322. Tired of the Cost per Square Foot Conversation? Shift to Total Cost of Occupancy
Resources Mentioned in this Episode:
Everything Coworking Featured Resources:
Masterclass: 3 Behind-the-Scenes Secrets to Opening a Coworking Space
TRANSCRIPTION
322. Tired of the Cost per Square Foot Conversation? Shift to Total Cost of Occupancy
00:00:02,"Welcome to the Everything Coworking podcast, where every week I keep you updated on the latest trends and how toss in Coworking. I owned and operated Coworking spaces for eight years and then served as the executive director of the Global Workspace Association for five years. And today I work with hundreds of operators and community managers every month, allowing me to bring you thought provoking operator case studies and inspirational interviews with industry thought leaders to help you confidently stay on top of what's important and what you can apply to your own role in the Coworking industry."
00:00:45,"Hey there, this is Jamie Russo. Thanks for joining me. It's great to be here. Okay, we are gonna talk today about a topic that came up in the Facebook group, and I love a bunch of things about this. It's a great question. It's a great challenge and thank you Karen Tait. Huge shout out to Karen Tait, who is outside of London for offering up a blog post that she had kind of in her back pocket that answers this question."
00:01:22,"So she was DMing it to folks, so we took her idea and wrote a blog post for you. So we're gonna offer that up once we get into the episode here. Karen has been a part of our programs for a long time and I know Karen and was excited to hear that she's working on response to this question. So the question or challenge is how do you get folks to not have the square footage conversation?"
00:01:56,"So if you have folks coming in who are used to looking at traditional leases, traditional commercial real estate, you know this 'cause you signed a lease, they think in price per square foot and probably a lot of tenants who maybe don't know that until they learn it from their broker, because you probably didn't know it until you started looking for space, you know,"
00:02:20,"to house your Coworking business. But the brokers for sure think this way. And as a matter of fact, this is a topic. So I'm running a course with Kane Wilmont for Avis and Young, which is a major brokerage company. Well, they do a lot of things, but one of the things they do is commercial office brokerage. And they're super committed to making sure that they're brokers in the field understand how to integrate flexible workspace into their holistic recommendations to their clients."
00:02:55,"So it may not be the answer. So putting a tenant in a Coworking space may not be the answer, but as we all know who are listening, Coworking, flexible office meeting space, event space hub and spoke space, we have a lot of solutions that are really useful to traditional occupiers today of all sizes, right? So we have solutions that might augment traditional office space."
00:03:26,"So we have this conversation with the brokers. We've run, I think five cohorts of this course. Now we have another one coming up at the end of the year. We love doing it, it's a lot of fun. And we work with brokers who are interested in flex and wanna understand it and they have some great success stories, but this is definitely one of the challenges that they have."
00:03:49,"Brokers think it. And so tenants think it, they think Coworking is expensive because they're looking at at it on a square footage basis. So Kane has an awesome way of teaching this in our class and he usually does, he covers this section, but I saw it come up in the Facebook group and I thought, okay, I'm going to sort of cover this a little bit."
00:04:08,"I won't give away like all of the secrets, you know, and approaches that we share in the class, but I wanna cover some of the concepts because it comes up a lot and it would be good for you to know how to think through it and to be able to have those conversations either with brokers or with potential members. So the challenge I think that we're facing,"
00:04:34,"so somebody po it might've been Andrea posted this in the Facebook group and said, you know, people come in and wanna, you know, ask a like what is the price per square foot? And as Coworking operators, some of you may not know it, so you may not be able to share it and you or you just don't want to talk about it."
00:04:57,"So, you know, I run a program called this Coworking Startup School. We have started actually to teach it in a sense in terms of pricing. So when you're looking at how to price your Coworking space, it's kind of important to understand what is the market doing and what are the best ways to get apples to apples is to try to get an understanding of how your market is pricing per square foot."
00:05:22,"So you can look at per seat, that is a good indicator, but not every office is the same size. So a four person office in a WeWork is different than a four person office in a bond collective is different than a four person office in another Coworking space. So understanding the per seat price is important. That's what I used to always teach."
00:05:43,"And now when I do pricing analysis for folks, if I'm working with an asset owner, I will look at the square footage pricing. And when I'm also looking at pricing power, I wanna understand, you know, how much, you know, how, how are we pricing per square foot, both on a monthly basis and an annual basis. That's important to understand too."
