154. Highlights of the GWA Financial Benchmarking Survey

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154. Highlights of the GWA Financial Benchmarking Survey

00:00:01 Welcome to the everything coworking podcast, where you learn what you need to know about how the world wants to work. And now your host coworking space owner and trend expert. Jamie Russo, Welcome to the everything coworking podcast, episode number 154. This is Jamie Russo. And my guest today is Craig bowtie, who is the founder of Creative density, coworking in Denver,

00:00:39 Colorado. He is also the founder of dent swap, which is a platform to help people buy and sell coworking spaces. He is on the podcast today to share some insights from the 2019 global workspace association industry financial benchmarking study. Craig was a lead researcher on the project. Before we dive in to Craig, if you are thinking about starting a coworking space in 2020,

00:01:07 I am hosting a masterclass three behind the scenes secrets to creating a successful coworking business in 2020. I am going to give you the three factors that I've seen in all of my experience in coworking that are the difference makers for success, and they have nothing to do with startup budget. So I want to share those with you to help you think differently about what's important in terms of starting a coworking space and get you started off on the right foot.

00:01:35 If you are interested in attending the class, it'll be an hour. We'll go through the content and save some room for Q and a. You can register@everythingcoworking.com forward slash masterclass. I would love to see you there. And now here's my conversation with Craig Cloud. All right. I am here today with Craig bowtie who has many hats, just like I do.

00:02:03 I'm looking forward to this conversation, Craig and I have been catching up on our pre-checkout and Craig has a lot going on before I start. We are here today to talk about the highlights from the 2019 GWA industry benchmark survey. So the data is from 2019 and Craig was our data analyst and, um, you know, sort of highlighter and I don't Craig,

00:02:29 you can talk about kind of what else you want to highlight about your input into the survey? The survey is an incredible amount of work. So the GWA has run this, uh, financial survey for years and years and years. And we started doing it every two years because it's so much work for operators to give us their data. It's really unique in that.

00:02:51 It's the only survey out there that asks for really detailed financial data. So it's not just questions like, are you profitable, but you know, what's your revenue per square foot. And it kind of really digs into a lot of information. And then it's a lot to unpack when it comes in. And so Craig can talk about his many hats, but,

00:03:09 um, he's a market research background. Um, and so we reached out and said, Craig, you know, would you help us with this? And he said, absolutely. So he did the write up for us and we're going to go through some highlights today. So a little bit more about Craig Craig. When did Craig is the owner of creative density,

00:03:27 which has a number of locations in the Denver area. He is also now the proud owner of a coworking space in Chicago, which I'll let him talk about. And he started a website to help people find and sell coworking businesses called den swap. And he's heavily involved with Denver Coworks, which is a coalition for coworking spaces in Denver. And he said he just started the one for Chicago.

00:03:53 So Craig is busy, all the links to find Craig and all the things that he does are in the show notes. So, um, pop over there, everything coworking.com forward slash episode one 54. And you can find all that detail. Craig, thank you for joining me today. Glad to be here. Yeah. What else? What did I miss?

00:04:15 What do you want to add to your life? I really think that that's it, uh, there's probably, I do a lot of, I mean it all intertwines to really being a good experience, coworking operator and consultant. And then it's like, how do you, uh, turn that information into just more ways to help people? I mean, which you obviously kind of follow that exact same path.

00:04:38 So when did you start creative density? 2011. Yeah. So you've been doing this for awhile. Yes. Yeah. Yeah. And before that I was a market researcher and so it's always kind of been, uh, fun to kind of merge those two worlds. So Do you also, yeah, well we can, you know, at some point you can share a little bit more about the kinds of things you help people with.

00:05:04 Um, and you're in Chicago today. So Craig does have a podcast studio in one of his locations in, in Denver, but um, he's just in a regular conference room, right, Chicago today. Yeah. Hope I sound great. Usually I sound perfect. I'm a little far by Streisand on a podcast. Awesome. So Craig let's um, maybe at the end,

00:05:27 we'll talk about Dennis swap and a couple of other things a little bit, cause I think folks will be interested in that let's hit the highlights on the 2019 survey. So a couple of notes. If you want to get the very detailed version of the survey, you can, there's a link in the show notes. You can go to the GWA website under resources.

00:05:49 It's very expensive. If you buy it all a card, our members get it for free by joining for two 97. So we're going to give you the highlights, but we're not going to give away all the juicy details you have to, uh, join or buy the survey for that. Craig, let's talk about. So you and I talked a little bit when we were kind of setting up how we wanted to go through this about the fact that you thought,

00:06:14 you know, really the insights that came out of this were not necessarily heavily impacted by COVID-19. So kind of the trends will continue. Maybe not, um, a lot that isn't still relevant. No. And um, in fact, uh, Scott Galloway, this, um, he's an Ivy league business professor and he describes COVID-19 as just an accelerant on business trends.

00:06:40 That's like looking 10. What we did is we look 10 years out and basically all of that kind of got pushed forward and coworking trends were already happening. And I think it's just an accelerant to, um, the current space owners right now. I think, uh, people's worlds are going to be there. Everyone's going to be on a much stronger position in six months.

00:07:01 Um, it is just surviving for the next six months. Um, but you can do it and come out of it. Um, I think coworking is going to be on very strong footing. Yeah. Craig and I are the co coworking Kool-Aid drinkers by the way. So be prepared that we're biased, but we both see a lot of what's happening in the marketplace.

