Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
be very careful giving ownership of your concept blood sweat and tears to a building owners who pure motivations is to fill space by what ever means necessary.
There are others ways to do this. For instance. Do a Percentage Lease with TI Allowances. A percentage lease keeps you in the drivers seat as the owner of the concept but splits the Net reveues with your landlord. So as you grow his rent grows. I highly suggest puting in a cap so that he does not make more that what the space is work. Unless you are asking for a lot of build out then you can add in some ROI for that for him as well. Just so they can get their money back.
Doing a percentage lease also can allow you to take more space than you can afford right off. Find a building in a area of town that is good but that the building is quite empty. This owner is going to be more likly to play ball since he needs to fill his building. Also if the building is a high rise tell him that as your members grow they will need more space and will become his tenants. You are not only filling space for him you are a feeder for his building.
All in all there are a ways to do this so that you are not giving up control of your community concept to someone else just for money.
Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
One key word that you can use that’s standard in the real estate world:
- “rev share”. This is common for retail stores inside malls. The more you earn, the more rent you pay.
Another is like the hotel industry, where a hotel brand/operator might…
- have a minority ownership stake in the building, but this requires the hotel to invest some $.
- win a bid to operate a hotel b/c the developer wanted a hotel from the start.
So here’s the main difference b/w hotels and coworking: developers want a hotel from the start, so they need an operator. Office developers mostly don’t want coworking initially, but now are considering it, which is more of a fix for their vacancy or rental income after the fact rather than initially.
Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
Thanks! Rev Share. Thats the term I was looking for! The space we are looking at is inside a mall that has a lot of empty spaces. Would love to know exactly what those kinds of numbers look like.
···
On Friday, July 6, 2018 at 4:31:29 PM UTC-4, Jerome wrote:
One key word that you can use that’s standard in the real estate world:
“rev share”. This is common for retail stores inside malls. The more you earn, the more rent you pay.
Another is like the hotel industry, where a hotel brand/operator might…
have a minority ownership stake in the building, but this requires the hotel to invest some $.
win a bid to operate a hotel b/c the developer wanted a hotel from the start.
So here’s the main difference b/w hotels and coworking: developers want a hotel from the start, so they need an operator. Office developers mostly don’t want coworking initially, but now are considering it, which is more of a fix for their vacancy or rental income after the fact rather than initially.
Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
Thanks Joshua! Seems like the smarter way to get started.
···
On Friday, July 6, 2018 at 4:57:23 PM UTC-4, Joshua Webb wrote:
be very careful giving ownership of your concept blood sweat and tears to a building owners who pure motivations is to fill space by what ever means necessary.
There are others ways to do this. For instance. Do a Percentage Lease with TI Allowances. A percentage lease keeps you in the drivers seat as the owner of the concept but splits the Net reveues with your landlord. So as you grow his rent grows. I highly suggest puting in a cap so that he does not make more that what the space is work. Unless you are asking for a lot of build out then you can add in some ROI for that for him as well. Just so they can get their money back.
Doing a percentage lease also can allow you to take more space than you can afford right off. Find a building in a area of town that is good but that the building is quite empty. This owner is going to be more likly to play ball since he needs to fill his building. Also if the building is a high rise tell him that as your members grow they will need more space and will become his tenants. You are not only filling space for him you are a feeder for his building.
All in all there are a ways to do this so that you are not giving up control of your community concept to someone else just for money.
Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
Please be careful with malls. They often have strict opening and closing hours which might not work with your operations. For example, mall stores often open at 10 but you might want 8am or 9am office hours.
Then there’s the shared HVAC in big buildings like this where you have to pay for extended hours, just like in class A buildings. Often $100-150/hour. Exorbitant.
You can negotiate any revenue share. The numbers will be dictated by your profitability and the landlord’s motivation. The LL might want market rate or simply break even, if even that, to generate foot traffic in his mall.
Thanks! Rev Share. Thats the term I was looking for! The space we are looking at is inside a mall that has a lot of empty spaces. Would love to know exactly what those kinds of numbers look like.
On Friday, July 6, 2018 at 4:31:29 PM UTC-4, Jerome wrote:
One key word that you can use that’s standard in the real estate world:
- “rev share”. This is common for retail stores inside malls. The more you earn, the more rent you pay.
