Maryland Coworking Company Grows With 3 New Deals, Plans Major Expansion
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A 5-year-old coworking brand has just reached three deals to continue its growth in Maryland and is now setting its sights on other parts of the Mid-Atlantic.
Launch Workplaces has reached a deal with Washington Property Co. to open a coworking space at 6900 Wisconsin Ave. in Bethesda, Launch CEO Mike Kriel tells Bisnow. The company also reached deals to operate two Montgomery County-owned business incubators in Rockville and Germantown.
The new Bethesda coworking space is expected to open in September in a 7K SF spread on the second floor of the building. Launch, which operates through management agreements rather than leases with the landlords, has the potential to expand to additional floors of the 42K SF building.
Launch Workplaces was founded in 2014 as a division of The Brick Cos., a real estate company based in Edgewater, Maryland. Its first three spaces were inside Brick Cos. buildings, but Launch has now begun signing third-party management agreements with other property owners to operate coworking spaces in their buildings.
Kriel said the management agreements offer greater benefits to the property owners than traditional leases. While leases make the coworking space a tenant that occupies a portion of the building and pays rent, he said the spaces don't serve as an amenity to the building the way they can under a management agreement.
"The way we look at it is we put some soul into the entire building," Kriel said. "If you've got a five-story building and we take one floor, we're going to integrate other tenants into the resources we provide, the networking events we have, and really put an energy into the entire building."
Washington Property Co. Vice President of Commercial Leasing Joshua Gurland said the management agreement structure was a primary reason it decided to work with Launch rather than another coworking provider.
"We felt like the structure of using them as a manager of the facility gives us input and control as to how it's operated," Gurland said. "Rather than being a third-party tenant, there are some features we can offer as an amenity to other tenants, which is a real benefit."
In August, Launch opened a 14K SF space at 4701 Sangamore Road in Bethesda through a management agreement with that building's owner, W.C. & A.N. Miller Development Co. The latest deal at 6900 Wisconsin represents its second space with a private landlord other than Brick Cos., and its second location in Bethesda.
Launch is now in talks with building owners from Philadelphia to Baltimore to Richmond to open new spaces in their buildings, Kriel said. He said it aims to reach four more third-party management agreements by the end of this year and then sign between six and 10 deals annually going forward.
"We plan to expand, but not at the breakneck speed of some of these other folks," Kriel said. "It's a little bit of a slower model, but geographically there are no bounds to where we can grow."
Gurland said Washington Property Co. is already in talks with Launch for two other buildings in its portfolio, which spans the D.C. Metro area.
"Launch is a unique player in the space, and we're confident enough in what they do and how they do it that we're exploring putting Launch into other buildings in our portfolio prior to getting this one open," Gurland said. "These deals are not inexpensive, so when you make something like this happen, you've got to be confident that it's going to work."
Launch Workplaces announced last week it reached two deals with Montgomery County to manage the county's business incubators in Rockville, a 23K SF center at 155 Gibbs St., and in Germantown, a 32K SF center at 20271 Goldenrod Lane. The deals come after Montgomery County brought on Launch last year to manage its 20K SF incubator in Silver Spring.
Montgomery County launched its tax-subsidized incubator program in 1995, but it has faced some financial struggles. Bethesda Magazine reported in April the Germantown and Rockville incubators were each losing over $500K/year as of Dec. 31, and a County Council member said the facilities were "bleeding money."
With the new partnerships, the county incubators will include "powered by Launch Workplaces," in their branding, Kriel said. Launch aims to improve the incubators by marketing them better to attract new companies and by instituting a more rigorous standard for the companies it incubates to ensure they prove successful, Kriel said.
"Montgomery County used to have a pretty vibrant incubator system and a pretty strong staff supporting all of that," Kriel said. "But over the course of some years that has changed where they don't have as many and they don't have the resources applied to these locations. They needed a little jump-start to get back to what they were doing successfully years ago."