00:07:20 And so our, I think our optimism is not unwarranted. It is grounded in reality. And Craig sitting in a coworking space that you bought in January of 2012, great timing. And he's still optimistic. He sees hanging in there and expect some good demand. And we see some really strong indicators. Texas is open. I talked operators in Texas, they're getting really strong leads.

00:07:45 Google search results are up. So it's really market by market right now. Um, but it'll, you know, it'll happen depending on kind of where your market is with reopening. So let's kind of talk about Craig, you've been doing this for nine years. I've been doing this for eight years. Uh, the data that we collected, we cut it by,

00:08:05 we, we ask 'em for this size of this space so that we can cut some of the data by size. I will say that's about the data. Cause Greg you're a market researcher. You know, I have graduate level statistics classes. I get super anal about like sample size and is this statistically relevant? And I need to kind of get over that because if you ever look at,

00:08:27 you know, some of the reports the brokerage has put out and whatnot, like the sample sizes are always pretty small because it's hard to get data. And so ours it's in the like, I don't know, 300 ish operators responded, so it's a pretty good sample size, but any of the data that's cut is not a huge sample of any segment.

00:08:46 So we're drawing some conclusions and kind of talking over some of the data and we might talk about like, you know, what, what we think is, is probably right. And what might be a little bit wonky. Yeah. In fact, Jamie week, uh, cut out a lot of the data that was too small of a sample size. Yeah.

00:09:03 So perfect for the report. That's why we hire people like crank, who know how to make this happen. We narrowed the category down to just really coworking and serviced offices. So if you compare this to some of the previous reports, um, know that some categories were left out because sample size, we want it to be relevant. Yeah. It's important.

00:09:26 I would just also overlay that even, you know, it's, it's not a sample size of all the operators out there. If you're starting a business or kind of looking at your business, there's still some good trends and still some good insights that you can draw from it. And any benchmarking data is, is helpful. So let's talk about the size of coworking spaces and how sizes have evolved.

00:09:48 Um, you know, kind of, you know, feel free to voice over just in general in your experience, but also what we saw come out of the data. So this was a big shift from 2017 to 2019. So sizes, um, is the actual physical footprint, the square footage of a coworking space. Um, and in previous years,

00:10:09 the sizes of coworking spaces were gradually going up. But this time the data really showed that there's a dumbbell effect happening, uh, to where there's a lot of spaces. In fact, it was 47% of, um, spaces are less than 10,000 square feet. And now 26 square, 26% of spaces are over 30,000 square feet. So the middle is getting more hallowed out.

00:10:43 Um, and there's large spaces at 30,000 square feet. And then there's more, less than 10,000 square feet, which is probably most likely independent operators. Yeah, I think, I mean, my coloring in on that would be, there's a lot of folks still going into new markets. I mean, it's, I know, you know, you do feasibility studies and it's really interesting to see when people find markets that are just still really underserved in general,

00:11:09 by even serviced office spaces or coworking. I think those of us who are in it tend to think it's everywhere, but it's still not, it is not. But when folks go into it, you know, a newer and smaller market, right. They'll start with the sub 10,000 square foot space and kind of test it out and feel out the market and kind of warm up.

00:11:29 And then you, I think in the urban areas, you know, kind of one of the approaches is unless you're, if you're going to CBD like downtown, you know, or kind of in the core business district, you kind of have to go in and go big in order to serve your client. In fact, in this data, it shows that,

00:11:44 um, in cities above 1 million only 18% of spaces are less than 10,000 square feet. Yeah. So that's a great example. It's like, it's kind of hard to do the smaller independent space, um, in a, in a larger market and yeah, the, yeah. And so when people are going over that 30,000 square feet, they've also have a tendency to go towards the premium price.

00:12:09 So these are people, basically what this is saying is that it's companies with money are really taking a swing at coworking as a major trend. That's going to replace commercial real estate. And so they're spending millions of dollars to start these new spaces. So they're either CRE companies starting their own brands or they're, as we know, venture capital backed spaces that have the money to swing big,

00:12:39 to take, to take some losses for a few years and then grow a larger business on top of that. And so that is the, been the biggest trend going forward, our multi floor, 30,000 square foot spaces or larger. Yep. And I think that also has something to do with this bet on sort of that corporate client coming in and taking more flexible space,

00:13:02 taking C suite type offices team spaces. And I think it'll be interesting to see how this plays out sort of in the CBD. I think we see that happening, but will that sort of shift out to the suburbs and will that demand, disperse a little bit into independent operators versus, you know, we're putting all 60 people in a, you know,

00:13:25 4,000 square foot space, you know, that we're, um, flexible space than an operator is managing Well, I think that will that survive, that, that brings us to like another, another big trend with these larger spaces is that it's teams, um, above 10, 25, people are really starting to enter the coworking space. And this is changing the way that some floor plans of coworking spaces,

00:13:49 because it's not, you know, a few years ago, if a team of 20, um, would have come into a coworking space, they might've grabbed four to 10 offices next to each other. Now there's suites being built out that are attached to a coworking space, but kind of that company's own space that they can kind of brand and make their own.

