+1 for Alex's two main tips there. First thing's first. And a big +1 for Jerome's lease tips as well.
I'll add something from my experience, because I'm dealing with it now and it's SO important to so many of us out there. *Plan for how this is all going to play out. * It's easy in the beginning to shirk advice of developing an exit strategy, because it can feel at the time like an insult to the passion you feel for your new project. "But we're in love! We'll be together forever!" No, you won't. Your business will outlive you, or you will outlive your business. In either of those cases, you both will benefit tremendously from preparing for a world in which you and your business are two different things with two different lifetimes. It doesn't mean you need to have exact answers ready before you even begin, but if you have the possible exits in mind early and revisit them at least annually or so, you'll be insuring yourself against future crises. -- If you intend to lease a space without a deeper relationship with the landlord, or a legally binding option to buy or extend the lease at an agreed-upon rate, you can bet on the rent going up not just a little or a lot but drastically. You just can't know what's going to happen. Market conditions change. Even a friendly landlord might sell their building to someone else during the tenure of your lease, and that new landlord might see fit to improve the building and triple the rent. As Glen said, you don't know who might come to town with to drive up rents. So you can bet on one of three scenarios: 1. *Find a landlord you can develop a deep relationship with,* so they're invested (perhaps literally) in what you're building and you are secured against them jacking up the rent on you. 2. *Secure an option to extend the lease at an agreed-upon rate,* or an option to buy, or both, in the lease. 3. *Plan for what you'll do when the rent skyrockets *in not just your building but your whole city at the end of the lease term. You can try to find a suitable alternative location, diversify your business model, sell to someone else, or shut down. Distilled: Plan to become a landlord, or become really good friends with one, or for your current business model to not work anymore when the lease is up. ... but really, before you do any of that, you would benefit a lot from building the relationships that will form the cultural core of your new community first, and letting that guide how this process plays out in the early stages. Vive le coworking! Tony --- New Work City <http://nwc.co> • Cotivation <http://cotivation.co> On Fri, May 22, 2015 at 3:15 PM, Alex Hillman <[email protected]> wrote: > "I guess my concern is that I'd hate to look back 5 or 10 years down the > line and think 'Geez, I should have just bought a space.'" > > I think of this kind of decision as "future-defensive". It's common - to > do something now to prevent something later. Except...5-10 years down the > road, are you REALLY going to be in a worse position to buy, vs better? > > There's no such thing as a perfect space - now or later - so I would make > sure that a purchase is a strategic choice vs a future-defensive one. > > Separately from the coworking space itself - ask yourself some > questions. Do you want be a building owner? Why? What happens if the > coworking space fails - do you still want to own that building? What else > would you want to do with it? > > It's definitely smart to be thinking about this, and it's something that's > personally a close-to-home issue for me, but it sounds like you're putting > the cart before the horse. > > I've learned a LOT about commercial real estate along the way...but I > don't regret renting for the last 8 years. It's really helped us stay > focused and learn what we're best at. A fully loaded mortgage, insurance, > etc would've been a bit more expensive financially, but renting gave us a > LOT of flexibility and peace of mind that owning wouldn't have. > > I'd put your energy into in two places: > > 1 - work on building your community before you even start thinking about > specific locations. Until you have a community who wants to make this > happen with you, the rent v purchase conversation is premature. > > 2 - start talking to a lot of business owners, regardless of your goals > of buying or renting. Find someone who you really like and trust, and > understands what you're thing to do. Whether you rent from them or have > their assistance when you begin to execute a purchase, it'll be VERY > valuable to have them on your side long before you NEED anything from them. > > -Alex > > > ------------------ > *The #1 mistake in community building is doing it by yourself.* > Join the list: http://coworkingweekly.com > Listen to the podcast: http://dangerouslyawesome.com/podcast > > > On Tuesday, May 19, 2015, Stephanie Miles <[email protected]> > wrote: > >> I guess my concern is that I'd hate to look back 5 or 10 years down the >> line and think "Geez, I should have just bought a space." A lot of it will >> come down to the cost of what's available (both to buy and lease) when >> we're at that stage. In the small community we're in, there aren't tons of >> spaces that would even be suitable. Still in the earliest stages of >> planning right now... >> >> >> >> On Sunday, May 17, 2015 at 4:16:22 PM UTC-7, Stephanie Miles wrote: >>> >>> Hello all. I'm new to the group, at the very beginning stages of opening >>> a coworking space in Redding, CA. (pop. 90,000) >>> >>> I'm considering buying a commercial space for my coworking business, >>> rather than leasing. Obviously it's a big financial investment up front, >>> however based on looking at the market here, it seems like the monthly >>> payments on a commercial real estate loan would be less than the cost of a >>> lease on a similarly sized space. (I'm looking at pretty run down >>> industrial spaces, with the plan to renovate.) >>> >>> Wondering if anyone else has done that and what unexpected issues, >>> challenges, or even benefits you faced by doing so? >>> >> -- >> Visit this forum on the web at http://discuss.coworking.com >> --- >> You received this message because you are subscribed to the Google Groups >> "Coworking" group. >> To unsubscribe from this group and stop receiving emails from it, send an >> email to [email protected]. >> For more options, visit https://groups.google.com/d/optout. >> > > > -- > > ------------------ > *The #1 mistake in community building is doing it by yourself.* > Join the list: http://coworkingweekly.com > Listen to the podcast: http://dangerouslyawesome.com/podcast > > -- > Visit this forum on the web at http://discuss.coworking.com > --- > You received this message because you are subscribed to the Google Groups > "Coworking" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected]. > For more options, visit https://groups.google.com/d/optout. > -- Visit this forum on the web at http://discuss.coworking.com --- You received this message because you are subscribed to the Google Groups "Coworking" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
