Written by Mike Kriel, CEO of Launch Workplaces
If you’re a building owner or landlord considering flexible workspace, you’re probably doing your homework on operators.
But here’s what you might not realize: operators are doing just as much homework on you.
At Launch, we use a proprietary 12-point evaluation system to assess whether a building has what it takes to succeed with flex space.
It’s weighted. We score buildings from 0 to 100. And, over the course of 10 years, it’s proven to be a reliable predictor of financial performance.
Here’s what we’re looking at.
1. Proximity of Competition
We’re mapping your competitive landscape from two angles.
First, which coworking operators are already in your neighborhood? Second, what other buildings nearby could potentially host flexible workspace, and might they be better positioned than yours?
Understanding both helps us figure out whether your building has a real competitive advantage or if we’re walking into an oversaturated market.
2. Quality of Competition
Once we know who’s around you, we need to understand what they’re offering.
Is the competition a national brand with serious resources, a regional player with local credibility, or a small mom-and-pop operation?
What’s the quality of their space? Premium buildouts? Solid mid-tier? Or budget C-class space where “as is” is the standard?
This tells us what the market expects and what we’d need to deliver to compete.
3. Professional Management Services
Your property management team matters more than you think.
What are they currently doing to engage tenants and build community in your building? How good are they at it? Is creating an ecosystem something they care about, or are they just keeping the lights on?
Strong property management that already knows how to activate a building makes our job easier. Passive management creates uphill battles.
- Entrepreneurial Strength
This one catches landlords off guard, but it’s heavily weighted in our evaluation.
Are you pursuing flex because you’re desperate and out of options? Or do you actually see it as a strategic opportunity to create value, attract growing companies, and keep your building active?
Do you understand that smaller companies can grow into larger tenants? That larger tenants sometimes need to downsize? That flexible entry points keep your funnel full?
The more entrepreneurial your mindset, the easier it is for you to see what flex can actually do for your asset. And frankly, the easier you are to work with.
5. Capital Strength
We need to understand your financial position, not just for the building we’re looking at, but across your entire portfolio.
Are you upside down on some properties? Cross-collateralized? Are you using strong assets to prop up weaker ones?
Your capital stack impacts every decision you make, so we need to know where you stand.
6. Risk Tolerance
This ties directly to your entrepreneurial mindset and financial strength.
Are you all-in on flex because you see the upside and you’re willing to invest? Or are you in defensive mode, overleveraged, facing a balloon payment, unable to stomach any risk?
There’s no right or wrong answer. But underwriting today involves risk, no matter what. We just need to know your appetite so we’re building realistic expectations from the start.
7 + 8. Building Class and Operator Alignment
The coworking product needs to match your building.
If you’ve got a C building, you’re not building out a $200-per-square-foot premium coworking space. It doesn’t make financial sense, and the market won’t support it.
The operator’s product and your building quality need to align. It sounds obvious, but it’s worth considering upfront.
9. Parking
Parking only becomes a big deal when your situation is significantly different from everyone else in your neighborhood.
If you’re in an urban market where everyone pays to park, that’s fine. It’s the standard. But if you’re in a suburban area where parking is free at every building except yours, we’ve got a problem.
We can work around it, but we need to address it in the pro forma and marketing plan upfront. Otherwise, you’re dealing with unhappy members on day one, asking why they’re the only ones paying to park.
The more you know upfront, the fewer surprises you get down the road.
10 + 11. Amenities and Activation
Having amenities is table stakes. What you do with them is what sets you apart.
After COVID, every building in DC started adding fitness centers and lounges. If you’re one of 20 buildings on the same street and you all have the same second-floor gym overlooking the park, you’ve all got the same thing. Which means nobody has an advantage. It’s a commodity.
But if you’re the one building offering sunrise yoga, cycling classes, and monthly events in that space, actually activating it, you’ve differentiated yourself.
The building next door might have the same fitness center, but they just hand out fobs and let people use it whenever. You’re creating programming and community around yours.
That’s the difference. The list of amenities matters. Activation matters more.
12. Vacancy and Tenant Stack
We’re looking at your current vacancy and your tenant mix.
Here’s what we don’t recommend: making 100% of your building flex. That trend came and went. It’s hard to make buildings over 60,000–100,000 square feet entirely flexible and profitable.
Some operators tried. Some are doing okay. Some are giving buildings back to lenders.
What works is a healthy mix:
- Long-term prime tenants who anchor the building
- Mid-term tenants on three-to-five-year leases, not 10-year deals that lock you in
- Plug-and-play suites managed by a coworking operator where companies can come in for a few months or a couple years
- Dedicated coworking space with hot desks and private offices for pure flexibility
If your building is 90% vacant and you’re adding flex, it’s doable. You just need patience.
If your building is 95% occupied and you’re adding flex, that’s also smart. It helps you fill the pipeline when existing tenants hit their termination dates.
There are probably more than 12 factors we could evaluate. But these are the ones we weigh most heavily.
As a landlord, you’re doing your homework on operators.
But, as operators, we’re doing as much homework on you as you’re doing on us (if not more).
We’re evaluating a wider field than just financial strength, looking at whether your building, ownership approach, and market position are actually set up for flex to succeed.
If you’d like to learn more about the evaluation process, dive deeper into the scoring system, or explore whether your building is a good fit for flexible workspace, download our free ebook, The Commercial Landlord’s Guide to Flexible Office Space, or check out my Flex in Five series on YouTube.
And if you want to talk more in-depth, contact me today. I’d be happy to speak with you.
