Coworking Operator Embraces New Model As It Expands Across U.S.
The Rye, N.Y.-based company is pivoting to an entirely franchise-based model as it enters six new markets in 2020, adding 130K SF to its national coworking network, mostly in secondary and tertiary markets WeWork and other national operators are overlooking.
Serendipity Labs is licensing its brand, going into joint ventures and profit-sharing with landlords, who increasingly want flexible office as a component of their buildings, a spokesperson said.
That model will be spread further across the country this year. Two of its upcoming locations are in major markets: 28K SF in HUB 121 Office Park in the Dallas-Fort Worth suburb of McKinney, Texas, and 28K SF in the Marathon Oil Tower in Houston. But the bulk of its 2020 expansion will be in secondary and tertiary markets.
It is adding locations in Westport, Connecticut, and Wauwatosa, Wisconsin, this month, and is targeting sites in East Memphis, Tennessee, Dublin, California, Marlton, New Jersey, and Clayton, Missouri.
Serendipity Labs Chairman and CEO John Arenas said tertiary markets in the U.S. are now some of the best places for his firm to shop for growth opportunities.
Not only is the company discovering valuable real estate in these lower-tier real estate markets, it is also benefiting from shifting accounting rules and economics that have transformed these markets into hot prospects for Serendipity Labs' particular brand of coworking.
An overall consumerizeration of the workplace has taken hold nationwide, Arenas said, with more people choosing flexible office spaces to better structure their days.
Another factor spurring along a preference for shorter-term, secondary-market leases among corporations is a change in how chief financial officers manage their corporate accounting today, he said.
“Companies today, certainly public companies, are required under new accounting rules to disclose their lease liabilities as debt on the balance sheet now,” Arenas said. “What that causes is a lot of scrutiny … around how efficient a real estate investment has been to support a workforce. So, if you are a CFO, and you have a lot of extra or inefficient suburban or secondary market leases, you want to get out of them.”
The best alternative is access to high-quality coworking spaces within these markets, so end users can access corporate-level amenities while still enjoying shorter leases, he said.
Serendipity Labs has 100 locations open or under development across the U.S. and U.K., including two DFW sites in Uptown Dallas and Hall Office Park in Frisco.
Moving forward, Serendipity Labs is "now totally focused on licensing the brand and running locations over franchise," a spokesperson said.