‘Core to Floor’: The Latest Strategy Helping Landlords Keep Their Buildings Fuller For Longer

Traditional long-term leases and hands-off landlords don’t meet modern occupiers’ needs. These assets are struggling. Meanwhile, fully flexible models are costly and complex for landlords.

A middle-ground solution is needed…

Enter TSP’s ‘Core to Floor’ strategy: merging the role of the managing agent and flex space operator.

The model integrates co-working elements with traditional leases. It allows landlords to enhance net rents and reduce voids by offering more services directly, rather than through operators. It incorporates lessons from flexible models – community building, hotel-level services, and premium amenities – without the high costs.

Tenants enjoy lower upfront costs but pay a premium rent. Landlords gain higher rents and longer lease terms – typically three years. Upgrading management to meet tenant expectations is crucial for capturing these prime office returns.

TSP have designed their flex platform to allow landlords to capitalise on these opportunities, without taking unbalanced risk.

Risks associated with the fully flexible model include:

• Landlords are signing expensive management agreements, which increase operating costs and complexity in advance of revenue generation
• Co-working and flex brands are proliferating rapidly: it’s a case of picking the winners and losers in a congested market
• Complex retainer and profit share agreements make it difficult to value real estate and are reliant on operating and business data
• Landlords risk funding fitouts that do not have longevity at their core – often too personalised to the operator’s brand.

Meanwhile, opportunities can be found…

• By accessing the flex market, landlords can turbo charge net rents, whilst reducing voids and incentives
• Operated well, this new market significantly smooths and improves net cashflow
• Assets that can attract tenants from both the traditional and flex markets, with interchangeable management will benefit from greater capital appreciation

Unlock traditional & flex markets

Our platform allows landlords to offer flex and managed space alongside traditional leasing – without increasing their existing op ex, and without creating a complex and layered service approach. Landlords don’t have to choose between offering traditional and flex space.

Instead, they unlock both markets.

Benefits include:

• No need to ‘layer in’ multiple service providers
• Landlords can address much of the market with one provider who can ratchet up service provision in response to the tenant requirement
• Access to both traditional leasing agent and flex brokerage market
• Lower financial risk for landlord
• Triple net cashflow in line with traditional structure
• No complex P & L relationship with provider
• The cost of any ‘upsold’ service provision is directly met by the tenant through an enhanced rent, without the landlord cash flowing a higher operating cost.

The cherry on top?

Landlords benefit from a simpler management structure – it’s all structured within a traditional management agreement.

CASE STUDY: Great Suffolk Yard: A new development designed to cater for flex & traditional

Great Suffolk Yard is one of Borough’s newest offices. It has market-leading sustainability credentials, an on-site café and outdoor terraces – but at a 10+ minute walk from London Bridge, the landlord knew they needed a compelling offer to attract tenants.

Enter TSP. We have managed the scheme since PC in Q4 2022. Since then:

• The building has gone from 0% to 85% occupied
• Major corporates have taken space: Pizza Hut, Huel, Lumanity, and Koto Studios
• We hired a new Front of House team
• We set up a Yearly Asset Plan and service charge from scratch

Our flex product outcompeted nearby buildings (including serviced offices) helping the landlord to reduce vacancy quickly.

Thinking about your own property strategy?

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