Huge Popularity of Co-Working Spaces
This segment of office space real estate has received great attention and continues increasing in popularity. WeWork has effectively set the gold standard for office space reinvention. Much of their recent phenomenal growth has come from large companies leasing large footprints in downtown office locations, such as Boston and New York City. While people think of co-working as individuals locating office space in a common location at reasonable rates, the spaces are expensive. Large companies have entered this area because their products aren’t real estate – rather - software, services, consumer products and industrial products and what they get is flexible lease terms – length of term, size of space, but nobody said cheap rates. They just want the term flexibility that allows them to scale to the success of their primary product line without the worries and complexities that come with real estate ownership. What WeWork has not been faced with to date is a severe economic downturn or a recession. Only time will tell as to how risk adverse their business model is.
Manufacturing space requirements are quite different than office space which is one size fits all and really ‘cool’ as primary needs. Manufacturers require more specificity to the actual needs of their business and are rarely look alike with other manufacturers from different industries. They are also more long term as to their cost of set up to get up and running and tear down. They can’t just pack everything in a box on a Friday and move down the street to a different location on Monday and be up and running by noon. That is the office market. At CI Works, we offer as much flexibility as possible as to lease terms, footprint size, very limited build out costs, and as much generic building function as possible across all tenants. The flexibility has been very valuable to companies in minimizing start up costs and we have been able to help facilitate their growth as revenues require it.
Co-Working CI Works includes manufacturing ‘barn doors’, reinventing manufacturing flooring solutions for food processing, and an innovative metal roof that is not only decorative – but insulated (thermal and acoustic), harvests solar thermal energy to heat / cool building, and also solar PV to power the building………and that is only in this picture.
Sustainable business models – in a booming market, We Work has done exceedingly well. When the market turns, we’ll just have to wait and see as will their investors. CI Works however owns and manages real estate that will hold its value, have a large number of tenant companies – 65 in total – from a cross section of industries, which mitigates risk from individual industry sectors, does not have a small number of large tenants exposing large footprints, and a diversified rent roll of lease terms both throughout the calendar year and variable as to actual terms expiration. We are a revenue based model that includes commitments for fixed periods of time that we subsequently manage expenses based upon, so we have variability in our cost structure tied to revenues and accordingly variable vs. fixed where possible.