When A 6 CAP Is No Longer A 6 CAP - Only The Paranoid (Office Investors) Survive

In this episode of #WorkBold, your host Caleb Parker, talks to Michael Kovacs from Castleforge to discuss the transformation in office space investments towards flexible workspace solutions. Castleforge, traditionally a real estate investor and developer, has pivoted towards investing heavily in 'Flex' space, creating their operator known as Clockwise. Mike delves into the decision to start their own flex space operation, initially tested in Glasgow, which resulted in a highly successful full building conversion to Flex, achieving over 90% occupancy and significantly higher desk rates than anticipated. The success at Glasgow prompted Castleforge to scale the model across their portfolio and purchase assets with an underwriting for flex space from the outset. The discussion also touches on the broader challenges office investors face in generating consistent cash flows and the potential for Flex space to offer a more reliable income stream. Mike further discusses a white paper released by Castleforge, arguing that traditional valuation models for office space are outdated and that Flex spaces, despite their discounted valuation, may offer a closer match to their economic value, thus presenting a compelling investment proposition. The episode concludes with considerations on the future of office space valuations and the evolution of investor models towards accommodating the growing demand for Flex spaces.

Castleforge White Paper: Only the Paranoid (Office Investors) Survive

 

Michael Kovacs: LinkedIn | Website

Prior to founding Castleforge in 2010, Michael worked at Westbrook Partners in London, where he was involved in transactions representing over £2bn of asset value for Westbrook's various funds in the UK, Europe and Asia across a diverse range of real estate investment types. Prior to Westbrook Partners, Michael worked at the Blackstone Group in New York.

Don't forget to hit that subscribe button so you get each episode as it comes out.

 

Sponsors:

Headline Sponsor | Freshwave: Website | LinkedIn
Freshwave is the connectivity infrastructure-as-a-service provider bringing MNOs, government, and real estate providers to work together in new ways. From stadiums and hospitals to skyscrapers and shopping centres, we provide mobile, 5G and Wi-Fi connectivity infrastructure all over the UK and Europe.

Fortune Favours the Bold: Website | LinkedIn
Bold is a coworking brand owned and operated by NewFlex.

Future Proof Your Portfolio with NewFlex: Website | LinkedIn
NewFlex delivers and manages a range of branded solutions for every type of building, in every type of location, for every type of occupier. Including the flexibility to develop your own brand. All enabled by flexible management contracts where we are invested in making money for you.

Brave Corporation: Website | LinkedIn
The next generation real estate company driving value through strategic asset repositioning to de-risk assets and increase NOI. 

Launch Your Own Podcast: Website | LinkedIn
ShoRunner is the leading podcast production and strategic content company for brands, organisations, institutions, individuals, and entrepreneurs. Our team sets you up with the right strategy, equipment, training, guidance and content to ensure you sound amazing while speaking to your niche audience and networking with your perfect clients. Get in touch jason@shorunner.com