The meteoric growth of the flexible office space sector is unprecedented in commercial real estate. The sector’s footprint has grown because of the value these providers offer to a broad range of occupiers, but the trend is not limited to traditional office space—shopping center landlords and retailers have gotten in the game
, which has locations in New York, creates drop-in workspaces in both vacant retail storefronts and high-end restaurants that are closed during the day. CBRE spoke with Preston Pesek, co-founder and CEO of Spacious, to discuss the benefits of flexible offices in traditional retail settings for shopping center landlords and end users.
How do drop-in workspaces benefit shopping center landlords?
Drop-in workspaces can essentially activate otherwise dark spaces with an activity that draws repeat, recurring traffic into that space.
We take the space as it is generally—we may do some cosmetic upgrades, we might paint it, we might make sure that the light fixtures are the right color temperature—but we generally don’t ask the landlords to do any tenant improvements or any construction buildout. We’ve got a very flexible program – provided we can put the right kind of furniture in the space and if there’s at least one restroom, ideally two, and a place to brew coffee in the space, we can take anything from a white-box retail space all the way to something that’s fully built out as a restaurant and we can activate it almost instantaneously.
Even for spaces that require some work, it only takes us about two to four weeks to get the space ready for customers because most of the work that we do is mostly furniture, fixtures and equipment. From that perspective we have a very light footprint in terms of the actual capital required to get the space customer ready. The landlord can continue to market it for lease while we’re there, and provided that we have enough of a notice to vacate, which we negotiate, we’ll get out of the way as soon as you find a permanent occupant.
We can also do things for landlords that have a business plan that doesn’t really want a tenant right away. For example, if there’s a development site that’s waiting for entitlements, or a site that’s being sold as a redevelopment property, if the plan is not to encumber your asset with a long-term lease while you’re carrying out some other plan, a drop-in workspace is perfect for that kind of situation. We can come in there, immediately activate it, get you some interim revenue, and then we’ll leave when you need us to.
What are the benefits to the users of the space? Why would someone choose this option over working from a coffee shop?
Coffee shops aren’t really optimized for working—and don’t necessarily want for people to hang around for hours at a time. Their business model is about selling coffee and getting people in and out as fast as possible. It’s not really in the best interest of the coffee operator to have people occupying tables all day inside of the coffee shop – they want to turn those seats over so they can sell more coffee to the next customer.
The local coffee shop isn’t really well suited for a drop-in workspace, it’s a little bit noisy, there’s not enough seating, there’s not enough power cables to actually plug in your device if you’re going to be there for more than a few minutes, so batteries run out. Wifi is typically sub-optimal. If you’re buying coffee to get a seat at the coffee shop for working, why not just take Spacious for the seat and the tabletop and the coffee comes for free.
You refer to your product as a drop-in workspace, rather than coworking. What’s the difference?
Coworking is essentially a different way to package and sell an office – it offers greater footprint flexibility and often a month-to-month commitment for the occupant, but it’s essentially an office—either private office cubes or private glass enclosures connected to maybe some common-area amenities.
A lot of folks ask us this question – should I get an office, or should I do coworking? – you should definitely do either one of those things AND add a drop-in workspace membership to Spacious. This combination is optimal and can give your employees the option to work outside the office one or two days a week, at a price that mirrors an employee perk such as a gym membership. Or if they’re traveling for business in the cities where we operate, they can use Spacious as their point-to-point connectivity around the city. So, it’s not meant to be a replacement for an office in the same way that coworking is, it’s recognizing that not everybody needs to be in an office five days out of the week with a private workstation. It’s saying, work happens essentially anywhere, and let’s optimize the urban environment to accommodate this constant connectivity that’s always happening.