00:06:06,"Different markets will refer to it differently. So I what my first location was in Chicago and that they talk about pricing on an annualized basis. So it's 23 bucks a square foot and in California they tend to talk about it on a monthly basis. And I had trouble making, doing the fast math in my brain sometimes. I mean, I could do the quick math if it's arou,"
00:06:32,"you know, easy round number. But I, I always, you know, I, my, I naturally kinda go to that annualized number, but I always look at it both ways just so I can have those conversations. But it's good to know, some people will use an annualized basis, 20 bucks a square foot, or somebody will use a monthly basis like two bucks a square foot,"
00:06:52,"which would be $24 on an annualized basis. So anyway, okay, so I wanna set a little bit more context here. Why is this question coming up? It's probably always come up and again, we don't kind of like to talk about it because what we're offering is not square footage, right? We're offering space as a service. And I know some of you out there hate that term,"
00:07:17,"so call it whatever you want, but we, we are not focused on the 250. So 250 square feet is roughly a four person office, right? So, but so if you wanna, you know, go head to head against a commercial office lease and you know you're selling your 250 square feet for $2,000 a month, that's gonna look high, right?"
00:07:41,"Because the per square foot cost of that is high compared to a traditional lease. So if you just compare apples to apples, so I didn't do the math ahead of time, but let's say that office is $130 a square foot, right? 250 divided by whatever, the 2,500 divided by two. Well I could do that math, it's, hold on."
00:08:09,"Okay, so if you're talking about a 250 square foot office, roughly four people and you're charging $2,500 a month, that's 10 bucks a foot on a monthly basis, 120 bucks, $20 on an annualized basis. Now this totally depends on the market that is in the ballpark of what would be probably reasonable for a lot of markets, A lot of times I see,"
00:08:33,"you know, one 30 ish. But again, it depends on pricing power and the state of the commercial real estate market. So price per square foot in a hot market is going to look different than the price per square foot in a rural market. Very different as a matter of fact. So this is just an example, but 120 bucks a foot,"
00:08:54,"right? For this 250 square feet and the broker's thinking, well 250 square feet is, is tiny and you're asking $120 a square foot for that on an annualized basis when they can go get traditional commercial real estate for $25 a square foot, right? It's just not apples to apples. What you are providing, and you know this, but I'm just kind of setting the context,"
00:09:18,"is that four person office and all the common space, the kitchens probably restrooms, reception area, soft seating, meeting rooms, all this other space that they have access to, right? So it's not just the 250 square foot feet, it's all of the common space that you have. So one way to do this would be to add up all of that common space and then give a per square foot number based on that."
00:09:46,"That's what I used to do. If I was really pressed by someone who really wanted to know how many square feet, I would do it that way, just add up all the common area and then say here's what the price is per square foot to all the space that you get access to. Now, not all of that is dedicated space. The dedicated space is your four person office with the door that closed."
00:10:06,"Hey, I am interrupting this episode for any of you that are thinking about or are already working on starting a Coworking space, which would be 2024 at this point, if you're just getting started, I wanna make sure you know, we have updated the format of our Coworking Startup School. We are now running it live. Although you don't have to attend live,"
00:10:31,"you can get all the content and resources and the roadmap without attending live, but we think that is the absolute best way to get the support that you need and build your own Coworking community as you're getting started. So we've split the Coworking, Startup School into two phases. And we've been running phase one, which we call validate your plan. And we really,"
00:10:57,"really want folks to clearly know their numbers before they commit to a lease. We even have folks that already own buildings that are going through phase one to make sure they get everything right before they actually commit to their layouts and start construction. So phase one is really around knowing who your target customer is, making sure you have the right size of space that aligns with your goals,"
00:11:26,"and then figuring out your product mix, your floor plan and your pricing and then putting that all together so that you have a pro forma that you can take to the bank, as they say literally and figuratively. We also have pitch deck and business plan templates and we run these workshops live. So you're actually, we have prep work that you're doing offline as homework."
