\nFriday 27 February 2026 10:45 am<\/p>\n
As offices shift toward hospitality and operational value, a familiar tension is emerging in capital markets:
\nhow do you value a building when the income looks more like a business than a lease?<\/p>\n
For many investors, serviced and flexible offices still sit in an uncomfortable grey area. They don\u2019t fit neatly into traditional valuation models, and as a result, buildings with serviced office providers are often priced at a discount. Not because they perform poorly, but because they are harder to underwrite.<\/p>\n
At the heart of the issue is familiarity.<\/strong><\/p>\n Conventional office valuation relies on long, predictable leases. Income is fixed, risk is framed around covenant strength, and value is expressed through yield. Serviced offices break that logic. Income is shorter-term, multi-line and operational. Occupiers are customers, not tenants. Costs sit closer to revenue. The asset behaves less like property and more like a platform.<\/p>\n For capital used to clean, bond-like cashflows, that complexity has historically meant caution, and caution translates into higher yields and lower values.<\/p>\n