Congrats Diane on getting started with opening a coworking site. Please keep us posted on your progress.
Mark- Thank you for sharing all of your extensive knowledge! I'm thoroughly impressed with the level of detail you've provided. Thanks again. I too, am in the planning/researching stages of starting a coworking site in North County San Diego. There are a couple locations in the Downtown areas of San Diego but a little too far for the people that live North. In the surveying I've done, it seems as though the community wants & needs a coworking space. I'm glad that the coworking community is so open & willing to share ideas. I know have a better understanding of what questions to ask as well as what expectations to set. I grow more inspired every time I read the coworking group thread to get the ball rolling. So the journey begins... Carol Farrar San Marcos, CA 92078 carolinafar...@gmail.com On Jun 4, 8:56 am, mark gilbreath <mfgilbre...@gmail.com> wrote: > 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 t*he 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 <hendersondm...@hotmail.com> 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 > > > -- > > You received this message because you are subscribed to the Google Groups > > "Coworking" group. > > To post to this group, send email to cowork...@googlegroups.com. > > To unsubscribe from this group, send email to > > coworking+unsubscr...@googlegroups.com<coworking%2bunsubscr...@googlegroups.com> > > . > > For more options, visit this group at > >http://groups.google.com/group/coworking?hl=en. > > -- > Mark Gilbreath > > PO Box 2830 > Ketchum, ID 83340 > > mobile 208-720-8107 > skype mfgilbreath > twitter markgilbreath- Hide quoted text - > > - Show quoted text - -- You received this message because you are subscribed to the Google Groups "Coworking" group. 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