Hi Diane
You are very welcome. I do have some thoughts on entry way design and
access control. I'm on the road today but will summarize my thoughts
when I get home tomorrow... and am not typing with my thumbs!
Best
Mark
Sent from my iPhone
On Jun 24, 2010, at 8:04 PM, Diane Henderson
<[email protected]> wrote:
Mark
Thank you for your very generous answer to my question. I think it
has helped a lot and confirmed some of my own thoughts.
These are my current quandries: In order to solve the problem of
24/7 access (and the number of keys, etc. that could mean,
hopefully!) with landlords, do you think it is better to have your
own entrance and not a shared one? I'm afraid that might be a
problem with one of the spaces I'm looking at. Our entrance would
be shared with another tenant.
And I have been watching discussions on entry systems. Do you know
if there is a low-cost one that allows keycards or fobs and is
synced with our computer system to keep track of hours and who comes
and goes?
Thanks for your help; it was much appreciated. Sorry for the delay
in answering, lots to do.
Diane
Springfield MO
Date: Fri, 4 Jun 2010 09:56:06 -0600
Subject: Re: [Coworking] Introduction
From: [email protected]
To: [email protected]
Diane
Paraphrasing your question: "is it better to start small...OR...lock
in a good rate now"?
Let me offer a third approach: work with a property owner to craft
a solution that does both.
First the big picture: The real estate world has changed.
Commercial real estate vacancies in the US are in excess of 20% and
many, many buildings are sitting 100% empty. This situation is
likely to get even worse before it gets better. Contrary to what a
commercial broker may tell you, there are not an abundance of
potential tenants chasing after a limited amount of great spaces. I
presume that the market situation in Springfield MO is not unlike
most other mid size and large metro areas across the west. Boise ID
where I have operated a CoWork facility is also ~250,000.) So,
(write this in big letters on a post it on your monitor) if you are
in a position to occupy space in a building, with an interesting new
business, you are a VERY VALUABLE resource to a building owner.
Your potential value to the landlord goes beyond just the potential
to pay rent. The very nature of a CoWork operations creates
additional value for the buildings and the immediate communities in
which they resides. CoWork spaces create buzz and activity. They
drive physical traffic... meetings, events, day to day workflow.
CoWork facilities spawn new businesses that themselves may seek new/
more space in the same building or nearby over time. CoWork
facilities generate news and press releases. They capture the
interest of local politicians, chambers of commerce and assorted non-
profits. ALL of these impacts can be positioned as beneficial to
the landlord. Many landlords will be deaf to this. But not all.
The right landlord for your facility, is one who will share in your
excitement about the concept, and will see that your presence has
many other benefits for him/her.
So what could this mean?
Well, going back to your original question: "start small or committ
to more upfront. In general with any startup or early stage
company, you want to limit your fixed economic commitments until
you have confirmed the needs of the market. So ideally, for your
CoWork space, you'd like to start small ECONOMICALLY, AND have the
space to grow as the needs of your business grow. (this is no
different that the situation faced by your future CoWork members who
will be considering you as their home, because of the community that
you provide AND because of the economic flexibility that you provide).
Here are a couple non-standard ideas/models that worked for us that
you could explore with the right motivated landlord.
1) Participating lease - this is a well established model, popular
in the restaurant industry, and also being used by large serviced
office providers like Regus. Basically, you and the landlord reach
an agreement to have a lower Base Rent (could even be $0) and to
share in the proceeds of the business (this could be a % of the top
line revenue... your membership fees for example, or could be a %
of your operating profit). In this model you are asking the
landlord to share in the risk. You take on the risk of business
operations. The landlord takes on the risk of the building. Why
would the landlord consider this? a) They are desperate for any cost
recovery in their building b) You've done a great job of presenting
the case for your CoWork and all of the other benefits that the
landlord may enjoy.
2) Find a building with room to grow and secure terms in your lease
that allow you the first right to take more space. Here you are
presenting a very optimistic picture to the landlord (who is
desperate for anything the least bit optimistic). "I'm starting
this exciting new CoWork business. It will be the first in
Springfield. The phenomena is spreading worldwide and I believe it
will be a great success here as well. I expect to grow, but I want
to do in a careful smart way. I'd like to start with this first
space xx ft and then add additional space as our membership grows.
It would be better to be able to stay with you long term than to
have to seek new space to grow."
3) Enlist the support of the local muni government and or Chamber.
We had great success launching a Grant program, funded by our local
City to actually pay the membership fees for new startups that
located in our facility. ANY endorsement or programmatic support
that you can enlist from the public sector should be presented to
the potential landlord as evidence of how your business will prosper
and add value to his/her building. (I'd be happy to share more
details on the "Meridian Green Grant Fund" that we launched if you
like).
4) IF you sign a lease, try to include an early out option, in the
terms. For example, if you were to go with a 3 yr lease, pursue an
early termination option at 12 or 18 months. This equips you with
the flexibility to adjust the space or move elsewhere depending on
the status of your CoWork business.
5) Free rent or Tenant Improvement $s. Most landlords lack the
capital today to provide the TI incentives to prospective tenants
that they would have 2+ years ago. In lieu of that, purse an
extended period of free rent. You could also combine this with the
Participating Rent structure. For example: First 6 months $0
rent. Mos 7-18 Base rent of $1/ft. Mos 18-36 Participating rent,
landlord gets 10% of gross revenue. Mos 36+ Base rent $1.60 +
participating rent of 5%.
There are lots of ways that you can package this. Sorry this has
turned into a ramble. My bottom line advice would be:
* In todays market, in any landlord partnership, you are bringing
substantial value.
* Do everything you can to limit your economic commitments and
maximize the flexibility and scalability of your operation.
Happy to elaborate further or brainstorm with you if you like.
Best
Mark Gilbreath
On Thu, Jun 3, 2010 at 10:51 PM, DeeDee <[email protected]>
wrote:
Hi, everyone! Just like a lot of other people, I have been watching
this group for a long time and have finally decided to jump in. I
have been researching coworking for about a year now and am now
seriously considering opening a space.
I live in Springfield, MO (area population about 250,000) and as far
as I have been able to determine there are no other coworking places
open here. My background is taxes and bookkeeping so I've spent a lot
of time in offices! But just in my own family, I have found a real
need for coworking (built-in customers, right?). And just discussing
this with family members who are in networking groups, I think there
is a real need here.
I have started building a budget and looking at property for lease. I
have found 3 properties of various sizes in an area that I think would
work well. Here is my dilema: Prop 1 - decent size, smallest of the
three but not a lot of room for expansion, all inclusive lease, no
long term lease required. Prop 2 - larger space, triple NNN 3-5 yr
lease. Prop 3 - even larger space, won't use all of it to start, so
have room to grow, all inclusive lease, 3 yr min with some free rent
for longer lease. All three spaces have comparable sq footage rates
and can get in with minimal expense and time delay.
Question: Is it better to start smaller, keeping expenses to a
minimum, then expand by opening a second location in another area of
town OR lock in good rent rate now on bigger space and expand there
rather than opening a second location?
I have knocked the pros and cons around on this for a few days now;
but wanted to see what you all thought.
Thanks in advance for your help!
Diane
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