- Circular Impact
It is high time to provide a solution to the planned obsolescence of office spaces.
In commercial real estate, the owner is most often a "financial" organization (bank, insurance, etc.), that considers real estate as an investment and generally doesn’t have internal technical teams dedicated to space development and fitting out
The owner provides the tenant with office space free from any fitting out and recovers it at the end of the lease in the same condition. The fitting out work is a substantial cost and remains the responsibility of the tenant even if it is partially financed by the owner in the form of a free rent incentive (the longer the lease term, the higher the month free deductible will be).
At the end of the lease, the tenant must reinstate the space in its original condition and bear the corresponding cost.
The office spaces therefore bear in their DNA their future destruction: at the end of the lease, the tenant to restore the premises in the same condition before he moved in, must demolish the expensive arrangements he had used and which are the more often far from being at the end of its life cycle (partitions, furniture, specific equipment, etc.). This restoration to original condition generates in addition to the removal of all partitions, the total overhaul of ceilings (false ceilings), lighting equipment, electrical installations, ventilation, heating and ventilation. All demolished or dismantled items end up in landfill.
In large cities, tenants move every 6 to 8 years on average, and during the rental period reorganized an average of 15% of the rented space each year.
We are witnessing a massive destruction of office equipment at each tenant change with the dumping of products prematurely without counting the waste and rubble resulting from organizational changes (15% average annual churn).
It is high time to provide a solution to what we can call the planned obsolescence of office spaces.
The ModulO concept developed by the Circular Impact team is based on a modular design of workspace equipment and furniture, specially designed to cope with the transformation of user changing needs. Reusing existing equipment and limiting work on technical installations, allows for faster transformations of workspace, generates a very significant reduction in the destruction of value and limits the dumping of materials and equipment.
For companies, real estate is the second source of expense behind salaries, so it is naturally an item that impacts their competitiveness. But beyond the cost of real estate, the quality of offices and associated services is an HR issue for companies to attract and retain new talents.
For long-term rentals, 9 years or more, the tenant with the financial assistance of the owner (rent deductible) has every interest in investing in office fittings.
But for short-term leases this is no longer the case because the cost of office fittings and their refurbishment becomes prohibitive when the company leaves the premises.
In recent years, tenants have requested for flexible leases and no longer wish to lease all of their office space on a firm basis for long periods. They want to be able to increase or reduce the surfaces according to their needs. This trend partly explains the success of coworking spaces. In the post-Covid 19 world, we can expect this trend to increase even more. In addition, new working methods such as flex office or teleworking are making it necessary to rethink workspace, adapt their surfaces and redefine their geographical locations, etc.
For owners, the equation is complex: Declining demand (-40% in the first half of 2020 in France), rents still high even if the fall seems inevitable in the long term, costly support measures (increase in rent deductibles despite a decrease in the term of leases). They are looking for solutions ...
In addition, the rise of "environmental " awareness in public opinion is pushing the real estate world to transform. Demolition and landfill of products far from end of life raises questions. More and more companies have adopted or are considering adopting the principles of the circular economy and are seeking to implement environmental approaches.
The trend is also towards the economy of functionality, "Pay per Use", an increase in the services associated and integrated into the rental price and greater flexibility.
The layout of office spaces must therefore be:
• attractive, high-quality, secure, compliant with health and labor rules and be able to offer all the services expected by employees to meet HR expectations
• flexible, modular, transformable to adapt to different business needs while limiting value destruction with each organizational change
• sustainable, reusable, respectful of the environment and economical in energy requirements to meet the "ecological" expectations of users and the environmental initiatives of companies.
• adapted to the competitiveness needs of companies by limiting investment costs and favouring "Pay per Use" type rental (transformation of Capex and Opex)
• adapted to short-term leases and allow owners to limit the financial risks associated with this type of lease
ModulO: a response adapted to a changing world
ModulO is a platform that allows the rental of complete office fittings thanks to:
A design made from a catalogue of equipment, products selected for their quality, their design, their ability to transform / adapt and reuse, their durability.
Carrying out work with partner companies
Equipment rental agreements put in place with manufacturers
Equipment maintenance by each manufacturer.
Management of reorganization of spaces being rented
Adapting the space to the needs of a new tenant
The originality of ModulO, beyond its technical aspects, is to address the owners and no longer the tenants (except long-term tenants) and thus guarantee the reuse of equipment over optimized periods. Our design, production, maintenance, transformation offer is adapted to these new customers. By ensuring the maintenance of equipment and the adaptation of workspaces to the needs of successive tenants, we guarantee our customers the durability and reuse of facilities while limiting the destruction of value.
In addition, the rental of facilities makes it possible to meet the economic aspect of the need (investments) by transforming Capex into Opex.
As the office fittings are taken care of by the owner, their destruction at the end of the lease no longer has any reason to exist and the large rent deductibles to finance their installation can be reduced very significantly.
With ModulO, owners minimize their financial risks and offer their tenants a "Space As A Service" offer in line with market expectations. It is also for them both an optimization and a new source of income.