Flex space offers these benefits creating new demand from enterprise clients.
community culture. By providing options for tenants with traditional long-term leases based upon price per square foot or month-to-month membership based on all-inclusive price per office, landlords provide greater reach for tenants with diverse business needs. IMPROVE NEIGHBORHOODS AND BUILD COMMUNITY. By adding coworking to your portfolio, building owners and investors attract a mix of multi-generational entrepre- neurs and established enterprises looking to retain and develop talent. This ability to attract business and in- crease economic development improves neighborhoods and builds community. COWORKINGMUST-HAVES When considering coworking as a real estate investment strategy, it is best to partner with an experienced advisor or consultant with background in coworking and flex space. Be sure to evaluate the following must-haves to increase the probability of a successful venture. LOCATION. While amenities and niche spaces attract a small number of tenants, location is the primary draw. When looking at opening a coworking or flex space, consider the population within a 20- to 30-mile radius of your planned space. Research mean income, type of housing and long-term growth projections. Square footage. Industry data shows that profitability begins with spaces 7,000 square feet or greater. With the move from open desks to private offices, it is im - portant to have enough offices to offset un-monetized community areas. OFFICE SIZE OPTIONS. Successful shared space business- es cater to a mix of small, medium and large teams. Therefore, when planning your space include a vari- ety of office sizes to accommodate member diversity. Experts recommend a minimum of 80/20 designated offices to open desks. PARKING. One of the first questions prospective mem - bers ask operators is: “Will all my team members and guests have a place to park?” Adequate parking is a ne- cessity; and when possible, tenants seek free parking.
ASTABILIZATION STRATEGY As businesses of all sizes discovered they could operate from home, landlords have been faced with fewer lease renewals, space vacancies, lower occupancy rates and even some forfeiture. Here’s how coworking can serve as a stabilization strategy for landlords and commercial investment stakeholders. STABILIZE OCCUPANCY. To achieve profitability in a low-margin industry, coworking operators look for a minimum of 7,000 square feet. Landlords seeking to stabilize their occupancy find that coworking spaces serve as anchor tenants for their buildings. Rather than run a coworking space to diversify their building, land- lords can grant a lease to an operator as a sole occu- pancy tenant or invest in a joint-venture style operator model. OPPORTUNITY TO GENERATE INCOME. Under sole occu- pancy arrangements, building investors secure several thousand square feet with one tenant. For those land- lords relying on bank financing this may be favorable. Lenders generally view this model as having a stable and predictable source of income. The downside to this approach is the risk of having a tenant with fixed rent overhead whose income is based upon short-term contracts. In a joint-venture operator model, property owners and operators enter a management and/or profit-shar - ing arrangement. The property owner provides the space while the operator provides the brand, manage- ment and experience in running a shared office space business. Instead of paying rent, the parties share the profits. When designed with mutual-agreed upon goals, this model is a win-win for both parties. Landlords gen- erate income in a profit-sharing arrangement while operators avoid the liabilities of a long-term lease and build-out expense. TENANT DIVERSIFICATION. Coworking members techni- cally are not building tenants. Nonetheless they often steward word-of-mouth referrals for the building, bring visitors to the site, and increase visibility of the
SPACE PLAN. As noted above, the ideal space offers an 80/20 mix of designated offices versus open-space
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