I think coworking is at an interesting juncture. The commercial real estate (CRE) market is about to tank, and it will take commercial rents with it.
Unfortunately, many of the current coworking spaces signed leases in the middle of one of the largest CRE bubbles this country has ever seen (if not *the* largest.) Deflation hit individuals much faster than it hit CRE; thus, there is a disconnect. A couple years down the road, some foragers are going to pick over the commercial real estate market and buy-in (or lease-in) at fantastic rates that will make coworking make sense. But right now, you have landlords in total denial and entrepreneurs unable or unwilling to take on new financial commitments. These recent failures won't be the last. The day you hear of someone needing only 5 members or so to be profitable on a large space, who already has 7-8 signed contracts from lessees before the space opens, is the day you know CRE in that locale probably won't drop much further. But Vancouver? San Francisco? Many of these places still have 50% or more to fall. Space owners should seriously consider renegotiating now, and not signing any leases longer than a year or two. Leases should not contain any provisions for "inflation" or rate hikes. Potential space owners should wait it out until demand bubbles over. My position: Lived in Silicon Valley from 1999-2009; leased two offices for my company 2004-2007. Interested in starting a coworking space in N. County San Diego in a few years. Erica Douglass Are you on a quest for financial freedom? Check out http://www.erica.biz/ for candid conversations about entrepreneurship, investments, and wealth. -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Sasha V Sent: Friday, August 21, 2009 11:17 AM To: Coworking Subject: [Coworking] Re: Vancouver's Workspace closes Bootstrapping is great, but it's impossible to start a business without putting in personal savings or taking out a loan. We did both when we opened, but all the work was done ourselves like in many other spaces I'm glad to hear Alex's enthusiasm for the fall, but I wanted to share that we've also been seeing an unprecendented amount of tough financial situations our members are facing - whether it's losing investor money, losing big projects or just being late on payments. The recession is definitely a huge factor - I think while I'd normally agree that there are more entrepreneurs in tough economic times, it's just not the case this time around. In fact, I'm seeing more entrepreneurs turning back toward stable jobs. Anyway, don't want to be all 'gloom and doom' :) Our space has been busy the last couple of weeks and I hope that's a good sign for the fall! Sasha Vasilyuk Sandbox Suites www.sandboxsuites.com --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Coworking" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/coworking?hl=en -~----------~----~----~----~------~----~------~--~---