00:14:13 And inside that suite might be like three private offices, some open, hot desking, a kitchen and a conference room, but then they open the door and they walk into the larger coworking space. Yeah. When you describe that, I'm picturing, have you been in the novel location in Denver? Yeah. That's exactly. Yeah. So novel traditionally they buy their buildings and,

00:14:36 And they'll buy 50,000 square feet. Right? Yeah. Um, and that's in Denver. That was actually what caught everyone onto this trend. And then all the other spaces were like, yeah, like this, we're seeing that same demand. There is another coworking in, in Denver that, um, Facebook ended up grabbing, um, some temporary office space from them for a year,

00:14:58 why they built out their larger. Um, and so at GWA last year, someone was speaking about, um, they go into a market and want to hire some people, but they're kind of like testing out that market before they go full blown on it and hire a few hundred people. They've been entering into the coworking market to test it out, to see hire 20,

00:15:24 30 people and see if it's a good market fit for the talent that they're looking for. So coworking spaces are starting to see that Play that role. And I think, I think that to your point to your point in the introduction will continue to accelerate because I think now the mindset may even be, do we ever need our own space or the, you know,

00:15:44 the bar for when what the trigger is for getting your own space may just be different because now some people are at home, some people are at the space. Do we want a big corporate headquarters? You know, that, that may even look, look different going forward. And the trend of the 30,000 square foot space or larger really allows to accommodate these larger teams.

00:16:07 Whereas yeah, 10,000 square foot space is really, really don't because then you're handing your entire culture kind of over to this larger team. Uh, and, and for coworking space operators, that's something that you kind of need to be, be cautious of doing. You need to be hold your culture, culture tight. And I want people to understand that when I say coworking,

00:16:28 um, I'm generally talking about the whole shared office space industry. If I say coworking versus serviced office, um, centers, then, then there's a distinction. But generally when I'm saying coworking, I'm kind of talking about the, the whole shared office. That's a great point. We should be clear about that. That word has become sort of all encompassing and there's always debate over,

00:16:51 do we call it flexible office or right. Shared office or what it's called, but the media generally still calls it coworking. So we go with that. Yeah. And another thing I wanted to say about the changes in size of coworking spaces is that it really does determine on your market. And we kind of alluded to this earlier, but in cities,

00:17:09 less than a hundred thousand people, it's, uh, 82% of the spaces are less than 10,000 square feet. Uh, and then in cities from a hundred to half a million, it's 55% of spaces are under 10,000 square feet. And that's where we get to once you're over a million, it's only 18%. So there is a scale of the number of 10,000 square foot spaces on the size of the city.

00:17:37 Yup. And I wonder if we'll, it'll be interesting to see in the next year or two, if the spaces get larger in some of the smaller markets as that demand is kind of proven out. And as the segments of folks who used to commute every day, you know, maybe don't commute anymore. And so those markets can support larger spaces. I agree. 00:17:56 I absolutely agree. And it's, um, the, the chains that are growing like these local chains, as people start to get four or five, 10 locations, they're really looking at the space size from 15 to like 25,000 square feet. And that's because they can enter into markets that the big players aren't looking at. And so really the, the,

00:18:18 the chains that are growing that you might not have heard of. They're looking at that 15 to 25,000 cars under 10,000 square feet is very difficult to operate when you have layers of management. Um, but when you have scale and you have more confidence in experience, you kind of go up a little bit higher, but the big players kind of put a ceiling.

00:18:41 It ha how hard do you want to go? Yeah. And, but also, you know, they're in markets where it's more likely you're not going to get, you know, maybe an industrious or a, um, we work, you know, people who really operate at those larger square footage, but the 15 to 25,000 to your point can be a really nice profitable space.

00:19:03 Especially when you have the scale of some of multiple locations with some centralized competencies like marketing and finance. And you can have all those hats with different people when you only have one 10,000 square foot space. In fact, you want to think about, um, when your different sizes of spaces are going to have different target markets and radius. So when you're under 10,000 square feet,

00:19:25 you're generally like a neighborhood space. And according to other research, like from DeskMAX, it's people generally drive or commute, whatever way, 18 minutes to their coworking space. And so that sub 10,000 really serves that neighborhood. And then when you get too large of a space, you need to go into the downtown to the CBDs because then you need to attract people from all parts of the city and downtown.

00:19:54 So centrally located. That's why then they are allowed to get bigger. So if you're out in the suburbs, you can go, you need to think about like, okay, what's my 18 minute radius. Um, and then how many people can I serve don't so don't try to swing, Oh, there's eight 30,000 square feet out in the suburbs. You're not going to get that once a company's too big.

00:20:15 They need to kind of move downtown because they need to recruit from all of the suburbs, not just maybe the South side suburbs where they're originally located. Yep. Yeah. Um, Oh yeah. Team's desk suite are the big takeaways from the, from the, um, size things. Another change that a big shift that I saw in the, in the research was how now I'm going to talk about the difference between coworking and serviced office centers,

00:20:45 how they generate revenue, how they, how, what, how it makes it up. Um, although their floor plan is, uh, generally the same coworking space is now 89% of them provide private offices versus a hundred percent for serviced offices. But the, where they make money is, is still very different. And we could learn a lot from each other,

00:21:12 the two different worlds. Um, the biggest, most obvious one is virtual male, uh, coworking spaces, uh, people that identify as coworking spaces in the survey. So everyone's self identified, uh, only get 3% of their revenue from virtual mail, which is shocking because around 68% of them say that they offer virtual mail. So 68% say they offer it,

00:21:41 but only 3% of the revenue comes from it versus serviced office centers. Nearly all of them provide virtual mail and it gets 22% of their revenue. Yeah. That's a market difference in the, you know, the, the focus and operation. And we can talk about some of the things that play into that, but yeah, it's a really interesting insight for the coworking folks that are listening.

