Ashok Balbhaskarane, Real Estate & Business Development Director at WOJO, and Jérôme Martin, Avocat at Martin & Associés, shared insights on how the office space market is increasingly being influenced by the hospitality sector.
WOJO, a subsidiary of Accor Hotels and Boogie Mobile, was founded in 2015 and currently operates 18 sites across France, as well as locations in Africa and South America. The company offers co-working spaces under two brands: WOJO and Mama Works, the latter being a subsidiary of the Mama Shelter brand.
“We aim to develop these brands further across Europe,” says Ashok Balbhaskarane. He explains that WOJO has been incorporating the concept of “work hospitality,” blending office environments with hospitality services to create a more attractive workspace.
Variable leases and the role of services in the office sector
Ashok Balbhaskarane elaborates on how this shift has shaped the lease agreements, particularly through the introduction of variable leases. “In the co-working sector, we bring value by offering services such as meeting rooms, coffee, and other activities that you can monetize,” he states.
These services, which previously were not monetized in traditional office leasing, now make up a significant portion of the turnover. “About 20-25% of the turnover in the office sector is coming through services.”
Legal framework and the rise of variable rent models
Jérôme Martin, a real estate lawyer specializing in commercial leases, explains how this transition is changing lease structures. “Traditionally, office leases were fixed, but the evolution toward variable rents is now a market trend,” he explains. “We’re introducing flexibility with leases based on the tenant’s turnover, much like what’s done in the hospitality sector.”
Jérôme Martin further highlights that the agreements often include clauses to assess tenant performance, where rents may be adjusted based on turnover. “If the performance drops below 20% of the forecasted rent, it could trigger a default clause, which allows the landlord to switch to a fixed rent model,” he adds.
Balancing interests: protections for landlords and tenants
This evolving model offers protections for both landlords and tenants. “For the landlord, there’s a safeguard in case the rent drops significantly. For the tenant, there’s the option to terminate the contract early if the performance test is unsatisfactory,” Jérôme Martin says.
Impact of COVID-19 and the rise of hybrid leasing models
Ashok Balbhaskarane reflects on how the COVID-19 pandemic accelerated these changes. “The rise of remote work fundamentally changed how we view office spaces. The challenge now is to make offices attractive again, and services are key to that,” he emphasizes.
“It’s not just about providing a desk; it’s about creating a vibrant space that encourages collaboration and interaction.” He further elaborates that during the pandemic, WOJO introduced a hybrid leasing model that blends the flexibility of co-working with traditional office leases, a model that has since been successful in attracting both small and large companies.
Key figures and negotiating variables in hybrid leasing models
The financial figures behind these models are crucial. As Balbhaskarane explains, “The fees are typically around 15-25% of turnover, with incentives based on EBITDA. The more services you offer, the higher the potential rent.” Jérôme Martin agrees, noting that “the key elements to negotiate are the percentage of turnover and performance metrics, which help balance the interests of both parties.”
The win-win model: A new era of landlord and operator partnerships
Both speakers emphasize that this shift towards a more dynamic leasing structure creates a “win-win” situation for landlords and operators. “For landlords, having an operator managing the property can optimize costs and ensure the building remains attractive to tenants,” says Jérôme Martin. Ashok Balbhaskarane adds, “It’s about creating a space that’s not just functional, but a place where people want to be—services are the key to that.”
As the office sector continues to evolve, both speakers agree that the future of leasing lies in this hybrid model, where flexibility, services, and performance-based agreements will become the norm.
