With the increasing demand for flexible workspace, different types of coworking spaces have been opening up all around the world.
In the last few months, I’ve spent a lot of time analyzing the big household names in the flexible office space industry.
I’ve had the opportunity to speak to people who have real personal insights to share about these operators and what I’ve learned lately makes my blood boil.
It’s like the wild west out there right now.
And that’s why I thought it was so important to share these insights as well as what I’ve identified as the three best-kept secrets for picking the right flexible office space operator so you don’t find yourself disappointed down the line.
1. Honesty and Transparency
This is something that’s lacking in a big way in this industry and it blows me away.
It’s ridiculous that I’m the only guy giving you an honest look at what’s going to happen when Launch signs on as your partner. And, admittedly, while it’s an estimate, it’s a conservative one based on reality and current market conditions.
But there are flexible office space operators out there today who won’t even give you the straight goods about the type of deal you’re getting into, let alone the results you’re going to get.
Management agreements vs. Leases
One of the biggest players in the market today brags about having 100% management agreements, but that’s simply not true. They have many variable lease deals and guarantees and are signing leases for new deals.
Overpromising and Under-Delivering
Some of the biggest operators out there are way overpromising on new deals. They guarantee 20% pre-sales and 85% occupancy within 12 months, and then they fall way short of these milestones. And, as a result, they’re leaving landlords in a terrible position.
Refusing to Communicate with Landlords
In many cases, by the time a landlord realizes their operator is under-delivering, it’s too late—and the operator goes dark on them.
Eventually, they’ve already invested in the build-out, negotiated a deal, get things up and running, and then suddenly they’re nowhere near the numbers they were promised.
So, they ask the operator for tracking data and marketing but never get a straight answer. The operators often even refuse to discuss when they might be back on track.
That’s not a partnership. That’s a raw deal.
So, before you sign on with an operator, ask them to let you speak with their five lowest-performing locations and see what they say.
If they agree, that’s true transparency. If not, you need to wonder what they’re hiding.
2. Value Beyond Their Walls
As a flexible office space operator, you can’t care solely about your own space within a building. You need to bring value beyond your four walls.
I was recently asked if buildings that have flex office space in them are more than those that don’t and my answer was yes–buildings with flex space have traded for lower cap rates and there’s documented evidence to substantiate that.
The next question I received was whether Launch had created value in the buildings where we operate and again, my answer was yes.
I shared the highlights of one particular location including:
- Our first quarter per square foot net income at above market value
- That we had grown 11 tenants elsewhere in the building and they have, in turn, generated $1 million in revenue throughout the building
- That the build-out for this project was under $60 per square foot including technology, pre-opening, marketing, and fees (as opposed to the $80+ they would have paid to do another deal on a regular commercial tenant)
- We had done local market research and shopped every competitor in the market ourselves to find out exactly what was selling at what pricepoint
When you’re investing in flexible office space in your building, that space should be adding value to the entire property at large.
3. Results Over Brand Equity
Some of the big players in this game lean on brand equity versus actual results. And it makes it hard to distinguish between what’s honest versus what’s being sold.
All too often, the only thing that matters to these operators is what they need to say to get a deal done. And it’s not always what it looks like.
They get away with underperforming because they’ve got the brand equity to back it up. But when you’re sinking your money into that deal, that’s just not good enough.
You need to protect yourself and your investment and look beyond the shiny household name. It’s imperative that you spend some time researching what’s really going on.
The big players are cutthroat. They look at the numbers and not the people which is ironic considering we’re in a people-centric business.
And that’s why Launch is going in a different direction. We’re going to do it the old-fashioned way: being honest and acting as good partners. Every single one of our locations means something to me, and every landlord partner we work with has my phone number to call me directly.
Would the CEO of WeWork do the same?
When it comes to these big brand flex office space operators, I’m sharing these thoughts for one reason: at the very least, now you don’t have to be surprised to be disappointed by them.
So, before you enlist a flexible office space partner, make sure they check these three boxes. When you’re investing that time, money, and effort into putting flex space in your building, having a partner that’s honest and transparent, brings value beyond their four walls, and delivers you real results is the bare minimum that you deserve.
If you want to learn more about how to futureproof your building with flexible office space, get in touch with me today. I’d be happy to talk you through the benefits it can offer you.