00:22:07 Yeah. So if you're in the coworking world and you're not doing virtual mail, no, that that's a, that's an opportunity for growth. Um, the service office sector had other opportunities for growth that they could learn from the coworking world. Um, and that is dedicated desks and hot desks. So pretty much once again, all of them say that they offer it,

00:22:32 but for serviced office centers, their tenure for dedicated desks and hot desks. So how long a member stays with them is in the single digits. We're generally, it's always hovering around four to like six months if someone's there. So the lifetime value of that hot desking member is, is nothing compared to coworking towards generally 12 or 15 months for our coworking member.

00:22:59 So serviced office centers, could you better serving dedicated desks or hot desks a little bit more in serving those customers more? That's a growth opportunity. Uh, there's reasons why neither one of these camps are kind of leaning to the virtual mail or the service desk serviced office service officers go into the hot desks. Um, and that's a cultural and, or a way that they originally structured their business and they need to know that there's opportunity there.

00:23:30 Um, and then develop the processes and the promotion and the sales, also the sales process to get the word out and then know how to handle it. So it's not a headache. Um, cause I know as a coworking space operator, I was hasn't, uh, virtual mail for many years and I just kind of put myself up on the, like the DaVinci's and the anytime mails and I postals and sphere mail.

00:23:59 And I would get it a customer trickle in maybe once every three months or so. And I would love the money, but I would also kind of grown of like the, the process that it took. It's like, Oh, now I need to look out for Robert's mail. And I wasn't used to looking out for it and I just needed to get over that hurdle of saying,

00:24:20 Oh, what if I promoted this service? Uh, what if I made sure I sign up for several of these and I just learned myself how to do it, like create a, like, all I had to do was create a list of like this person, like look out for this name, The Excel spreadsheets and all the, all the different names that mail might come in for,

00:24:38 for that particular part of this junk mail from all these so much. Yeah. People that are just like Google mapping you and say like, mr, I don't want to windows company. I just know that there's one guy at crave density. That's like, and I'm like, who are you? I don't know. And I like, kind of get a little bit of glee.

00:24:58 I get anger that he's using my address. And then I'm like, you're never going to see this. Right. And then I like return to sender take that. Yeah. Um, but there was an education that, um, Hey, stick with it and this can be meaningful revenue. And you know, just in your mind, do your coworking space owner.

00:25:22 If you're thinking about virtual mail, take that whatever you're making per month and times it by 12 and just turn it into annualized revenue. And then you're like, Oh, this is, this is suddenly five, 10, $15,000 a year in revenue. So don't just view it as like, Oh, it's $300, you know, I'd rather just sign up a hot dusky member.

00:25:43 Um, immediately take that 300 and times it by 12. And you're like, Oh, that's $3,600 a year for me looking out for three people's mail. Like I can do that, that, that can ride me through COVID and then emerge out of COVID. Well, like I have a whole new revenue stream. Yeah. I think that's one of the big themes from COVID for the folks who were not doing virtual mail is a bigger focus on,

00:26:08 okay, how do I figure this out? It's not a silver bullet though. You know, as you said, it takes some time to build and you have to sort of have some optimism and put the processes in place and believe in it and stick with it so that it has the opportunity to build before you just throw in the towel and say, you know,

00:26:25 this is a pain. I don't want to do it anymore. Um, and I think that that opportunity again, is going to be accelerated because people aren't going to have an office where they can get any mail that they want, you know, everything has to come home. And there's just, they're going to be people who really want a business address.

00:26:44 I mean, there are legal reasons. We won't go into a big training on, on virtual mail, but I think, you know, Greg was at the GWI conference, the in-person conference last year. And there was a session where we were talking about, I really think it was about male, but Keith Warner from Pacific workplaces stood up and said, you know,

00:27:01 we basically pay our rent with our virtual mail program and, you know, head suing a key, like what, you know, it can depend on your address. And it also can depend on the member that you serve. And I think that's an important thing when you're thinking about revenue streams, when you're, if you're a service office, that's how you identify yourself.

00:27:20 And you're thinking about switching, you know, adding hot desks or dedicated desks, you know, or your coworking space, thinking about doing virtual mail there, go through the exercise of thinking hard about who your perfect member is and who you serve and how can you do that your way in a way that fits your culture. So the surface office folks, you know,

00:27:39 you mentioned a lower, um, tenure of hot desks and maybe it's because the offering just doesn't quite fit the member. So that doesn't mean that there's not an offering. That makes sense. Is it in the right location? Is it the right furniture? Is it, you know, the right amount of privacy? You know, there could be a lot of things there to figure out if you can't just drop a product into a culture where it's not a fit.

00:28:04 And I think, you know, one of their really key success factors, isn't the first thing I teach in my coworking startup school is like, you have to know who you're serving and, you know, Craig, you have some very diverse spaces in your portfolio. You serve some different members, you know, and differently I would guess. And you're,

00:28:22 there are some common themes I would guess in how you serve them. But you kinda know like who fits where and not all of your members would fit in your other spaces. No, no. And, um, we're trying to work through that. What does a brand mean? We do know that like we have to change the language up on, on the landing pages.

