The flexible office industry is moving at a supercharged pace in the past few years. And a lot has changed in that time.
Launch Workplaces CEO Mike Kriel sat down with Jamie Russo on the Everything Coworking podcast to talk about what’s new and what you need to know about what’s new in coworking management agreements.
Listen to the full episode below. And, if you’d like to listen to get a little more context, you can listen to their conversation from 2019 to get up to speed.
To learn more about coworking management agreements and whether a managed flex office space model is right for you, get in touch with us today.
Would you rather read the interview? Check out the transcript below:
Jamie Russo, Everything Coworking
I am super excited to be joined today by Mike Kriel. He is in the Baltimore, Washington, DC area, He is CEO of Launch Workplaces. And he reached out a few weeks ago before the GWA conference, which was in Maryland a couple of weeks ago, and shared a little bit about his business. And I was super intrigued. And, Mike, thanks for reaching out. And thank you for joining me today.
Mike Kriel, Launch Workplaces
Thank you, it’s great to be here, you know, obviously wanted to go to the conference, it was feasible because it was very close to all of our business. And we’ve been in this business since 2013. I wrote some notes in three days at GWA, I wrote down 42 items to either follow up on or learn more about, and I’ve already made me followed up with connections, I made at GWA and already executed a contract to get some help from someone at GWA. So for anyone who’s at any phase of this business starting out five years and 10 years, GWA was really beneficial because of the willingness to share. And I’ve been in some other associations where it’s not been that way. It may change someday, it may not. But right now, really bright people, everybody’s really encouraged about the trajectory of growth of this business and really willing to help each other. I can’t say enough about how it exceeded my expectations.
Jamie Russo, Everything Coworking
You’re my new favorite podcast guest and we haven’t even gotten into the interview. I’m glad you had that experience, maybe some positive feedback from others, but also kudos to you for following up. That’s the worst thing is to go to a conference and have those 42 items and a bunch of business cards and then kind of go back to daily life and not actually implement some of the ideas.
Share a little bit about you your background, and along with that, tell us the story of how you got into coworking flashlights, collectible offices kind of do a range of things in the industry.
Mike Kriel, Launch Workplaces
I work for a 127-year-old family-owned commercial real estate company. There are not many of us left. There’s one family member still active in the business. The current CEO, and you know we’ve tinkered around from we have some recreational properties, we do golf courses, we own some marinas, we have under a million square feet of commercial real estate, shopping centers, a hotel, you know, for a while we were doing the working living fun type of portfolio that really started, you know, the commercial was always really the engine that kind of pulled the rest of us along. And back in 2018, we started to see some trends that concerned us a little bit. We’re mostly suburban markets, outside the Beltway zones of Washington and Baltimore. And you know, like everyone else, the larger tenants weren’t as plentiful in, there was a flight to quality that lasted a long time through our last recession. And at the end of the day, if an institution wanted the same tenant we wanted, just as hard to compete. And we didn’t want to do that every day. So we came up with the idea of well, instead of 10,000 feet at a time, what if we get an office at a time? That’d be funny. Look who’s laughing now. Right? So soon, five years later, that’s what we do.
So, we created Launch Workplaces. And in 2014, we took 16,000 feet of space that came back to us. And instead of putting it on the market, we did our best we did as much research as we could on what’s the right size of an office and coworking space? I’m fortunate enough to not need a ton of information to say, Yeah, well, let’s give it a try. In 2014 we opened our first space inside a portfolio. Luckily, I think with a lot of good hard work as well, we were very successful a lot faster than we anticipated, especially in a suburban setting. Because if you remember, back then, as this was just really taking off, nobody spoke of suburban markets. And even right now, I think as the second wave of flexible office space is really kind of pushing through the country, people are just starting to recognize the ability for this stuff to exists successfully in suburban markets.
Fast forward, we had five locations open inside of our own portfolio probably within three years, they all did very well, with no intention, really at that point of making this anything other than kind of a self-feeding system for ourselves. And then a couple of things happened. So one storyline will be we started to grow our own tenants. And I’ll come back to that. And that’s an interesting thing that we’ve done. And then kind of more pointed to what we’re talking about here right now is, we started to get a bunch of phone calls from, you know, similar folks; smaller, three to five building owners that knew of us and say, ‘What do you guys up to with this Launch Workplaces thing? Tell us how it works.’ So, I entertained a lot of folks and brought him in and talked to them and showed them how, why we did it, how we did it. And literally had someone say, ‘Could you help me do that?’ And came back and said, ‘Alright,’ there’s a business here, right?
