Coworking: Should I go it Alone? This is a common question among our coworking and flexible workplace clients. For the Landlords and Developers we work with, the answer is “that depends” and typically “no”.

Building a Coworking or Flexible Office business is more complex than simply acquiring a space (rent or purchase), constructing walls and installing furniture and wi-fi. What it is NOT is a passive business of “If we build it, they’ll come”.

In our previous post 7 Ever-green Tips About Operating a Flexible Workspace Business, we walk through what to consider prior to jumping into this industry and considerable investment.

In our experience, the biggest hurdle is understanding that this is NOT a real estate business but a hospitality business. There is a reason we rank this as important, making it tip #2.

Living the Service Mindset will differentiate your business from good to exceptional, helping you reach profitability more quickly.

I already know real estate. Why work with a consultant?

We can share an even deeper story about a successful coworking operator from NYC that brought their business to downtown Chicago.

Having opened 3 locations successfully in Manhattan, their expansion plans brought them to Chicago in the financial district. When we pitched working together on this new location, they believe that they had “cracked the code” and were super-excited to launch their first satellite location. They felt confident in their ability to go it alone in Chicago.

What they encountered were unexpected hurdles:

  1. The lease closed in late May and they anticipated construction starting by mid-June. This is Chicago – the permit wasn’t approved until late July and they opened in late September, losing the momentum that an August opening would afford.
  2. The location chosen was not particularly appealing to their target audience. The financial district was not the Millennial-focused office destination they typically targeted but about a mile away. (A Wacker Dr. location was already more dominant as was River North)
  3. The space at approximately 15,000 s.f. was the right size for success. The space plan was 80% open plan in a beautiful 2-story height format with polished concrete flooring throughout. Seating was arranged in long tables for up to 12 people. With all this beautiful open space, all of their conference rooms (approximately 8) were taken as offices within the first 10 months of opening. The open plan seating felt sparsely populated during random visits. They did provide phone booths. These were very small in comparison to today’s footprints. It was tough to manage noise – even with white noise technology. In our experience, people gravitate to more intimate seating in groups of 6 to 8. People want periodic and roomy privacy and quiet to focus, using a variety of postures throughout the day. Private, individual offices are a reliable financial “anchor” compared to the variable month-to-month memberships. This has been true since we entered the industry in the 1990’s.
  4. The compelling reason to come to a coworking space in Manhattan is not the same in Chicago. Most apartments in Chicago are larger than 300 s.f. and are more affordable. Metro Chicago has multiple business hubs, many in the suburbs. Being in the Central Business District is not a requirement to be successful.

The location closed after 4 years and lackluster performance. While they knew the business basics. They didn’t know the market.

Knowing a market, a submarket and the components that make up the local culture are so nuanced and yet are critical to the success of the coworking business. Working with a seasoned consultant that understands, and has experience in, exploring the cultural markers, ensures that these are included in the overall strategy. This can help you avoid common mistakes and protect your investment.

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What do I look for in a coworking consultant?

This consulting category has exploded over the past 10 years, mirroring the dramatic expansion of the industry as a whole.

We’ve vetted our own consultants who become our industry resources. We understand what we’re looking for in creating valuable partnerships. So what do we consider important qualifiers for coworking consultants?

  1. Industry Experience. Have they actually operated a coworking successful coworking space for more than 3 years? We believe operational experience beyond 3 years gives an accurate understanding of business cycles affecting profitability. In fact, 3 years is the magic number when coworking spaces (and 80+% of all businesses) fail.
  2. Business Experience. How many business cycles have they experienced? We’ve witnesses the industry boom of the dot-com era and subsequent bust/industry consolidation, the Great Recession and the rise of WeWork on the scene through our current COVID-induced industry consolidation. Cycles matter and having lived through them gives experienced consultants the ability to anticipate and pivot to keep your business relevant and the doors open.
  3. Immersive Consultancy. Will your consultant deliver on the Strategic Plan they recommend? We like to work with consultants who roll up their sleeves and partner to execute their plan. This gives us confidence that, when we run into the inevitable, unanticipated problems, we can solve them together. It makes everyone better and the outcomes stronger.
  4. Breadth of Knowledge. How many projects do they have in their portfolio? Which markets do they serve? In addition to being active industry consultants since 2001, we have worked with over 120 locations, representing over 2 million square feet of flexible office and coworking space across North America. We know what works, staying on top of current trends and blending them with tried-and-true practices. (see the  7 Ever-green tips…)
  5. Passion. We know we’ve chosen the right partner when they cannot stop sharing solutions and are super-energized speaking in their own language (think, technology).  Their passion, coupled with their proven track record, gives us confidence that we can ride all the waves with them.

With that in mind, we share our passion with you!

We’ve created a separate 7-minute post on our YouTube channel Solving for Flex, featuring a walk-through the 8 business components that make up the creation of a coworking/flexible office business.

 

YES! Coworking components

 Can I really make above-market rents in Coworking/Flex Space?

For landlords and developers looking to capture a piece of the Flexible Office wave, please connect with our 4-minute video describing how YES! partners with Landlords and Developers to take the pain out of building and running a Flexible Office business.

What can I expect?

You don’t believe in high-risk investments. Neither do we.

Our work with you begins with understanding your goals and objectives for your location. From here, we develop a Financial Model with a test fit of your space based on maximizing revenue. The Financial Model will reveal the full line of products offered, resources and the ramp up timeline required to reach cash-flow positive status. We share our recommendations to invest – or not.

When we recommend for the investment, we partner with you to implement the recommendations from our Strategic Plan and activate the space.

Protect Your Investment

Based on your prior experience, it may appear easy to implement a coworking or flexible office strategy within your asset or overall portfolio. Getting a clear understanding of the financial investment and time investment (think concierge-level service capability) is the best way to protect your investment. You don’t have to go it alone. Book a 30-minute complementary teleconsulting call and learn more – go to our calendly link.

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