00:28:42 So when you go to different locations, so it emphasizes different features. Um, and then, so when we're talking about this, uh, the, I recently went from one to two, like five locations over the course of a year and I had to work with branding of like, how do we take a step back and make this a brand? So it's cohesive.

00:29:08 What do I need to change up with my locations? So that I'm constantly speaking to kind of the right person with enough wiggle room. Yeah. But the types of locations. Cause you have, did you still have the space? That's mostly offices. Yes. And you have a space with no offices, your originals. Yes. Yep. And then you've got the one in the apartment building.

00:29:29 I don't know what that like. Yeah. That was a lot of totally built out more at a premium level. And so I had to sit back and say, who's my customer. And then how could I actually make? Cause all of my spaces are neighborhood spaces, so I don't need to go fully generic. I only need to capture that 50 people in that area.

00:29:49 So we're actually adding podcasting studios to each location so that we're have a consistency of like, Oh, crave density. That's the one with a podcasting studios. And then we created a, um, uh, a locker full of gear. So anyone can rent, rent out like drones or cameras or something to kind of like, I want to rent a drone.

00:30:11 I've never heard anybody mentioned that. I love that idea. And so that's because now I have four locations, I can do stuff like that and then keep it at one location or have the community manager come and pick it up and rotate it. Yeah, yeah, exactly. And then, but everyone gets access. So it's like, I might, I'm creating the creative density brand for like,

00:30:30 Oh yeah. That's like kind of that's for creatives or people that have this, like, you know, people like, Right. So you're speaking to a type of person and so they might need like the feature they need might be different. I mean an office versus a space in a house. I mean, you know, your original space is super unique and different from the other spaces that you've created,

00:30:54 but there's a mind, it sounds like you're speaking to a common mindset. Yeah. I like to have fun. I'm hearing that, you know, I like to do different things. I know you do like kickball tournaments and like, I like to be a part of a community, even if I need an office. So your language probably speaks to that and we're getting into like marketing talk.

00:31:13 But my point was, if you're a serviced office, like know who you're speaking to and create the product that matches that, you know, don't do hot desks just because it's the cool thing to do, find a way to fit it into what your members want and need. In fact. So to wrap it into the virtual mail thing, one thing I love the thing I love about virtual man,

00:31:36 and is that it does not affect my culture. Totally. Cause you almost never see the people. Yeah, Exactly. It's a service I provide for my hot desking members. Cause they need to receive mail. I'm already doing that, but I can sell it out to outsiders and they're not going to affect my community. And so it's like, everyone can just add that on.

00:31:57 You don't have to sort of worry about how that fits in. And I think some like really pure coworking people are like, I don't want to do that. Cause it has enough, it doesn't build my community. Right. It gives you the budget to support. You're giving it any, I mean The reality. Um, but so like the service office,

00:32:17 people, uh, centers of not having hot desk and, and dedicated desks, I kind of get why that's a struggle. Um, because then that's a cultural shift. That's why the 10 year is lower is because you're providing desks, but it's not your core competency. You're really going after an office culture there. And so you're really serving ne the need of space I needed.

00:32:42 Yeah. And that's kind of more of a transition phase, but if the serviced office centers wanted to kind of grow into that, know that you will have to change your mindset a little bit, you're going to have to change your market positioning a little bit, but that is an opportunity for growth. Um, that's out there. So as we all kind of just look at our reevaluate things during COVID no,

00:33:08 that, that is something that you could do. You just have to do it with intention because before it probably was done without intention, now, now it needs to be done. And we discuss it as it's the difference between apartment culture and dorm culture. And you're going to need to add like serviced office centers are a little bit there, there are apartment culture and then coworking space.

00:33:30 They're a little bit more dorm culture, functionally. They're the same thing. It's just how they approach things are different. Yup. Totally makes sense. Should we talk about marketing since we are talking about marketing? So talk about marketing, let's officially talk about marketing and what the data says. And I always love this section because I think this is one of the biggest questions on operator's minds.

00:33:52 Like if you already have a space, you're like, well, what's everybody else doing that works. How do you attract members? You know? And once you get them in the door, most of us, you know, we talked about some of the tenure data, which isn't in our notes. I can pull it from the actual study, but tenure is longer than folks think,

00:34:10 I mean, on average is closer to a year across all products. Um, I mean, I just closed my space in may. I had members that had been there for all seven years of my lease. You know, you have that too. I'm sure like they were there the whole time, this day and stayed. And so, um, so the,

00:34:29 the tenure, we, we know how to retain generally, but it's like, how do you attract people and build your business? And if you're, you know, opening expanding a new space, you know, kind of what's working for folks. So I'll let you kind of jump into some of the insights from the data. And so the marketing tactics was another one of these,

00:34:47 uh, breaking points between coworking and serviced office centers. It was once again, just how they approach, um, what they offer. And coworking goes much more grassroots and serviced office centers. W what I call the, I didn't come up with this term, but the lumberjack strategy, they rely on their partners a lot more, uh, online platforms like liquid space and upsweep and Divinci,

00:35:13 um, or online broker. So I dunno, like instantly, yeah, freedom on set offices and stuff. So they make sure that they're listed all of those places and then pay people for when a sale is completed. So they might pay a higher price. They only pay when a lead comes in. Um, coworking on the other hand is much more like the,

00:35:37 like they go at it like a restaurant type thing of like, I'm going to pay for Google ads. I'm going to get the word out there. I'm going to join groups. I'm going to do paid social media and unpaid social media and kind of build up this awareness. And then, so there's two different approaches. One is I'm going to build my own awareness.