So, we put together a group of the whole business plan and the mode. ‘How do we monetize this? Is it worth monetizing? And, what are we going to do and what are we not going to do?’ Back then, some of the bigger players just started gobbling up space with leases. I’m not sure I want to have that kind of growth. And I don’t want 10 and 15-year leases in supermarkets with real expensive rates, that intimidates me a little bit, we’re a little bit more conservative. So, we’ve only ever partnered with owners and some government entities with service models that have managed models, which is completely different. And frankly, one of the reasons we don’t have 50 locations right now—we have nine—is it was a little more methodical growth. The managed model is a much longer sales cycle, you have to make sure you have like-minded partners, and they understand what you’re working flexible office space really is our model talks about this. We were joking after GWA, ‘activate your building.’ We coined that in 2013.
Jamie Russo, Everything Coworking
Well, I was just gonna say you were so early in these attempts, because the landlord, I mean, even you know, we’ve partnered with Nate up on the conference, and one of the reasons they were partnering with us is, you know, they just still had so many members who were just like earmuffs, you know about what was happening. And so for you to sort of invoke the curiosity of some of the local owners you know, even before this industry just became so mainstream to your point even in the suburbs today unless you read the Wall Street Journal and are fascinated by WeWork you may still not know it’s all thing really exists.
Mike Kriel, Launch Workplaces
Correct. So most of our introductions to owners are okay, we’ve heard of WeWork you can’t even reference Regus really because you know, Regus is out there. Yeah, we did this in 1985 or whatever…
Jamie Russo, Everything Coworking
So they popularized it. And I think that’s a lot of the discussion, like, thank you for doing a lot of the things you did despite sort of the shenanigans going on right now. Exactly.
Mike Kriel, Launch Workplaces
You serve the purpose of introducing this to folks at a quicker rate than it would have been adapted throughout the industry, right. I mean, we all know commercial real estate doesn’t make abrupt changes ever.
Jamie Russo, Everything Coworking
Also, it’s almost like a good problem to have that sort of conservative outlook. ’We’re not going to go because a lot of folks may have been well-served to have that sort of limitation,’ right? Because going out and signing leases that are dirty, I remember. So my husband and I met in business school, and when I signed my first lease and put that personal guarantee on, and it was a 10-year lease, and he’s like, so in total arbitrage. All we’re doing here is hoping this works arbitrage for 10 years. I’d love to sell high and hope that those leads don’t, you know, the deal that’s been changed too much on the renewal?
Mike Kriel, Launch Workplaces
So, it was difficult, right? So then, when people started throwing, like crazy signing lease after lease after lease, right, making the sales pitch doesn’t make it any easier. When you’re talking to someone saying, ‘I’d like to partner with you.’ We were a real estate company to develop this inside of real estate company. And we think all the upside goes to them.
We get paid, right? That your mindset, totally, the arbitrage is yours every time, of course, we run it for you, and we help you not nearly as sexy as, ‘Hey, you got 20,000 feet at 50 bucks per square foot, I’ll sign a 15-year lease,’ right? So it really is, I’d say it’s never, I’ve never sold anything. I’ve just educated someone enough really believe in what we believe. That’s a big difference. Yep. So you got to be very patient. We’ve had the same meeting two or three times with folks to make sure they understand we’re very clear with what’s the process before we get to a management agreement. And as long as you say, Yes, we go to the next step. If you say no, then we don’t, we’re fine.
Jamie Russo, Everything Coworking
My audience is always wildly curious about management agreements. Whatever you’re willing to share kind of about how you approach their framework, you know, who’s taking the risk, who’s getting the reward, anything about the general structure and approach that you would share?
