Space-as-a-service: a disruptive concept for the real estate industry?

Abstract: The technological development has enabled structural changes in the real estate market and created a growing concept of space-as-a-service. Space-as-a-service has emerged from the concepts of sharing economy, digitalization and servitization to meet the demand for flexible solutions on the commercial real estate market. The idea of space-as-a-service is to offer simple and flexible access to spaces as well as providing extra services for tenants to create added value. From a sustainable perspective the intention is to decrease the need for new construction and take advantage of the existing building stock to meet demand for space. Most of the previous research on the space-as-a-service concept focus on coworking and sharing spaces but not as much on the broader concept and its rampaging on the real estate market. This study aims to investigate if the concept of space-as-a-service is disruptive for the real estate industry and how real estate owners approach this development. A qualitative research method was applied, using both structured and semi-structured interviews with real estate owners with property holdings in Sweden to get more in-depth information and understanding of the growing concept of space-as-a-service. The Theory of Disruptive Innovations was used as a framework for investigating disruptive signs of space-as-a-service. The driving motives behind space-as-a-service are concluded to mainly derive from an observed demand for freedom of effort and flexibility in the real estate owners´ offerings. We can see a new complex competitive environment, where the real estate industry's service goes from selling “space” to offer a concept. This puts new requirements on real estate owners to justify for more than the location of their premises, in order to keep their competitive position. What positions the real estate owners take in this new landscape differentiates. The attitudes towards space-as-a-service are generally positive, but the perceived risks are explicitly present. External actors and regulations also counteract the development. Thresholds and attitudes collide, making it clear that a change in mindset is needed. However, from the results of our study we can conclude that the concept of space-as-a-service fulfills the characteristics of a disruptive innovation, indicating that this evolution will be disruptive for the real estate industry.