00:35:55 And the other one is I'm going to tell people that are talking to all of these people about me and let them talk about me. Do you, I wonder if again, we can't, you know, with the smaller data side, it's hard to, to cut really, um, granularly, but I wonder if one of the other differences is that if you have a larger space in a larger market,

00:36:16 it's more competitive and you have to be on the partner sites and you have to be spending on Google ads. Whereas some of the smaller spaces in newer markets, you know, I have folks in my, you know, coworking startup school, they flip into like a mastermind program and we talk a lot about marketing. They can't, it's hard for them to spend on Google ads because their market is not,

00:36:38 you know, there's just not enough search volume. There's not enough competition and they're already, you know, organically, they're coming up on, you know, the first three slots. So they have to do, you know, sort of the, the grassrootsy, you know, get on the local blogs and do the social media and have a hundred events in the space every week.

00:36:56 And That's a good point from my analysts, from not from the data set, but from just in person conversations with brokers and those partners work better for larger spaces because they're talking to larger teams. And so you need to be able to accommodate that. Yep. Although, so that I think is generally true, except we had instant on our virtual conference a couple of weeks ago,

00:37:22 and I talked to the CEO and I asked him what their average, um, like team sizes. They're I think they're, maybe it's not their average, but their median placement is like one to five seats. Wow. Yeah. So on average they're probably much higher. Like they get the 30 person teams for sure. Like 30% teams don't come through Google.

00:37:45 Right. They're coming through an instant or freedom office or a liquid space. They're not coming off the street from a, a Yelp or a Google review and they typically write need more space. Yeah. And so I just kinda, um, I wanted to kind of hammer down the, just the top five. And so we can kind of just get this compare and contrast.

00:38:04 So, uh, coworking spaces, number one way that they, uh, they, the most effective method of marketing is member referrals. Um, number two is hosting events, three paid digital media that also includes Google. Um, so it's Google and social media. And so then number four, most effective is unpaid social media. And number five is,

00:38:29 uh, networking groups and community groups. And that's your like economic development, um, and other forms. Uh, now we switched over to serviced offices. Nope, same number one, member referrals, number one, uh, number two, social media, unpaid three paid digital media, and then four and five are online platforms and lead PA platforms. Um,

00:38:53 but number one, for both our member referrals, as, as based on her, I don't have any remember referral program and this really kind of just pen and write a note, and I've seen this data a hundred times and talk about, I think people just get stuck. Like don't people tell their friends cause they like where they work, but coworking spaces say 71% effective.

00:39:17 Um, and, and serviced office centers say it's 50% effective. So, I mean, I guess there are a lot more willing to talk if they're going to get maybe a little kickback or something. Yeah. I mean, I think, or just to remind folks to share and to bring it out to remind people know when we do tours, you know,

00:39:37 I'm sure you're like this too. We don't, we've never had anything formal in place, but when we do tours and somebody's like, knows another member, we know when they're in, you know, there's no way they're not joining. They know Joe of course they're yeah. It's like their community's already here. Right. Right. They feel at home,

00:39:53 we don't have to sell them and show them that they're going to feel at home. They can see cause they know they, you know, they're going to like it if Joe's here. So, uh, some things that did fall in, in the marketing was unpaid social media. Um, and I think that is, you know, social media is harder than what people expect it to be.

00:40:13 Um, and you need to have intention beforehand. Now there's a lot of spaces that have a brand strategy with their social media. Whereas before it was just like, I don't know, just do send some photos and put it out there and people will come. But with competition, social media also has a lot of competition. There's five spaces that they're looking at social media,

00:40:35 one that everyone agrees just is ineffective is print media. Uh, and honestly I'm, the data is what it is I think. But Craig's gonna argue a little bit about people just do crappy print media. I also wonder, I thought about that too, with just this new market. Cause you and I talked at the beginning, you know, we've got this new segment of people who are working at some sort of corporate office and it's not necessarily that they're working at Facebook,

00:41:05 we're talking like lots of smaller companies that are like, they don't know about coworking. And I just wonder, is this the time to bring back like the zip code mailer, you know, honestly like, and pay a designer and do it right. And you can be so targeted with print mailers. Um, but I think people just don't think outside the box.

00:41:28 I think they do the cheapest postcard possible. And I'm like, Hey, you know, a Google click costs in Denver, $28 competitive market. It's super to Congo. I don't know if you've looked for Chicago. Chicago has always the same way, really competitive. It was super expensive, but a huge flyer. And we're talking bigger than what you expect is 80 cents mailed to a targeted person.

00:41:53 So, you know, I can do a hundred of those for $800. Wait, is that 100 of those for $80 way better price. Uh, and that would be only around like three clicks on Google. And I can probably do a better job with that. Um, by hiring a branding company or a marketing company, um, or it's just another one of those,

00:42:20 Hey, you need to touch, have seven touch points before someone remembers you. Yeah. It needs to be part of your sales funnel. So you need a way to track it. You need a landing page for people. Like, you know, you need a way for them to get to you and to know, cause I wonder if that's kind of part of it.