Mike Kriel, Launch Workplaces
The number one thing I would say is not one size fits all. Patience and flexibility. And humans. To learn enough about your building owner. Right? The buzzword now is skin in the game? Right? Does everybody love to say that? Well, that actually does mean something different for every building. So you need to do enough homework and to spend enough time with these folks to say, what is it that would make you comfortable, I can suggest what we’ve done with other partners, I’m open to listening to ideas that you have, and we can figure something out is the easiest way to approach that to be a little bit more rubber meet the road there. You know, there’s a lot of buckets you can fall into: ‘Do I want to make a contribution to the building? Do I want to guarantee numbers?’ I promise I’m going to achieve an interesting one that people might not think about is furniture in a traditional commercial real estate transaction furniture is not part of that.
Jamie Russo, Everything Coworking
Right? The landlord is never touching that right now.
Mike Kriel, Launch Workplaces
That’s your responsibility as a tenant, we built out a process where we can bring the furniture in, and run it through the operations of the business. In essence, we’re buying you your furniture. Yep. So that’s if you can help them get their head around that and explain that to them. That’s a really big benefit to them. And then you could do revenue, shares, and management fees. And like I said, it’s all slightly different. But really to have a managed model to have an agreement with someone, right? I want all skin in the game. Okay, I understand you’re gonna give me a bulk of the upside. And honestly, I haven’t met any building owners yet who have really been outlandish and what skin in the game they’re asking for, as a total number of the project, right? We look at certain size spaces enough and we’re generally you know, north of a million dollars for build-outs and things of that nature, and you’re at that funny numbers going to be pretty substantial too.
For anyone out there. who works in furniture? I spent back in 2013, and 14, I went to a lot of the big furniture makers and said, ‘Look, there’s an opportunity here. It’s not a problem. It’s an opportunity. If you can make on-demand furniture, somehow, you’d be a trillionaire.’ And was told by the first six places. That’s nice.
So, you know, we’ve really worked hard to try to find people to say, ‘Hey, if you believe in what all this data says that the workplace is changing, too, the way people want to work is changing how they work from, you know, the 20 somethings to the 70.’ Plus, if you think that 3040 plus million people are going to change their habits for a long period of time, this is how they want things to be. If you can be the first to market with some of the stuff you can do really well.
Jamie Russo, Everything Coworking
I was gonna say I’m like, ‘Are you harboring some secret stores?’
Mike Kriel, Launch Workplaces
I would not harbor secrets, I would gladly let anybody know that. We’ve been patient, that’s really key for folks that want to be in a managed model, I would say, understand, right? And we say know your life, really understand your purpose of being an operator, in this world. If it is I’m going to make a run at arbitrage for the foreseeable future. Right? That’s a tough one, if you’re really dedicated to helping companies grow and providing resources and all the buzzwords community and networking and all that stuff, right to find a building owner that feels shares a lot of those same values.
We built a 61-point criteria evaluation system for the building, right, we can only take 61 things we try to get to 100. So the first thing we do when we meet someone and say, ‘Okay, what’s your history, what’s your interest in this’ And then we put them through this evaluation. And it goes from what do we think the mindset of the owner is all the way down to the attributes to the physical assets, amenities, safety, lighting, arcing free, not free, everything, and we give them a number. And it ranges from zero to 100. So 80 to 100. We call that Greenlight, share with the owner, and say, ‘Look, we think that this would be successful, and it would follow absorption that we’ve seen in the past and we’d all be happy.’ If it falls in the 60 to 80. We call it the yellow light. Here. We’re like, ‘Alright, there’s a couple of things here that aren’t surprises to you’.
Hiccups that you know, exist that may interfere a little bit, we say, you know, we delay success a little bit, but nothing he can’t overcome. And then we say, ‘If you’re below 60s, maybe look for redevelopment play or something.’ Maybe we’re not interested, you know, you’re not interested. Right? Either. You’ve got 60% of your building vacant for years. Right?
Jamie Russo, Everything Coworking
It’s an important point because I think there are landlords today who think this is a softball for buildings. I love your work and I think there are operators, not all, but some who will make too many concessions for a management agreement opportunity. And so I love your checkpoint to say like, look, it has to essentially be a deal. You’ve signed a lease if you were in the lease signing business. Correct? Yeah. Otherwise, you’re not going to do it just because it’s a management opportunity. Because you need to be successful and you want the owner to be successful.
