Exclusive Q&A With LiquidSpace CEO: The Appetite For Flexible Office Space Has Always Been There
Flexible office space solutions are going mainstream, with co-working becoming attractive for both super innovative commercial real estate media conglomerates (ahem) and Fortune 500 tenants.
Bisnow sat down with Mark Gilbreath, CEO of Liquidspace—one of a smorgasbord of recent online marketplaces for flexible office space—to get his take on the changing industry, and why this new market is so attractive.
Bisnow: How is LiquidSpace different from what tenants have done with brokers traditionally?
Mark Gilbreath: Well the real estate industry really hasn't changed much in over 50 years. Occupiers, broadly speaking, lease space for long periods of time—leases of five-plus years. That’s been the model of building owners and the model that brokers evolved to fulfill, because large transactions for long-term leases is a complicated transaction, and the model has been a custom contract, the lease.
We emerged to address the rapidly growing demand for flexibility. Not all uses of space require a long-term lease of a large amount of space. For our founding offering, we introduced a mobile app that allowed you to book meeting rooms and offices by the hour and by the day. The customer that we were serving was the employee, individuals who needed small spaces for little slices of work.
Bisnow: When did you veer from that model?
Mark Gilbreath: Ten months ago that changed, when we broadened our business to extend durations well beyond a day. We also have now significantly larger spaces that are available.
Our goal wasn’t just to support the individual, but to support, let’s say, the CEO of a 10-man team who needs a primary office for his group for the next 12 months, but he has a fast-growing team that might see an expanded head count.
Or, we could serve the corporate real estate manager who has been asked to find an office for a team for 12 weeks, which happens all the time now.
Bisnow: You still focus on flexible space, then—what is it in the market that makes you pursue that concept?
Mark Gilbreath: The demand for it is very clear. We’ve served over 53,000 companies over the last four-plus years, and we were getting inquiries from them about renting full offices, so we got that demand signal. And we also saw on the supply side an enormous amount of underutilized real estate, in particular two main categories that are now two core elements of our supply base.
There's private companies with excess space that they’d like to monetize, and institutional building owners, who, historically, have had an enormous amount of vacancy in their facility that they’ve written off. Spaces that are small enough that they end up falling off the radar screen of a traditional real estate brokerage. If you look inside most portfolios you’ll see 5%, 10% or more in vacancy, and much of that is these smaller pieces, which are ideally suited to the size and duration requirements of growing teams.
Bisnow: So the demand for this flexible space has always been there? It isn’t just a new phenomenon?
Mark Gilbreath: I think there’s an appetite for it that’s never been fulfilled. The service/office industry is the first example of the solution for that, providing three- or four-person offices. What we have identified is the opportunity to provide that for the next scale of growth, the eight- or 10-person awkward adolescent startup, that might have 30 people in the next few months.
Bisnow: Are there any trends in what types of space are most active on the site?
Mark Gilbreath: There’s unquestionably a trend towards more open-plan environments. We see that in the spaces companies are listing on the site, as well as the spaces that are being rented out. There’s also an overall appetite for monthly flexibility. There’s uncertainty in the market right now, so people want to limit their long-term exposure.
Bisnow: What are LiquidSpace’s offices like?
Mark Gilbreath: It shouldn't surprise you to hear that our offices can be found on LiquidSpace’s marketplace. The team is spread across the US, we have a big cluster of folks in S.F. and NYC, but day-in day-out we’re using our own venues. We live in the marketplace that we built.