00:42:36 People don't know how to manage something that goes out in the mail. Yeah. Yeah. If you're only hitting people, you, you, you hit this point that are searching for coworking. Well, they already know about coworking. Um, and the mailer is growing the audience, people that don't know about coworking. Yep. Especially right now, Hey,

00:43:00 got a spouse at home. That's making you crazy. Come on down the street, we have a spot for you. Big is 100% less kid noise. It's just reinforcing that. I love it. You know, I want to hit on the social media piece. Cause I, I coach people a lot on this and I'm not sure if people take my advice or not.

00:43:23 I think it's table stakes, you know, to your point. I think when people look at a space, if they're trying to feel like, do I fit here when it's not just about the space when you're selling, you know, more a community, how I feel when I go to work every day, you know, what's happening there, who were the other people in this space,

00:43:39 social media is your way to show that off, right? Or your newsletter. It's hard to see those things on a tour. So I think you have to do them, but I always warn people like don't have your community manager spending two hours a day on social media. Cause I'm not sure that ROI is there. And we have to remember, I'm sure you know this,

00:43:58 what is it like 10% of your followers see any post max? That's an organic post. I promote half the posts. I'm like for $5. Boom. Although I will caution that boo boosting if yeah, it could, it may work. But I think even some simple Facebook ads training to know how to manage a little bit of a Facebook budget. And I know you've done some research on,

00:44:25 you know, Facebook ads work in some markets don't work in other markets. Um, my startup school students in my flight groups, group, students talk about this all the time. We'll have people like killing it on Facebook and other people who are pretty experienced, marketers will say, you know, Facebook leads are not nearly as high quality as Google. But again,

00:44:44 it's another point where this may be the time to be just amplifying awareness of your solution because people are searching on Google. They're not searching on Facebook. You have to kind of get in front of them, but it may be worth a little bit of spend just to make sure you're To lower the risk of fake like Facebook ads. Because Facebook targeting for coworking has been,

00:45:06 has been difficult and same with display ads in general. Um, one way to make that really a safe is to just only pay for retargeting of yeah. So that like once they come, I can pay them. I can pay that high price in Google, get them to my site. Yeah. Maybe they'll leave and it will be a bounce. But then I know they're interested and now I'm showing them ads for only 15 cents a click on Facebook or Google.

00:45:33 Um, and so you have to have a bit of a strategy on it. That means we have a suburban space in the North suburbs of Denver we're Facebook does, does wonders. But to your point, it's also not a lot of people searching for coworking on Google up there. So Facebook is our better strategy Is the, yeah, I love it.

00:45:52 I mean, you just have to test, which I think, I think that was kind of the point of, of the research that you did. Like, you know, it's, it's worth testing and trying and figuring out what strategy works for you. But I think the, the unpaid can be challenging just because of the reach can be so low.

00:46:08 Yes. And for social media, I think a lot of spaces for like it hangs out there, it's there for a very long time and people can see it. So if you're going to post on social media, make sure it's quality because no pressure. Yeah, no pressure. But man, like I had to clean up crave density, social media feed,

00:46:32 maybe, uh, about three years ago because I, you know, was more Willy nilly just posting. I was like, Oh, we just need to have conversation. Yeah. Everything. Um, and then I had, I had several members they're like dude, clean that a professional photo, like do more professional photos. You have like your, your,

00:46:51 you have way too. Many of your photos are from an Android phone of 2012, Get a new phone, do photo shoot. Did I? I did it honestly, it looks great. And I was like, I'm proud of it. And I think it represents a lot more because you look at the people that watch videos on social media and it's like,

00:47:14 the view count will go quickly get into. So Videos are huge, which is why you were talking about my background. I was like, yeah, well I do this all the time because videos like get the action, you know, on Facebook and Instagram that's and the algorithm loves it. So, but again, you have to be careful about what you're doing.

00:47:31 It has to be professional and meaningful. It can't just be, you know, I don't know, although I've watched a video of your kickball game, the highlights. Yeah. Right. And it hangs out there and you can repurpose it. So, um, but back to the data, unpaid social media is losing love in the overall industry. But I think don't give up on it.

00:47:51 Just like with print media, we just have to have more intention with it. Um, I think a lot of people were sending out like pizza type flyer coupons of like, Hey, new pizza joint, take $5 off. And you're like, yeah, that doesn't work with coworking. Um, as you, you have to have more intention behind it and,

00:48:10 and purpose. So those are the big takeaways. Um, but member referrals, if you're not doing member referrals, that's the most effective way, according to our data, um, Start your virtual mail program, start your member referral program and things will start looking up. Yeah, I think so. Awesome. Yeah. I mean, these are some,

00:48:32 some great highlights and there's a lot of good detail that we didn't get through that's in the full report. So you can grab that@theglobalworkspace.org under resources. Craig, let's just spend a couple minutes talking about what, tell us about Swap. So, okay. So den swap is, uh, there's a few of us doing den swap and it launched last September actually at GWS conference was our big coming out.

