M7 Real Estate is planning to launch a real estate investment trust (REIT) focused on regional co-working hubs, aiming to capture what it expects will be growing demand in coming years.
The M7 Regional Coworking REIT will be the subsequent initial public offer from the company, said chief executive Richard Croft.
Following the IPO of Mailbox REIT PLC on the International Property Securities Exchange (ISPX) in May 2021, M7 is floating BWP REIT this week.
Both these REITs are based on a single building, the first in Birmingham and the second in Leeds. Croft told Proactive that M7’s next project will be similarly focused on regional offices but look very different.
The M7 Regional Coworking REIT portfolio will include “a large series of buildings”, he said, “and we'll be working in partnership with a co-working service group provider”.
Croft said the aim of this third listed vehicle will be to “take advantage of what we consider is likely to be a surge of demand over the next two or three years so that we can create genuinely exciting investor returns out of the change in the real estate dynamic that we believe is coming”.
He explained that M7’s “slightly contrarian” prediction is that “there's going to be the need for as much, if not more, office space post the pandemic than there was prior”.
Working from home every day is not particularly viable for a lot of people, he argues, with children, animals and other distractions.
“Whilst you can do that a couple of times a month I don't think it's a long-term solution. And apart from anything else having demarcation between your work and your life I think is important for people's mental health.
“What I do think has changed since the pandemic is people's desire to undertake a long-distance mass transit commute, ie. all the train journeys into London," Croft said.
He suggests working near home is becoming more attractive.
“I think there's going to be the need sometimes to all be in the same place for the collaboration purposes and for general team-building and also dissemination of information, but there'll be other times where you can be in smaller groups and that can happen more regionally.”
This will feed into what some are calling a hub-and-spoke model – the main office is the hub where workers come in one, two or three days a week and then the spokes allow staff to congregate in smaller numbers near their homes, or to share office space with other companies to cut costs and allow employees to get the experience of being with people.
“I can see regional co-working becoming a major a major sector over the course of the next three or four years,” says Croft. “I think there will be a shift in the way that we work but I don't think that the era of the office is over – I think it's changing and we intend to be well-positioned to take advantage of that change.”