Another is like the hotel industry, where a hotel brand/operator might…
- have a minority ownership stake in the building, but this requires the hotel to invest some $.
- win a bid to operate a hotel b/c the developer wanted a hotel from the start.
So here’s the main difference b/w hotels and coworking: developers want a hotel from the start, so they need an operator. Office developers mostly don’t want coworking initially, but now are considering it, which is more of a fix for their vacancy or rental income after the fact rather than initially.
Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
Jerome is very right when selecting a building look for ones that have in suite thermostats. And all inclusive rents meaning that they electric and water is shared across all tenants. you typically will get a better deal on your utility expenses. This is also helpful when negotiation the HVAC overage costs.
While a mall is a good foot traffic draw pay close attention to what Jerome said about the business hours. Most of our coworkers come evening and weekends. That means that I can not do deals with any property that wont grant our members access on their “off hours”
For your space your looking at make sure to sus out why the mall has empty spaces. If it is due to lack of current foot traffic this can indicate that you will have a dificult time as well. Malls are a dying breed and typically have extremely high rent rates. Some even have a rent plus Rev Share in their standard leases.
I made the mistake one time of choosing a larger space for cheaper rent than a slighly small space with a higher cost but was located directly next to an anchor space (think office depot, office max)
So in your case try to be next to a food court or a very strong departments store in the mall. Dont take a large space at the end of the hall.
Also consider convenience for your members. Will they have to walk far from their cars to get to you in the mall. Pick a space that makes it easy.
Some land lords will push for 50% rev share so will go less. it all depends on how much buildout your asking for and how quickly they can get it back. As I said early only do a rev share if they will accept a Cap. You need room for profit and growth.
···
On Sat, Jul 7, 2018 at 10:56 AM, Jerome Chang [email protected] wrote:
Please be careful with malls. They often have strict opening and closing hours which might not work with your operations. For example, mall stores often open at 10 but you might want 8am or 9am office hours.
Then there’s the shared HVAC in big buildings like this where you have to pay for extended hours, just like in class A buildings. Often $100-150/hour. Exorbitant.
You can negotiate any revenue share. The numbers will be dictated by your profitability and the landlord’s motivation. The LL might want market rate or simply break even, if even that, to generate foot traffic in his mall.
Thanks! Rev Share. Thats the term I was looking for! The space we are looking at is inside a mall that has a lot of empty spaces. Would love to know exactly what those kinds of numbers look like.
On Friday, July 6, 2018 at 4:31:29 PM UTC-4, Jerome wrote:
One key word that you can use that’s standard in the real estate world:
- “rev share”. This is common for retail stores inside malls. The more you earn, the more rent you pay.
Another is like the hotel industry, where a hotel brand/operator might…
- have a minority ownership stake in the building, but this requires the hotel to invest some $.
- win a bid to operate a hotel b/c the developer wanted a hotel from the start.
So here’s the main difference b/w hotels and coworking: developers want a hotel from the start, so they need an operator. Office developers mostly don’t want coworking initially, but now are considering it, which is more of a fix for their vacancy or rental income after the fact rather than initially.
Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
If I can offer any advice be very careful on structuring a rev share deal with the landlord. You’ll definitely want a good RE attorney to help you draw up docs if you end up finding a landlord willing to do a deal like this. I am sure Jerome has some advice there.
The commercial real estate market is on fire at the moment on a national level, so it’s going to be rather difficult to find something you really want and also find a landlord willing to get creative. Don’t settle for something because it’s your only choice. Also, I’d look for properties with some built in character and minimal tenant improvements needed. If you’re going to try to get creative with the landlord and you have a small budget, keep in mind he’s going to be less interested in putting any real improvement dollars in the space. And lastly, I’d find an anchor tenant. Get a local agency to partner with you, a team of 5-10 and maybe even consider some sort of partnership with them on the space.
Coworking is very saturated at the moment. To be successful you need to be different and stand out. Simply being a landlord and offering amenities is a failure waiting to happen. I’ve personally seen several friends in the coworking business struggle because they went in thinking “if you build, they will come.” Have a niche and get involved in your community. Community is keystone to success. Good luck!
Jeran
···
On Friday, July 6, 2018 at 10:31:06 AM UTC-7, [email protected] wrote:
Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
The space we are looking at has it’s own outside entrance so I am guessing that we could keep that accessible after hours if need be. Good thought on the HVAC etc after hours.
