Flexible offices will cover 20-30% of the market in the next 5 years - an interview with Tudor Popp, Founding Partner, Hotspot Workhub

Hotspot Workhub is a great space for great people.

Located in the heart of Bucharest and designed as a mix of dedicated flexible spaces and open space offices, Hotspot includes the premium services required by the new office lifestyle. The high level of comfort and efficiency pursued in the design and arrangement of the space, brought Hotspot BREEAM Excellent certification, the space being now one of the "green" environments for remote work.

How and when did your business start and how was it influenced by the office market at that time?
We started the project in 2019 and opened in February 2020. In 2019 the office market was effervescent and the coworking market as well. In Romania, the coworking market is still in its infancy, there is a limited offer both in terms of space and variety. 

What are the advantages and disadvantages of instant offices on the current market in Romania?
The biggest advantage is flexibility. Small and medium-sized companies cannot afford to sign long-term contracts, make large initial investments and therefore have little chance of having quality offices in class A buildings. In addition, even before the crisis, companies could not plan business and staff fluctuation for 5-7-10 years, so the flexibility of the rented space has always been essential for a healthy development. In a flexible office, companies can start immediately, without the initial investment, and can change the rented space or the number of working desks every time they need it. In addition, they sign a single contract, which includes all services - internet, utilities, cleaning, security, coffee, reception - so they can focus on their business, not on the search for suppliers.

What sets you apart from your competitors? What are the company's strongest values and services?
First of all the quality. We have invested a lot in a top arrangement, premium furniture and high-tech equipment. The companies that come to us, come for the highest standard on all levels. In addition, the way we configured the space allows us to be very flexible. Companies can choose the right space and the service options they really need. Also the combination of functions, with cafe and conference center offers our customers a unique level of service on the market.

What is the profile of customers who use Hotspot Workhub services?
In general, we are talking about experienced companies, which also appreciate the quality of our services and understand the difference to their old offices, but also to other competitors. We have companies that have teams between 4 and 40 employees.

Who are your biggest tenants? What areas do they occupy?
At the moment we have a company with 40 people, who use only 16 working desks simultaneously. In a normal office, their entire team would occupy about 400 sqm. They currently use a dedicated area of 60 sqm, on the one hand because they have organized their presence in the office on a hybrid model, on the other hand because they benefit from the common spaces of almost 600 sqm - lobby, meeting and conference rooms, toilets, kitchen, phonebooth.

What are the trends in the office market at the moment, in your opinion, both locally and internationally?
All companies are currently considering the role that offices have in the life of the company. There are all the options to the extreme - companies that no longer want offices at all and others that want to return 100% to the office when they can. This depends a lot on the company profile but also on the organizational culture.
However, a trend is clear, both locally and internationally, and refers to the reduction of conventional office space. This means, among other things, that a large number of unused spaces are now offered for sublease. There are new spaces, never used, in very good buildings but also outdated spaces in old buildings. Some are offered with furniture and look like deserted towns in the Wild West. Unfortunately, it is very difficult to align the demand for offices of companies that want to reorganize and optimize with these spaces generally devoid of life and character.

What do you think are the main changes in the tenant sector? How do their needs change?
Tenants who plan long-term rethink their offices and transform them. Offices designed only as production spaces are necessarily changed into spaces for interaction, socializing and creativity, preparing the new lifestyle in the office, a condition that today's employee defines when called to return from home. The needs of many companies will change in this direction. On the one hand, the headquarters will have to become friendlier, more generous and representative for the values and culture of the companies, and on the other hand for the routine and concentration work, the companies will offer their employees alternative solutions of satellite flexible offices, more close to home.

How do you analyze the relationship between landlord and tenant in Romania?
Most large office owners in Romania have focused their offer on large floors ("big floorplate") and have built their financing plans with long-term contracts. On the other hand, about 50% of big cities employees work in small and medium-sized companies that need something else. Now the abyss has deepened even more since even large companies will no longer want long contracts and such large spaces.

How do you rate the 2020 pandemic year for your business?
We were lucky with our loyal customers, but we managed very hard to bring in new customers. On the other hand, we had time to experiment with new ideas and to prepare valid solutions to start when the crisis ends.

What is the next HotspotWorkhub project on the local office market?
We have many development plans, on several levels. We want to develop and spread the classic quality Flex-Office product but also to come up with some totally new products. In a short time, the next project will be announced, not all the elements are finalized yet.

What are your forecasts for the Romanian office market in the medium and long term, and especially how do you think the business with serviced offices will evolve?
I think that flexible offices will grow a lot and will cover 20-30% of the market in the next 5 years. I also believe that the best buildings on the market will continue to be successful and find occupants. The question is what is the fate of old, obsolete buildings. If they will continue to approach the market with very low prices or will want to modernize. But I think they will suffer the most from the crisis.