Pods May Factor into the Future of the Office

Savvy landlords would be smart to look to Singapore and Shanghai—both markets known for domestic space constraints—as they consider strategies to woo workers back to the office post-COVID.

A new research report from Cushman & Wakefield notes that the cities stand out for their innovation in creation of office pods, easily accessible rentable spaces based on a pay-as-you-go or subscription model. Pods have sprung up in both urban and suburban areas, allowing working professionals the flexibility to choose where they work—whether close to home, clients, or colleagues. And while this trend has been focused in Asia thus far, it could well find a niche in the US market, adding yet another choice for office-using companies. 

 Singapore-based Switch calls its pods the “world’s first workplace on-demand platform,” and currently boasts more than 30 locations in properties including retail malls, hotels, offices and co-working spaces. Similarly, Shanghai property development firm Shui On has incorporated an office pod concept within their managed spaces, and the Cushman report notes that the company’s pods are being used for an average of 4.3 hours per day, which includes weekends. And as COVID-19 continues to upend nearly every notion of working in the modern age, “the idea of an on-demand conveniently located office pod seems like a compelling opportunity,” the report notes. “It offers optimal conditions for productivity, as well as the mental and physical health benefits of getting out of the home environment when working remotely. Users can also benefit from simple reservation and pod access through a mobile application, ensuring a frictionless experience.” 

On the employer side, companies may consider pod memberships or subscriptions as part of their recruitment and retention strategies: “by using office pods as an employee benefit, employers can offer an alternative space for those employees who aren’t productive at home or don’t want to commute to a central office, further expanding the talent pool beyond the immediate metro area,” the report reads.

Cost is a consideration investors and landlords should take into account, the report goes on, noting that in China, the cost to build a pod is roughly $309-464 per sqm in US dollars, and they can be rented for around $154-232 per sqm/month. But those returns are heavily dependent upon asset type and location, so investors and landlords must understand foot traffic and local demographics to get a complete picture of the potential market.

The concept is particularly interesting for the hotel asset class: installing pods in lieu of business centers, for example, could be a valuable benefit to loyalty-program tiered members an additional priced amenity for guests—and  “installing these office pods provides the bonus of helping the hotel improve the health and wellness of its business solutions users, a factor that will surely be front of mind as we emerge from the pandemic,” the report notes.  Pods could also fit into high-traffic transit areas like train stations and airports to mimic an office environment for business travelers on the go. 

Cushman analysts say the return on investment for pod concepts is “seemingly sound for investors and landlords,” portending a potentially rapid expansion of the concept to meet local demand.

“Investors and landlords across the commercial real estate spectrum have had an out-of-the-ordinary last 12 months, with the COVID-19 pandemic causing unprecedented disruption, as well as accelerating existing trends for markets such as brick-and-mortar retail,” the report concludes. “The opportunity to introduce a solution that could both occupy and monetize vacant space, as well as drive significant footfall from affluent clientele, is worth close attention.”