Techspace News
Techspace wants to grow in Europe

English Translation of Interview with Handelsblatt Inside Real Estate: 04 Dec 2020 - BERLIN by author Lars Frensch.

  • The opening of the new Eiswerk location was postponed due to the coronavirus.
  • Berlin is still in the growth phase when it comes to Flex Offices.
  • New locations are being planned.

Techspace Eiswerk is the second location in Berlin and with around 4600 square meters and is the largest that the British Flex provider Techspace has opened to date. The 19th Century building, which was developed and restored by Trockland and brokered by Avison Young, is said to offer space for around 700 members.

The opening was in November - a little late, as Jonathan Bevan, CEO of Techspace, admits in an interview with Handelsblatt Inside Real Estate: "We agreed with Trockland to postpone the opening by a few months because the pandemic affected the development schedule and the supply chain of the project." The decision was the right one for both parties involved, he says.

Despite the circumstances, Techspace has signed a lease for the property for a period of 15 years. Bevan is optimistic: "Before the crisis, Berlin had a shortage of high-quality office space. We expect the Corona crisis to strengthen the trends that were already happening towards higher demand for flexible office space."

Before the crisis, Bevan said the occupancy rates of the group were almost 100%; now it is at the lowest level of the year. As with most Flex Office providers, the locations remained open and COVID-safe. The company has also made use of the Kurzarbeit scheme, and similar ones in the UK, which have provided the right level of flexibility and cost savings.

While some competitors tend to focus on single users or very large companies as tenants, Techspace specialises in "scaling technology businesses" i.e. small tech companies that have left the early start-up phase behind them (partnering with teams of 6 and above). The average size member company is between 25 and 50 people.

"Of course, these principles are sometimes uncomfortable," says Bevan, who thinks it is more important to act in the interests of long-term values than short-term upside. In the past few months, virtual reality and gaming companies have been added as members.

Nevertheless, the members should mix a little and also exchange ideas with one another. As a guide, an average company at Techspace consists of around 25 to 50 people, new teams have recently consisted of more than ten people. Bevan cites Lendico as an example. The FinTech was initially a member in the first of Techspace's Berlin locations in Kreuzberg. Since then it has tripled in size and now rents several large areas in the new Eiswerk location and accommodates 150 employees.

When it comes to Flex offices, Berlin is still in the growth phase, says Bevan. A number of providers have entered the office space market there in recent years - a development that can also be observed in other major European cities. "We owe at least part of our credit to WeWork for educating the market about Flex offices for the past five years," he says.

Bevan is quite optimistic about Techspace's future. The company has big plans for London and Berlin, but other European cities are also on the agenda. So far, only space has been rented, but he is open to new opportunities. "It's a cliché, but 'location, location, location' is everything, and if the location is right, we will work with the landlords in a variety of ways. I am sure that one day we will consider owning the real estate too."

The Techspace boss can also imagine growth through takeovers, but he wants to focus on organic growth for the next two to three years. In any case, Techspace expects sales of 15 million Euros for 2021/22, which will reflect a full trading year of our new location at Eiswerk.

View the source version on Handelsblatt Inside Real Estate here - https://www.handelsblatt.com/inside/real_estate/flex-offices-techspace-will-in-europa-wachsen/26686582.html?ticket=ST-22332457-utl6YSoM6LMCeaYbVJ4a-ap5

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