Real Estate Trends That Will Impact Your Startup’s Headquarters

by Knotel: Sep 05, 2018

As startup founders and CEOs, we like to think that product-market fit is our only concern. But there are other factors that will impact the success of our businesses. Take real estate, for example.

 

Whether you only need 1,000 square feet for a small team or your headquarters needs an entire floor with conference rooms and a kitchen, your employees, your finances, and your company culture are affected by changes in commercial real estate and office leasing.

 

Here are four real estate industry trends you need to know.

 

1. New leasing tax laws may impact your bottom line

On January 1, 2019, a new tax law called IFRS 16 will come into effect that will significantly impact how companies recognize leases on their balance sheets. According to global accounting firm PwC:

 

“The new standard will affect virtually all commonly used financial ratios and performance metrics such as gearing, current ratio, asset turnover, interest cover, EBITDA, EBIT, operating profit, net income, EPS, ROCE, ROE and operating cash flows. These changes may affect loan covenants, credit ratings and borrowing costs, and could result in other behavioral changes…. Balance sheets will grow, gearing ratios will increase, and capital ratios will decrease.”

 

If you’re not yet prepared for the change, take a look at the educational materials and implementation advice offered by International Financial Reporting Standards, the organization responsible for issue the new guidelines.

 

2. Landlords are wiring buildings for better connectivity

When most of the most of the commercial office stock we work in was built, lighting-fast internet was not on anyone’s mind. Now, of course, it’s critical to pretty much every business. Retrofitting older buildings can be expensive and difficult, but landlords have realized it is a non-starter for attracting and keeping tenants.

 

Thanks to certification providers, like WiredScore, building owners are able to measure their properties and know where to make improvements. Increasingly, brokers are providing those ratings to tenants in the market, giving landlords even more incentive to upgrade their systems. Since research conducted by CoStar, a commercial real estate data firm, indicates that properties with Wired Certifications achieve higher rents than similar buildings, the trend to better connectivity is guaranteed to continue.

 

3. Blockchain is gaining traction in real estate transactions

Blockchain, the digitized, decentralized system for publicly tracking and verifying transactions, was bound to find its way to commercial real estate. The industry is notoriously opaque, and Blockchain will provide more visibility—and security—into buying and leasing properties.

 

With Knotel’s acquisition of 42Floors, a platform that provides insight into active leasing data, the company is laying the groundwork to quickly access accurate real estate information via Baya, our new blockchain network currently being developed.

 

4. Building owners are integrating ‘transformational’ amenities

Office landlords used to compete for tenants primarily on location and a cost per square foot basis. As a younger workforce puts pressure on their employers to provide more holistic perks, building owners are positioning their properties to also support better overall wellbeing.

 

From gourmet food halls to curated community spaces, high-end fitness facilities, and rooftop decks, landlords are integrating amenities never-before imagined in traditional office buildings. The Urban Land Institute, a nonprofit organization focused on real estate development, even calls these amenities ‘transformational‘ that “now include finishes that rival those seen in hotel lobbies.”