Is An Owner-Operator Business Model The Key To Helping Coworking Companies Survive?
There are difficult conversations happening between landlords and their coworking operator tenants, who are struggling to pay rent as revenue streams disappear as Americans wait to return to the office.
Since the pandemic began, almost no major coworking provider has been spared from having these conversations — unless they serve as both an owner and an operator.
Most coworking companies rent their spaces from building owners and then turn around and re-rent that space out to their clients at a higher cost. But coworking providers that own the buildings they operate out of have more freedom: They can offer their clients more space and a wider range of amenities at a more affordable price, because they don't have to cover their rents or deal with landlords unexpectedly raising prices.
Those coworking providers are also thriving right now, while other companies are pleading with their landlords for rent relief. One such company, Novel Coworking, with over 3.2M SF of flex space across the U.S., is flourishing where others are struggling.
“We give our clients options. Some of them have 10 or fewer people in an office, while others can take up an entire floor with hundreds of employees,” Novel Coworking CEO and founder Bill Bennett said. “It’s our unique business model that lets us say ‘yes’ while other coworking providers say ‘no.’”
Many of the small startups that call coworking offices home have dreams of expanding someday, and when that happens, most of them have to search for new space. But not Novel clients.
Novel gives its clients room to grow through SmartSuites. These self-contained workspaces are ideal for enterprise companies of 10 to 500 employees and range in size from 800 SF to 15K SF.
The sites have separate, keycard-accessed entrances off a main hallway, Alexa-enabled sound systems, open space for work groups, private offices, huddle rooms, phone booths, a kitchen, a conference room, fiber internet, and access to the building’s meeting rooms, amenity space and business services.
Novel also provides furnishings for these spaces, and companies are encouraged to customize their SmartSuite for productivity, as well as add logos and company colors.
Sunrun, a residential solar panel company, was looking for space for 80 of its employees in the Denver area. Novel was able to put them in an 11.5K customized SmartSuite in just three weeks. As the company’s Denver operations grew during its first three months in the city, Sunrun was able to quickly accommodate 40 additional employees in its flexible suite.
According to Rhonda Fleming, Novel’s national sales director, the idea behind SmartSuites is to offer clients the privacy and customization options that come with having a traditional private office, paired with the flexibility and cost savings that come with being a coworking client.
“At Novel, I’m able to accommodate that growth within our building through our SmartSuites," Fleming said. "This ultimately minimizes disruption to my client’s team and allows us to continue the business relationship for years to come.”
Bennett was inspired to start Novel in 2008, when he was unable to find office space that was both affordable and in an ideal location. He realized that coworking companies were forced to raise prices to cover their rents.
“I realized that if the coworking company itself was also the building owner, they would be able to offer more affordable prices,” Bennett said. “I searched for buildings in great locations that needed a little work, purchased them, renovated them and created the Novel Coworking community.”
Along with the SmartSuites product, members of the Novel community have access to a host of customization options and amenities that other coworking companies don’t, including podcast recording rooms, bike storage facilities, fitness centers, showers and nursing rooms. The amenities differ from building to building, but there’s always something unique in each space.
“We don’t charge companies per user, so we don’t have to pack as many people as possible into each building in order to make a profit,” Bennet said. “This gives us more room to create something truly great for each client.”
This feature was produced in collaboration between the Bisnow Branded Content Studio and Novel Coworking. Bisnow news staff was not involved in the production of this content.