Mike Kriel, Launch Workplaces
Correct. And we evaluate a fair amount of opportunities, and we keep track and over 50% of them. We stopped the process early. It just doesn’t fit our model. Maybe it’s another operator, maybe it’s a different opportunity. Maybe it’s spec suites. There are a million different ways you can try to do this. But you have to hold yourself true to that. Because, again, you like some of these meteoric growth rates and you’re picking up four deals a year, you kind of feel like you’re getting left behind. But slow and steady still wins the race. And granted there are some really good big operators that are going to do very well. Painting with a completely broad brush. That’s just not our model. And we’re super cautious. We want long-term relationships. We’ve been in the real estate industry for your years, and we want to be in it at least 50 more. So, yeah, we take a lot of pride and picking our partners, and it’s really important to us. And it makes slip-ups a lot easier and more successful. Wonderful when you are with the right people.
Jamie Russo, Everything Coworking
I was just gonna ask you to circle back on, who does your brand serve? Like, who do you design your spaces to attract? And is that consistent across your locations? Or does it vary by the market?
Mike Kriel, Launch Workplaces
It varies a little bit. So it’s a great question because we’re Suburban. So we don’t have a niche in any one location, where we’re, you know, cyber or fast-growth tech or health care. And we have found that in locked workplaces environments, it is a wide range of industries, it is a lot of folks that are serial entrepreneurs, that they’re just a little bit more patient kind breed there is that wonderful. It’s almost like success, guilt, where they’ve accomplished stuff, and they just feel this need to give back and help other people out. So on average, our audience is a little bit older, and usually pretty accomplished. Maybe on their second, third fourth venture. There’s patience, there’s calmness, the right amount of urgency, and there’s a tremendous amount of sharing partnerships.
65% of the people inside launch workplaces do business with each other. So we have complementing businesses where you know, digital marketing group, we don’t have 15 of them, we’ll have one or two, we don’t have a bunch of certified financial planners, does anything wrong with them. But it’s not a pool of sales opportunities either. So we’re fortunate enough, we have plenty of locations that are local to each other where we say, you know, we’ve got a couple of those here, four miles down the road, we’ve got some, some options in there is really how we build them all. So we’re agnostic to business and industry.
But just by the nature of being in suburbia, it’s a different person than not a lot of people biking to our locations, just we do heat maps of where people live, and I’m astounded. It’s over 10 miles away on average. So you’re out driving by other operators. And we really work hard at being kind of the hospitality company and making sure when you’re here, you don’t ever need to get back in your car, do anything, we can take care of everything we can for you. Make sure you’re accomplishing what you want to accomplish at work. And we’re not a keg environment. And we don’t do any of that stuff. We don’t do summer camp. But you know, we’ll do networking, bagel, and breakfasts, and some mimosas and funding or success for somebody all the time. But we say look, we’re here to get work done.
We’re a startup trying to grow; you’re a startup trying to grow, we’re helping each other. We do have access to tons of resources, we provide a tremendous amount of professional resources, learning opportunities for folks along the way, and networking and fun. So it’s a really unique environment in the suburban markets.
Jamie Russo, Everything Coworking
What is your product mix look like? Is it mostly offices and some kind of shared amenity space?
Mike Kriel, Launch Workplaces
It is we’ve done enough and looked at enough of these where everything is now formula-driven, which is wonderful from the back way in the beginning. You’d spend hours wondering what to do, I can size any space instantly. Give me four minutes, we can tell you if it’s a feasible opportunity financially, among the other measurements of the model.
But in the suburban market. It’s really like between 75 and 80%, office 20 to 25% open desk cowork lounge and wherever you want to phrase it. And then inside the office, there’s we have ratios of onesies, twosies, threes, fours, it’s a very funny phenomenon with the head I actually didn’t think nobody said this at the GWA. There’s a phenomenon in suburbia called Private coworking. It’s such a small office. ‘I want an 88 square foot office like that’s a closet. But I want the ability to shut the door. And I want the ability to go outside and socialize when I want.’ So we tease and go, ‘Yeah, it’s private cowork.’ So it’s on a scale of 75 to 80%. folks wanted to work at some point in their day they wanted to work.