00:49:00 And so, uh, it's a marketplace for people to buy and sell coworking businesses. Um, now that the coworking world's been around for about 10 years, uh there's now people that are thinking about succession planning of like, boy, I didn't mean for this to be my lifetime thing. I just wanted this to be a side business. Why I did this thing or I need to move from my lifestyle's changed and how,

00:49:24 how do I, I built up this beautiful community, but I don't want to just close it down, you know, that would break my heart. Um, and then you just tell all your friends that you've made to go away and you're like, wait, you built a business here. You spent money on this. You know, it's mostly, it's probably,

00:49:43 it could be profitable and worth a lot of money. So, um, we try to ease that friction to help people hand it over to the next generation of space owners. Um, and then we also work with property owners that want coworking spaces inside. So we really try to be a matchmaker, um, from property owners with maybe spaces that are doing operation management contracts so that they can do a joint venture something.

00:50:10 Um, we use our coworking consulting caps on and uh, we try to help guide people to make that best match. And we've built a lot of cool tools. So like a lot of free tools. Um, we have an instant profit and loss calculator to kind of get a gut check on a space. Uh, we have the coworking valuation calculator.

00:50:31 You input a answer about 10 questions and we tell you how much we think your space could be worth. Um, and then we have the coworking heat map, which is coworking heat map.com. And we do a Google basically map search and we mapped out every single coworking space in cities, above 20,000 in America. And there's a whole bunch of filters and you can just go in and start playing around and poking around different cities to see where coworking spaces are.

00:50:58 Um, and what style of coworking spaces they are. We did it over 5,000 entries and categorized each one to whether it's like a chain, an executive suite, uh, traditional coworking. Um, so we put a lot, it's a very valuable tool. Uh, and so I hope people take advantage of it. Yeah. I love it. Well,

00:51:19 and I love the buy sell platform because there's really nothing out there. And I think it's a unique business. And so bringing, you know, having a place where people can list their business and find people who want to get into the business, if Craig doesn't buy all the locations, well, I know there's some good deals on there when it's like,

00:51:41 how much less risky is it to buy a coworking space, then start a coworking space. You're like, if you go into it and you're like, this feels good, you know, in here, you're like, I want to build this. And what if it's like, well here you can have it. You know, like, yeah, it's for sale.

00:52:02 The poor guy that put all the hard work into like filling, you know, from scratch and yeah, well, before he had to close it down, maybe he'll get, you know, 10 hundreds of thousands of dollars for it. Uh, and so that's a whole new mindset. I know. It's like when you do your startup school, it costs well over a hundred thousand dollars,

00:52:24 half a million dollars to often start a coworking space and you're hoping to build a community. Um, this is a chance, you know, hopefully for you and be like, I love this community. I, I want to put some elbow grease into this and turn it into something special. Yeah. Um, yeah. So I'm excited about den swap and the property management matchmaking.

00:52:45 I think it needs it, a new voice inside of there to a, let people know that this is an option like, Oh, you like to do a joint venture together with a coworking space operator, especially a, the trend. Yeah. Yeah. It's, it's the trend. And especially during COVID, there's gonna be a lot of empty retail spaces and just commercial office space that we would be appropriate for coworking.

00:53:08 Yeah. I love the potential retail space because I think some spaces even that are, may be typically too small, like just maybe repurposed, it may be the time and you can find a way to scale it, you know, have enough of them kind of around, uh, an NGO. I I've always loved this model to where it's like, you have like five retail spots kind of throughout a downtown,

00:53:30 they're all like 2000 square foot spaces. And now you can get one membership to one of them and there's like conference rooms and drop. Yeah. Wherever you need to be. Yeah. Yeah. It's like, there's a space. Right. And you have some floating staff, it's like a little bit of a different model, but you could, you could do it and make it happen.

00:53:45 And I think we'll probably see that with the retail space. It's open. I, yeah, I've always loved that concept. I think I wrote a love letter blog to the concept, like cause Cove try to do this like 2012, something like that. And I, and I wrote a love letter blog post to the concept back then, and I hope that happens.

00:54:05 There's an idea out there for anyone listening. Totally. Well, the COF is a good model. And I wonder if they'll start to scale that a little bit more. They've gone into software, I think. Yeah. I knew that they were kind of abandoning that. Yeah. But I know I always liked it too. I was like super smart.

00:54:20 Just kind of useful. And you just have to manage the community aspect, um, carefully, since it's kinda transgenders lessons to learn. I still love it. I totally, I would pin that letter again. We might see it. You might do it. Who knows? Okay. Yeah. Awesome. Well thank you for sharing your insights. Thank you for all the work that you did on helping us put this out.

00:54:43 And for everybody listening, if you didn't fill it out, we would love next time when you get this in your inbox, give us your data because the more data we get, the more useful it is for everyone At a hundred percent, this is the best data set. Um, and we could always use more of it. Um, dedicate 30 minutes,

00:55:03 you know, and, and be honest, Right? Totally. It's anonymous. It's totally anonymous this year. We gave out staple sponsored it. And we did, um, two, I think, um, like the fancy touchscreen laptops, um, we, uh, drew names out of those who filled it out. So there is some upside in addition to just access to data.

00:55:28 Yeah. And just knowing that you're, you're contributing to the common. Good. Exactly. Greg, I have your contact info in the show notes, but if somebody wants to find you, what's the easiest place for them to goCraig@creativedensityorcraigatdenswap.com. Perfect. All right. Thanks for joining us today, Craig. Absolutely. Thank you.

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