Who would have thought that we Brits, a nation of folk who not so long ago scorned US-style customer service – proudly preferring service with a snarl to anything with a smile – would become such converts to the service culture?
These days, it seems we can’t get enough of it. We expect it where we work, to the extent that flexible workspace is on the brink of becoming mainstream according to new CBRE research, and we expect it where we live, as demonstrated by the way BTR is taking more and more inspiration on the services front from its no-longer-so-distant US cousin, multi-family.
The Crown Estate’s Jon Allgood went so far as to proclaim at LREF this week that “the word ‘landlord’ is ridiculous” and to call on the industry to “scrap landlords, scrap tenants, provide services instead”.
"The landlord word is ridiculous. You have a phone provider, not a phone lord. We have customers, not tenants. We need a culture change" says @JonAllgood from the Crown Estate (and it's great to hear it imho) #LREF #LREF2018— Emanuele Midolo (@ManuMidolo) June 13, 2018
And he’s right: the balance of power has shifted, so much so that it was only a matter of time before someone decided to serve up serviced space in the industrial sector. Whether Stenprop’s move to reposition itself as the UK’s first ‘serviced industrial’ provider will spark an industrial revolution of the magnitude seen in the office sector remains to be seen, however.
On the one hand, ‘serviced industrial’ makes a lot of sense. It would certainly seem to stack up for businesses focused on the multi-let market that deal mainly with SMEs.
Just as serviced office operators attracted entrepreneurs who were previously running their business from the local coffee shop, they should be able to attract the cottage industry businesses currently running their operations from their garden sheds, garages or self-storage units. As for those who were already leasing space, they might well re-sign if the operator is providing services they can’t, rather than leaving for pastures new as half currently do.
Others will follow into serviced industrial
It could also be a nice little earner for the landlord, sorry service provider. Stenprop’s Julian Carey draws parallels with the student accommodation sector, which he says makes around 20% of its revenue through services, and argues that industrial could make more money still.
But you have to think there is a reason the serviced phenomenon has not yet swept across the industrial sector in the same way it has across the office sector. One of the big questions is whether the model would work with bigger tenants. It is not quite the no-brainer it is for big office tenants. There is inherent inflexibility in industrial, what with the bespoke equipment and sheer scale of buildings required.
Gazeley clearly thinks it could work, though, which is why it is launching a new finance leasing business offering its occupiers finance for equipment and looking at using telematics and data analytics to offer customers a range of other new services. There is also growing occupier demand for flexible space of the sort Stowga was able to provide KFC during the recent chicken crisis.
Time will tell what the true scope for serviced industrial is, but others will undoubtedly follow Stenprop’s lead.
It makes you wonder how differently things might have turned out had landlords adopted more flexible models a decade ago at the start of the financial crisis.