Brendan McGee
For the past 12 years, I’ve worked for one of the pioneering co-working companies in the country, and I’m proud to say that not only is co-working here to stay, but it’s also now an essential component of business in the commercial real estate industry. When I initially joined TechSpace, it had a location in California and two in New York. Our success in these markets gave us the ambition to be elsewhere, too. I led expansion efforts to put new spaces in places like Texas, Virginia, New York, and beyond.
The challenging part, though, wasn’t selecting where to put new locations. As with most big projects, we’d judge the results by the execution. Running day-to-day operations for multiple physical locations is not an easy prospect to come by. I had to research and get to know markets, meet with landlords, understand supply and demand for different regional opportunities, plan with local architects, manage construction projects, staff and hire local site teams, work on leasing with the sales team, and more. All of this work went toward helping the company see a return on its investments as quickly as possible.
During the years I was acting as a business generalist and managing these locations, we saw co-working take off and soar. Our clients were small businesses of all types, as well as name-brand VC-backed startups and Fortune 500 companies. We competed with others by constructing energetic and creative spaces where people would be excited to come into work every day by delivering top-notch customer service modeled after the Four Seasons’s white-glove approach for our customers. By building an underlying technology backbone that gave our customers a turbo-charged, first-class user experience we were setting our clients up to succeed.
However, the emergence of so many other players in the co-working segment of this industry complicated matters. Suddenly, we witnessed new spaces popping up in what seemed like every building, with the footprint of each operator’s installation getting bigger and bigger—radically changing the equation for everyone. I remain bullish on co-working but at the scale that co-working companies were building and growing, I began to wonder and worry if expansion in the industry had been too much, too soon. Supply had outstripped demand and from where I sat, and with my experience, the numbers surely didn’t add up.
As a result, the conversation around co-working has shifted in the past year. It’s less about where to drop the next location and more on how to uncover and bring in people to sign up for those seats. I know better than anyone how labor-intensive it can be to find these people and fill these spaces. You can’t achieve profitability without it. To make matters even more challenging, co-working has to account for the continuous customer churn of companies who succeed. Ideally, in a matter of years, they will outgrow co-working and look to move on. As a result, you need a robust sales pipeline to backfill these seats as they become available again. Coming into new markets and designing beautiful spaces is surely the most thrilling part of the process, but getting to, or even approaching, full occupancy has always been the biggest issue that largely goes unmentioned. The emphasis of late, however, has been on the behind-the-scenes performance of these co-working spaces. Greater transparency about the performance of these operators and their spaces is a step in the right direction.