Here’s a fact I wish more commercial landlords knew: having flexible office space in your building can save you a ton on the acquisition costs of filling vacant space in the rest of your building.
The value of flex offices doesn’t just lay in the fees they command from members. It extends to the ancillary value of having members who outgrow the flex space and turn into prime tenants for the building owner.
Turning Flex Members Into Prime Tenants
By now, we’ve been around long enough that many of the members in our various Launch Workplaces have graduated to become tenants elsewhere in the building.
What we’ve seen is that these tenants started out inside of Launch then grew, had success, and, at some point, found themselves needing more space than was financially feasible to take on with us.
After all, there eventually comes a point where the cost of having multiple Launch offices outweighs the cost of getting a suite of their own (on a long-term basis).
And that’s where we’ve created ancillary value for our landlord partners: we’ve found these Launch members larger spaces with flexible arrangements, turning them into prime tenants elsewhere in the building.
Growing Members Don’t Want to Leave Launch
One of the most noteworthy things we’re seeing is that members don’t want to leave Launch, even when they’ve outgrown our workspaces.
We’re finding they want to stay close because they like the vibe of our spaces, they’ve made friends in the building, they want to be part of our networking events, and they want access to our conference centers and amenities.
So, rather than leaving Launch entirely, they’re able to stay in the building and still have all the benefits of being a member.
The only difference is they’ve moved onto a new floor and have expanded their footprint to occupy the landlord’s vacant space.
Creating a Win/Win Scenario
When we’re able to grow members into larger spaces within the building, everyone comes out on top.
It’s a win for the member because they’re still part of Launch. They didn’t have to leave the building, move down the street, or head out of town.
And it’s a win for the owner because we were able to use that vacant space that hadn’t moved or that they hadn’t done anything with, or can’t lease. Rather than trying to fill it with an outside party, they’ve got an interested tenant, right already in their own building.
Cutting Out the Middleman
The other win for the landlord is that there’s usually no broker involved in this equation.
In these scenarios, Launch is dealing with the business owners directly. They need the space, and we’re able to show it to them, see what they think, and get a feel for what they want updated or changed.
Rather than bringing in a broker, we negotiate the entire deal right there in-house.
And these members don’t care about market TI, concessions, or commissions. They just want a space that looks the way they want it to look as quickly as they can get it at a price they are comfortable with.
And there are generally no free-rent or concession periods to contend with.
The Math Checks Out
I’m not just arbitrarily making things up here. This is tried and true.
And the ancillary value isn’t just speculative. It’s proven.
We’ve taken Launch members and grown them into prime tenants elsewhere in their building at least a dozen times.
And what we’ve seen is that the cost of doing so is at least 40% cheaper than finding a new tenant from outside the building.
So, when you’re thinking about incorporating flexible office space into your building, it’s one thing to think about the immediate benefits. But it’s also important to consider the ancillary value that flex members can offer as they grow into prime tenants elsewhere in your building.
If you’re interested in learning more, get in touch with me today and I’d be happy to talk you through our managed model and the benefits it can offer you.