Written By: Mike Kriel, CEO of Launch Workplaces
I realized something recently. I talk a lot about the what, why, and how of opening your own flexible office space. But I don’t talk as much about how to fix flexible office spaces that are failing or falling short.
And there are a ton. Too many commercial landlords have put flexible office space in their building only to find it tanking.
But let’s call a spade a spade: the problem often isn’t with the flexible office space model or the building. In many instances, it’s with the operator.
The good news? There’s still hope.
Address Your Primary Concerns
I hear it a lot: commercial landlords have brought in a coworking operator, they’ve gone through the motions, but the space just isn’t living up to expectations.
And as a building owner, this means you’ve already got a lot of money tied up in this thing.
So, understandably, you’ve got some concerns.
You’ve probably got a lease agreement where the operator owes you literally millions of dollars over the next number of years. And if they go bankrupt or dissolve the business, how many pennies on the dollar will you even recover? How much time and effort will that take?
My advice would be this: don’t wait to find out. Explore other avenues.
Remember You’re Not Starting from Zero
If you’re in this position, every single one of your concerns is valid. But hear me out and let me talk you off of the ledge.
As a generality, there are a few assumptions I make when a landlord tells me their coworking space operator is struggling:
- You’ve had a coworking operator in your building with some degree of success
- You’ve already built out the space
- You’ve marketed it and branded it
- You have at least some members
So, remember: you’ve already got a foundation laid. You’re not starting from zero. You’ve got a running start at trying to right the ship.
With that said, let’s look at your options. As I see it, you have three of them.
Option 1: Shut It Down
There are no two ways around it: it’s a tough call to annihilate a flexible office space you’ve spent time, money, and resources to open.
After all, you’ve probably got a ton of square footage and some big questions to address:
- What are the odds of you re-leasing it?
- Will it just sit dark?
- If so, for how long?
- How much money do you have available to sink into repurposing the space?
- Is anybody trying to take on a 20-year lease right now?
In a 10-year lease, you generally need to get to year five or six to even be in the black. So, if your flexible office space has been open for less than that, you’re probably going to lose money regardless.
Suffice it to say this is not the most pleasant option.
Option 2: Run the Space Yourself
Your next option would be to look at what you’ve achieved so far, decide you want to salvage it, and then run it yourself.
The things you’ll need to consider are:
- What does this entail?
- Do you have the know-how and the skills you need to do so?
- Do you understand the nuances of running a coworking operation?
- If not, are you willing and able to commit time, energy, and resources to learn it all?
In general, I’d advise that if you have multiple buildings with coworking operations, then this investment of effort might make sense.
But if you only have one building and one coworking operator, is it worth the time, effort, and money to educate yourself on how to run this properly?
That’s a decision that you’ll have to make.
Option 3: Find a Partner to Fix It For You
If you’ve had a bad time with a coworking operator, I can understand why you might be wary about bringing in another one.
But doing the research and finding the right partner can salvage your flexible office space. We call this a work out. And while it won’t happen overnight, a new operator can come in and make something different (and better) of your space under a new situation.
At Launch Workplaces, we’ve become experts in helping commercial building owners to save their flexible office spaces.
We come in, look at your flexible office space through the lens of our patented evaluation system and deep experience, determine what worked, understand what didn’t, and make suggestions for how to fix it, often in phases.
Lately, this starts with simply weathering the pandemic before talking about how to infuse capital into the space, such as turning 600 square foot offices into 200 square foot offices.
Stop Operating Your Flexible Office Space at a Loss
With a work out from Launch, a commercial building owner who was hoping to bring in $100,000 per month in rent but hasn’t received a nickel in six months can become cash flow positive in month one after we take over operations.
It may not be the $100,000 you were hoping for, but it won’t be zero.
First, we help you to stop bleeding cash. And then we can reposition your space so that you get back to where you set out to reach when you first opened your doors.
If you’re in this position, get in touch with me. I’ll personally walk you through the process of a work out for your flexible office space and explain how we can help you to get profitable again in month one.