Jamie Russo, Everything Coworking
Totally. I mean, I think that’s to your point, outside of the urban core. I think that’s common and although I think we still sort of fight the misconception that a shut door equals not interacting. 5% of your members do business with each other. I mean, that means they are finding their way to interact, they’re opening their door and coming out, and you’re in there when they need to. And when they want to, I want to talk about so you mentioned when we were first connecting, and this is, you know, part of the unique value proposition that you offer since you have a portfolio, you talked about kind of an ecosystem and organic tenant growth happening. And again, you’ve been doing this and seeing the value of this. And I think in the industry overall, some folks have sort of yet to prove this out, because when you set it up, like, oh, he has evidence of this. He’s already been doing it. So people sort of, you know, hypothetically think this makes a lot of sense. But there have not been many cases where folks are doing this and buildings, enough time, you know, gone by to see leads turnovers and in companies growing, and some of that happening. So I’d love to hear how that’s working for you.
Mike Kriel, Launch Workplaces
When we started out, big pie in the sky, we were like, this would be great, right? Companies are going to flourish, and they’re going to need space and time will tell to get, unfortunately, it’s happening. In absence, we always say we have proof of concept. We’ve grown. So the first place we opened was in 2014 at 16,000 feet. It was a five-story building, and we were on the second floor. So right, first of all, you need space to grow. I mean, it’s important. So inside our own building, wonderful. And we had occupancy in the building, so it was no random order, we’ve grown five tenants out of that Launch location, and four of them took space inside that building. And one of them we put in a different building in our portfolio because they needed more space for me. So there’s value to that. Right? So we went back and said, ‘Okay, what did it add? And what did it not force us to spend?’ So we put 1,000,005 of gross revenue to the top line, adding these tenants trickled down to a little over a million net income, cash flows to our business of the four places inside the building three of them, were those tricky tough to lease, on side of windows, not the most attractive key locations in the building. Because we worked with the owner of the business, we didn’t deal with tenant brokers in mind, you were in the real estate, and as you know, we have brokers. But what happens is the owner of the business comes to the Director of Member Success. That’s the person that was ultimately responsible for running that location says, I got the grant, I got funding, we’re killing it. I need to hire 18 people, I need 2000 feet, we go Wonderful. Let’s go up to the third floor. So we bring our real estate guy in and say, Mr. Jones needs 2000 feet. This is 2100. What can we do? We walk him around and say like, what would you like it to look like? And we started talking about finishes and then suddenly, it’s not? Well, the market is $59? It’s I would like some open space. I’d like a private office, kitchen, and a conference room. Okay, what kind of finishes I’d like him to look like Launch. Okay, all right. That’s always easy when I’d like it to look like that. Okay. So, you know, besides adding so much value to the bottom line, we’ve also saved over $300,000 in commissions in build-outs, because we’re working directly with the business owners, and we’re the building owner. So nobody cares, like market and market concessions, and didn’t even understand that I’m having success. I’m growing, I would like a space that we can grow into and call our own. And if you build what I have described, we show people other rents around the area and just hold ourselves accountable. They love this is about what the market rate is. It’s beautiful, how it works out.
Everything Coworking, Jamie Russo
It’s really such a more natural experience for the business owner. Because when you have to go get your first commercial lease, you’re like, ‘I don’t know how to do those things. I don’t have time to do those things.’ It’s so not part of what they do. And you’re saying, ‘We’ll help you just transition from the space that you love. And we’ll make more of that for you. And we’ll help you because we know how to do both, which is unusual.’
Mike Kriel, Launch Workplaces
And the best part is, you’re still in the building, where you start. You have all the connections you have all the friends, you’re invited to all the tenants in the building are invited to all the events that connection stays See when people have success in these flexible work environments, they don’t want to just go, Okay, I’m going to take 2013 story of some 20 story building and become this anonymous thing again, I want to stay connected to the energy and the folks that helped me get, and how can I help them get here. So there were some discussions at GW way about, there’s a coworking operator, and I’m going to leave an entire floor in the building. And I’m going to do the arbitrage thing. And I’m going to do well, right, we are a coworking operator that takes a floor and Bill, integrates it into your entire building, and puts a soul in that entire place. It’s a really different model. And we have proof that when it works, it’s glorious and wonderful, and everybody wants to be a part of it. We have tenants that have come into our building in the recent past, who just want to be near our flexible workspace, they’re too big to be in it, at some point doesn’t make sense to rent 80% of it, just take the floor, we want to be near those people, we want to be near that energy, might be trying to pick off talent and might be trying to put some flexible options in for our workforce. It’s a man, when it’s working, it is a mess.
