Thanks To Richard Watts from VXFibre for this Article! 

The space-as-a-service phenomenon is transforming the way that real estate is used. Whether it be co-working or co-living, developers and landlords are shifting from being mere rent collectors to service providers. The popularity of co-working spaces, led by companies such as WeWork is changing the way that developers design rented space. The focus is now on providing the occupier with the exact services they need to make the most out of the space.

And these occupiers are exacting. The rise of the gig economy and new internet-enabled business models has not only shifted the levels of connectivity needed by these occupying companies, but also their levels of expectation around connectivity. Even the smallest start-ups expect high-bandwidth connectivity, making high-speed or “Gigabit speed” connectivity essential for co-working or co-living spaces. This in turn puts developers under pressure to offer the fastest broadband speeds possible to make properties rented on-demand more marketable.

Connectivity has become is an increasingly important differentiator to avoid rental void periods. Prospective tenants or occupiers now choose real estate based on broadband speeds. Whether this be for Ultra-HD TV and video streaming or for cloud computing and the IoT, customers require full fibre connectivity to feed their growing appetite for these internet services.

The space-as-a-service trend highlights the shift in the industry from simply providing physical space, to the provision of an array of digital services. The concept can provide a lucrative opportunity for developers to tap into new revenue streams.

Put simply, there is real money to be made by committing to a full-fibre connectivity strategy to offer the best broadband services. Currently, real estate developers leave the expansion of this critical utility in the hands of service providers like BT, Openreach and Virgin Media. But the truth is that anyone can own fibre, and make money from it.

Real estate developers and landlords need to understand the economic advantages of investing in their own full fibre networks as part of these developments. Full fibre can be easily included as part of all new developments. Not only will it add value to a property, it can also lay the foundations for Smart services.

Space-as-a-service is expected to make up a growing proportion of commercial real estate for the foreseeable future. So if the industry wants to stay ahead of this trend, a radical change in mindset is needed. Developers must see themselves as service providers.

The challenge here of course is that developers don’t know how to be service providers. But there is a model that can offer a solution.

Service providers like BT typically manage all layers of the network: the fibre in the ground known as the “passive layer”, the network management systems or “the active layer”, and the leasing of services to businesses and customers“the service layer”.

An open access model disaggregates these layers. This means that property developers and landlords can install their own fibre, owning (and monetising) the “passive layer” of the network. These new fibre assets can then be leased to network operators and service providers to operate at a healthy return rate. The open access network model means that developers simply invest in, own, and monetise fibre, while the operation can be handled by third parties.

There is a clear commercial opportunity for developers to provide full-fibre services for spaces rented on-demand. Technology continues to drive the way that we use space, so enabling connectivity should be a priority for all new developments to meet rising expectations around bandwidth. And with the space-as-a-service trend showing no signs of slowing down, the real estate industry needs to focus its efforts on the services and technologies that can enhance the occupier experience in a property. Not only will this add value to a space, it will drive those all important new revenue streams.

To learn more about how developers can invest in their own fibre assets, come and speak to VXFIBER at FUTURE: PropTech