This Coworking Provider Is Stepping In When Others Go South
For landlords who lease their space out to coworking operators, this is not an easy time.
Coworking providers that rent office space and then sublet it to their members are seeing their incomes dry up. Meanwhile, their rents aren’t budging, because they are locked into long-term leases. But while many companies are wondering how they can afford to lease their space, one coworking provider is not only thriving, but ready to step in and help building owners who are watching their coworking tenants flail.
Novel Coworking, which has 38 coworking assets in 30 U.S. cities, owns all of the buildings it operates in. Functioning as both owner and operator of its coworking spaces has allowed the company to weather the current economic storm and kept it from having to face those tough conversations with landlords.
“Most coworking companies rent space from a landlord, mark up the rent costs and then pass that additional cost onto their customers,” said Bill Bennett, founder and CEO of Novel Coworking. “We own all our own buildings, so we can charge our customers half of what other companies charge and we have the flexibility to offer them more.”
Now, Novel is hoping to be the solution for building owners while other coworking companies are the problem.
The company has designed a management platform for troubled coworking arrangements. If a building owner has a coworking tenant that is failing, Novel will come in, assess the situation and turn what was a traditional lessor/lessee arrangement into a more financially stable management agreement.
“With more traditional arrangements, a coworking company pays building owners a fixed amount, and the owners see none of the benefits,” Director of Capital Chris Klare said. “With our solution, owners pay us a fixed percentage of revenue collected and then they get to keep all of the upside.”
Under the Novel Workspace Management platform, once a partnership agreement with the building owner is signed, Novel’s team members conduct a comprehensive analysis of all areas of the coworking center including operations, sales and accounting.
Then, they transition all key business data onto their Workspace Management platform to immediately identify areas where owners could be saving money. The goal is to preserve revenue and quickly implement a cost-savings action plan.
“We know that a lot of owners right now are wondering what will happen if their coworking tenants stop paying rent,” Bennett said. “Novel’s Workspace Management platform is a turnkey solution that allows us to just send in our own personal SWAT team and fix the problem."
After these first steps are complete, Novel’s in-house sales team will formulate a business plan to focus on client satisfaction, building the occupancy and overall revenue. Thanks to the company’s experienced sales team, wide network of clients and strong relationships with real estate brokers, it is able to generate the leads needed to bring a coworking space up to full occupancy.
“Most other coworking companies don’t have their own leasing and sales teams in-house, but we do,” Klare said. “Our sales team can self-generate leads, which helps keep marketing costs down and leads to higher conversion rates.”
According to Klare, the key is to improve the coworking user experience, then the rest will fall into place.
“Our first priority has always been the client,” Klare said. “These people deserve better than what they’ve been given, so when we come into these situations we treat them like Novel coworking clients right away. We evaluate the amenities, we make sure everyone has a productive place to work, and we do all this while helping to make the building owners more profitable.”
Kris Elliot, Novel’s chief operating officer, added that since the pandemic, the company has implemented a robust COVID-19 protection plan to keep tenants safe that it brings with it to each new property. The plan includes regular disinfectant cleanings of high-touch areas with cleaning products approved by the Centers for Disease Control and Prevention, office redesigns to enhance social distancing and changes to how people move throughout common spaces.
Once the workspace management plan is in place, the building owner can view real-time updates on key performance metrics including net growth projections, real-time leads and leasing updates, billing and collections, and client feedback through the platform’s dashboard.
“We see it all over the news right now, coworking companies are in trouble,” Klare said. “Our team has more than 100 years of combined experience in this industry and we want to use our expertise to help panicked owners get through this challenging time while offering coworking clients a better experience.”
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.