Everything Coworking, Jamie Russo
Did you hear Lisa Picard’s session at the conference, she’s the CEO of UQ. And she was using the analogy of it used to be those building owners would sort of look at their buildings as like the logging industry, like, Okay, I got about 10 years until this one is ready need to sort of leave it alone until then. And then you sort of send the broker out to harvest. And so she’s talking now and then people want, you know, I won’t remember your exact but like, then it turns into, well, they don’t just want the lumber, they want two by fours. Well, now they don’t want two by fours they want, you know that some sort of finished product. And that’s what you’re offering is you’re saying, like, we’re not going to just give you the raw shell and good luck. And you need to figure that out. And oh, by the way, this is how much it’s gonna cost you to build the thing, that you’re helping them do that. And it’s just such an and thinking. I mean, the whole ecosystem model is so it seems natural, but it is still new for owners to think that way. And to adjust and
Mike Kriel, Launch Workplaces
it’s amazingly unnatural in the commercial environment. And here’s an extension of it to commercial is why eyes wide open to the fact that they need amenities, or townhall space, common space lounge space. So it’s all the same thing. I can drive two buildings in our market, very big buildings. 200,000 plus feet that have beautiful 10 12,000 feet of this magnificent glass, empty, soulless. So they okay, we checked the box we need for these folks to hang out. And we put it there. Why doesn’t anybody use it? They have they’re literally one step at a time. Well, now what, like someone tells us what to do now that we built the historical relationship with tenants was they call you when your toilet doesn’t flush? And you call them when the check doesn’t catch? It’s not, you know, by and large, it’s not tremendously different industry-wide yet.
Everything Coworking, Jamie Russo
Totally. Right. I think that’s why what you’re doing is so interesting. And some of the conversations in the GDP are like industrial, talking about on Friday night, Justin was saying, talking about the activation of those amenities. I mean, they’re trying some pretty unique things like cooking classes on the rooftop. And second of all, like the peloton races and, you know, you can’t just have a gym like people have gym memberships, you get to do something interesting that brings people to it. And you know, they may not have, you know, there’s no silver bullet. And it’s probably different by market. And but right, you have to work at it. You can’t just build it and do your point. We do word look, we’ve got the gym, rooftop, no culture, but you’re in charge of that. We don’t do that.
Mike Kriel, Launch Workplaces
Well, that is what is keeping commercial real estate as a commodity. Right? Dan? It’s just down to your 27 per foot if the guy next door is 27.50. So there’s no upside to that extra 50 cents. Why spend? So they’ll come around and people have stated, right? You need some of the bigger players to move first in commercial real estate and everybody likes to follow. Yep. So they’ll get it and it’ll come around. And I’ll bet they’ll be all these great articles on how innovative and wonderful these ideas are. When when we’re not dealing group doing stuff like this. There are others, too. 7 million operators out there now and I’m sure there are other folks that are gonna listen to this guy doing the same thing for five years.
Everything Coworking, Jamie Russo
Some here and there. Although we need to tell the story more because I think, you know, the stories that get told are the more institutional operators when it gets done on a larger scale. And you know, the story kind of travels. And so I think this sort of more micro stories just start getting told as much. And I think that’s what helps to your point, you know, sort of people have to see others doing it and understand there’s a new way. And there are partners out there that can help me do this. This actually leads me to another question. I’m sure you’ve run across this in near when you were one with your 60-point checklist? Do you run into building owners who think they want to do this themselves? Like they want to, you know, develop the ability to be Launch? And how do you sort of help them with? Do they want to do this themselves? Or do they want to partner with someone like you?
