When industry trends change, the companies that can get and stay ahead of the curve tend to be the ones that garner the most success.
One of the best examples of this line of thought is in the co-working and flexible office industry. There are numerous companies that have recognized that businesses small and large are moving away from locking themselves into long-term leases. Instead, they want to find a situation that’s short-term, flexible or both so if they want to move they can do so easily.
The flexible office also allows companies to only lease the space they need and add on more as their number of employees grows. In the traditional model, businesses are forced to project how much they are going to grow, and lease accordingly. If the team never expands, the company is on the hook for space it is not using.
It is situations like these why so many co-working companies exist and why a lot of them have successfully raised millions of dollars in investment capital. New York-based startup Convene, which manages common spaces and amenities in office buildings and has its own flex office locations, recently signed its largest lease, 116,000 square feet, at 530 Fifth Avenue in New York.
The company plans to operate flexible office space for companies with 10 to 100 employees, according to The Real Deal. The 530 Fifth Avenue location is expected to open by the middle of 2019. To date, Convene is valued at approximately $500 million.
“Convene’s signature product offering, full-service meeting and event space, has been massively successful in the Midtown market, with several locations in high demand in the area near Grand Central in Times Square,” Convene CEO and co-founder Ryan Simonetti told Connected. “While the central location and general proximity to all public transportation was a huge draw for us to open Convene’s first Midtown outpost of our flexible workspace offering at 530 Fifth Ave, we are most excited to build on our existing partnership with RXR and open our fourth location in one of their Class A assets.”
Co-working solution and flexible workspace provider Industrious is also familiar with companies desire for less stringent lease terms. Convene has not only recognized the demand for flexible work environments, it has answered them.
Jamie Hodari and Justin Stewart founded Industrious just five years ago, but it has quickly become the largest premium co-working solution and flexible workplace providers in the United States with more than 53 locations across 35 cities.
Industrious provides established companies and enterprises with attractive offices, five-star services and productivity-driven design that’s geared to make people enthusiastic about coming to work. Some of Industrious’ notable customers include Lyft, Hyatt, Pandora, Chipotle, Pinterest, GM and Instacart.
“Industrious’ commitment to long-term market sustainability is a huge differentiator within the crowded and growing co-working industry,” Hodari, who along with being a co-founder is Industrious’ CEO, told Connected Real Estate Magazine.
“The typical strategy in the flexible workplace industry is for companies to accelerate their growth at the expense of real estate partners by layering on a ton of leasing risk.
Industrious has created a model that enables landlords to share in the upside and ensure the long-term health of the commercial real estate market. As the shift towards modern, flexible workspaces continues to grow, we’ll see immense opportunity in the space.”
Additionally, Industrious offers an exceptional workplace experience for companies of all sizes—from small and mid-sized business to Fortune 500 companies. “(Industrious) is a service-driven company with strong roots in hospitality, and is committed to catering to established companies looking for an end-to-end, best in class workplace management solution,” Hodari said.
Co-working companies like Industrious are not only beneficial to the companies seeking flexibility in lease terms, but to commercial real estate owners, too. As Hodari points out, the traditional model of static, long-term leases has somewhat handcuffed the commercial real estate industry to a version of the workforce that does not reflect how a lot of people work anymore.
Recently, Industrious introduced management contracts that will allow commercial real estate companies to benefit from the growth of flexible workspaces that they had historically been excluded from. The company delivers smart build-outs and intuitive design, lifts the burden of day-to-day hospitality services, and adds value to the landlords’ buildings.
“Landlords are best at owning and trading real estate,” Hodari said. “Working together under this shared risk format, both sides specialize in what they do best while growing sustainably and sharing in the upside. The future of the industry is in flexible, hybrid leasing options that are beneficial to both tenants and owners.”