Would it be wise to start with negotiating a standard PSF lease (low-ball) and see how that goes and then if they don’t accept it bring up rev-share? The LL was very excited about the concept of coworking space since the mall is struggling and this space has been empty for at least a year.
Please be careful with malls. They often have strict opening and closing hours which might not work with your operations. For example, mall stores often open at 10 but you might want 8am or 9am office hours.
Then there’s the shared HVAC in big buildings like this where you have to pay for extended hours, just like in class A buildings. Often $100-150/hour. Exorbitant.
You can negotiate any revenue share. The numbers will be dictated by your profitability and the landlord’s motivation. The LL might want market rate or simply break even, if even that, to generate foot traffic in his mall.
Thanks! Rev Share. Thats the term I was looking for! The space we are looking at is inside a mall that has a lot of empty spaces. Would love to know exactly what those kinds of numbers look like.
On Friday, July 6, 2018 at 4:31:29 PM UTC-4, Jerome wrote:
One key word that you can use that’s standard in the real estate world:
“rev share”. This is common for retail stores inside malls. The more you earn, the more rent you pay.
Another is like the hotel industry, where a hotel brand/operator might…
have a minority ownership stake in the building, but this requires the hotel to invest some $.
win a bid to operate a hotel b/c the developer wanted a hotel from the start.
So here’s the main difference b/w hotels and coworking: developers want a hotel from the start, so they need an operator. Office developers mostly don’t want coworking initially, but now are considering it, which is more of a fix for their vacancy or rental income after the fact rather than initially.
Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
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The space we are looking at has it’s own outside entrance so I am guessing that we could keep that accessible after hours if need be. Good thought on the HVAC etc after hours.
Would it be wise to start with negotiating a standard PSF lease (low-ball) and see how that goes and then if they don’t accept it bring up rev-share? The LL was very excited about the concept of coworking space since the mall is struggling and this space has been empty for at least a year.
Please be careful with malls. They often have strict opening and closing hours which might not work with your operations. For example, mall stores often open at 10 but you might want 8am or 9am office hours.
Then there’s the shared HVAC in big buildings like this where you have to pay for extended hours, just like in class A buildings. Often $100-150/hour. Exorbitant.
You can negotiate any revenue share. The numbers will be dictated by your profitability and the landlord’s motivation. The LL might want market rate or simply break even, if even that, to generate foot traffic in his mall.
–
You received this message because you are subscribed to the Google Groups “Coworking” group.
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Thanks! Rev Share. Thats the term I was looking for! The space we are looking at is inside a mall that has a lot of empty spaces. Would love to know exactly what those kinds of numbers look like.
On Friday, July 6, 2018 at 4:31:29 PM UTC-4, Jerome wrote:
One key word that you can use that’s standard in the real estate world:
“rev share”. This is common for retail stores inside malls. The more you earn, the more rent you pay.
Another is like the hotel industry, where a hotel brand/operator might…
have a minority ownership stake in the building, but this requires the hotel to invest some $.
win a bid to operate a hotel b/c the developer wanted a hotel from the start.
So here’s the main difference b/w hotels and coworking: developers want a hotel from the start, so they need an operator. Office developers mostly don’t want coworking initially, but now are considering it, which is more of a fix for their vacancy or rental income after the fact rather than initially.
CENTRAL: Culver City | 9415 Culver Blvd (@Main St)
EAST: Downtown LA | 529 S Broadway (@Pershing Sq)
NORTH: Pasadena | 680 E. Colorado, Ste 180 (b/w Lake and Los Robles)
SOUTH: Long Beach | 309 Pine Ave (@Broadway) - opening Summer 2018
On Jul 6, 2018, at 10:25 AM, nanette…@gmail.com wrote:
Hi group! I’ve been following all of your great questions and advice for a bit now. Thanks so much!
My business partner and I are still in the “planning and searching for a space” phase. Still so much to learn!
Since we do not have a large amount of capital to put in this business we are looking at all the options.
Has anyone entered into an agreement with a landlord where they are the owner and you are the operator/manager? Is it traditionally known by another term? We keep hearing about such arrangements but would love to hear about a specific example and what kind of terms might be acceptable.
–
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