Mike Kriel, Launch Workplaces
Another great question, there are folks that we interact with, don’t, again, I’m not institutional, we’re not working with giant players. Yep. The folks that we are chasing, that are calling us, there’s no interest in this is not what I’m good at. This is not what I want to be good at. And this is why I will pay you to add this service to my company, we have not met a single owner so far, that says, well just teach me how to do it. And then I’ll do it myself. You know, just like in other parts of owning a building, there are just certain things you just don’t want to fight off. And, you know, the dumb tax can belong in good standing on this. Went through plenty of really dumb ideas, and tried a lot of things myself until we got a little bit more refined. But it goes back to the ownership of our business, committing to this, allowing it to take as long as it needed to get fully baked before we went out and took it to the market. So that’s your dream.
Everything Coworking, Jamie Russo
Yep. And in terms of their capital, issues, and challenges, are they generally in positions where they’re not concerned about the bank needing a lease on that space?
Mike Kriel, Launch Workplaces
Interesting. You know, we’ve refinanced four of the buildings, we met our own operations. So ironically, when we opened in 2014, we refinance the building that year. So that conversation, like that was like two meetings like you had to give them a tour of like, wait a minute, what are you doing? Why don’t you have revenue, but nobody’s explained? You’ll let someone lease an office for 30 days? How does that work? There was a huge education, and 2018. And we do you know, we like smaller local banks, the great rate wins. But we’ve had relationships with these folks forever, in this business, 100 years. Right. And then there were some spaces were like, look, we made this decision based on what we saw. We don’t want to be dark. We don’t want brokers to say, We joke and say when commercial boycott can’t manufacture demand? Well, we can’t. So we’ve been actually applauded by some of the bank is saying, you know, you didn’t put your head in the sand. He didn’t call it dark and say, What are we supposed to do? You were innovative. And we understand your model. Most folks like to sign a 12-month agreement anyway. Yep. And what are the Okay, you have seven DEA license agreements, the odds that they all expire on the same day and leave together so they get that, right? So it’s a lot more mainstream now than it was five years ago, there’s not much explaining that you need to do. But again, if you need to give tours and explain the model, be patient and educate them.
Everything Coworking, Jamie Russo
And then they know, do you for your other building owners, where you do management agreements, do you have to help their capital understand the model?
Mike Kriel, Launch Workplaces
Know what we do, we, you know, we create a lease, they lease the building to the space to themselves, just so there is some paperwork to describe what it is. So you’ve created an LLC and run a business inside your building. So it’s not this idea. In our management agreements, we signed 10-year agreements with landlords and building owners. So there’s a lot of paperwork that clearly identifies the responsibilities of the relationship, like the terms and all that. So I wouldn’t go into a building owner and just start saying, Okay, we’ll put a lot to just start going office at a time without some idea of, we’d like to paint a long horizon show, returns, you know, risk of fraud returns in the end, the relationships, our growth schedule, and then really explain what we’re trying to do and the benefits of partnering with us. It’s there’s a lot of documentation so that everybody’s comfortable and happy. We haven’t run into any problems ever.
Everything Coworking, Jamie Russo
I think that’s one of the key points when people ask about the details of what is the structure look like? I mean, really, the important thing is the structure can be a lot of things, but it needs to be well documented, the upgrading approach and what happens when you know what happens if the building sold? What happens? Right? All of those things are probably what matters as much as the structure of the deal.
Mike Kriel, Launch Workplaces
You said it perfectly clear, each deal can be a little different. But as long as it’s well written and understood, everybody knows what they’re supposed to do. Everybody knows what are the possible outs on anything, right? So they’re clear. And you guys both agree.
Everything Coworking, Jamie Russo
Mike, anything you want to share? Before we wrap up here.
Mike Kriel, Launch Workplaces
I would say to smaller operators, I consider us obviously a smaller operator, stay the course keep your head down, chase the guard, get people to believe in what you believe in and help you and just keep going after it. And hopefully, things like GWA continue to exist. And people continue to share ideas because it was really a breath of fresh air to go to that and your real answers. Thought that was really great. And then the other side of the coin, I’d say to building owners, if we’ve learned anything in the past two weeks bigger isn’t been to so many conferences where people have stood on the front of the stage and said, Well, we’ve partnered with XYZ, they’re the biggest thing of this. In this world, the biggest isn’t as best as the best.
Everything Coworking, Jamie Russo
I love that. That’s a great quote to leave on. Mike, thank you for taking the time today to share your story and kind of all the details of what you’re working on. It’s been super interesting. I really appreciate the time. Thank you so much.