00:11:51,"We try to keep that pretty reasonable. We want you to be able to complete this work and make a go no go decision. And if you have draft floor plans and things that you're trying to like finalize and take to contractors or get plans approved on, we want you to be able to do that pretty quickly. So we run this across five weeks,"
00:12:09,"which gives you a little bit of time to catch up on your homework. And we run live sessions with live coaches so that we can get your questions answered and walk you through as we go. But you're workshopping, you're doing the work on the calls unless you've already done some of the work and then you're getting feedback on that work on the calls. Again,"
00:12:29,"you don't have to come live, but we've designed it so that you get expert support and again, you meet others who are going through the same process and we do it pretty quickly. So phase one, validate your model is running our next session, we have scheduled to start at the very beginning of January and that's a ways away if you're listening to this when we just launch it."
00:12:53,"So you can register anytime and get the content immediately so you can start working on it. If we have enough folks register, we will move up the live date. So we like to have a little cohort that we can run through the, through the program. So if we get folks who are registering, then we can move up the date of the start of the first live session."
00:13:15,"We've set it for the second week in January. So to get more details on that, go to Everything Coworking Everything Coworking dot com forward slash start. Now back to our episode. So the thing you want to be careful about is that some operators will give square footage. So if you go on LiquidSpace for example, which I do often to look at pricing,"
00:13:48,"you will see that companies like Regis, although I don't think Regis's pricing is accurate on LiquidSpace or any of the other places that you'll see it pop up, but some operators industrious does, it will put in square footage of the office. Expansive does it. So it is out there. It's not that none of the operators are using that as a metric because they probably get pressed more often and have just decided,"
00:14:16,"you know what, if everybody's gonna ask for it, we're just gonna put it online. But most Coworking space operators avoid putting it up there. But it is good to know because also like a one person WeWork office might be 36 square feet, which is not aada a compliant aada, a compliant would be 54 square feet and a one person office in your space might be 80 square feet or a hundred square feet,"
00:14:42,"right? So it does matter to some extent those number ranges probably sound a little bit small, but the difference between 56 square feet and a hundred square feet is pretty significant. It's almost twice as big, right? So, so this size does matter. And being able to tell somebody how, how many square feet you are compared to another operator, if they're pretty savvy and they're really,"
00:15:06,"you know, kind of comparing can be helpful. We don't love to talk about it because again, the value is that the total cost of occupancy usually is less. Okay? So, so somebody else made the comment in the Facebook group that, hey, if somebody's like really focused on this number, then they may not just not be a fit for Coworking."
00:15:29,"So again, just to zoom out, I would say in general, the folks who are really great for Coworking, they understand already all the pain points of get having their own office space and they're looking to avoid that or they're small enough that it makes zero sense to get their own space. So if you are, you know, there, so there,"
00:15:52,"there is, well let's, let's set a little more context. I would say what is shifting in the marketplace? It used to be right, if you were a small company, it just made no sense for you to go find space. There's not a lot of small square footage office space on the market, pre C-O-V-I-D pre pandemic. In most markets that space just didn't really exist."
00:16:13,"Sometimes it existed and usually it was not very high quality and you had to still had to furnish it yourself and you still have to go get your own internet connection and then you're sitting all alone in kind of a crappy office. That has changed to some extent. So what is happening out there? Well, there's a, in some markets there's a whole lot of sublease space that is happening in San Francisco."
00:16:33,"There's this giant vacancy of Coworking of, sorry, of commercial office space and some of it is sitting there furnished, right? So there's furnished sublease space in a lot of markets. And so brokers and even tenants are sort of just anchoring and defaulting to this idea that like, well, we'll just go get a cheap, a cheap sublease that is furnished and they consider that to be move-in ready."
00:17:00,"So to some companies of varying sizes, you know, that is a pretty decent solution. If they want their own office space, then they've got this move-in ready option that is their own and has their own entrance and, and all those things that are pretty compelling to a lot of businesses and they can get, probably get a decent deal on it. Maybe they negotiate,"
00:17:24,"you know, below market rent on the sublease and again it's furnished so they can like walk in and, and you know, kind of get rolling. Now Kane is always pointing out to our broker cohorts that subleases are not actually really move-in ready. Like you, you are not gonna walk in and do nothing. Usually like are you taking their IT equipment?"
00:17:47,"No, are you taking, did they leave the coffee equipment? Probably not. Can you actually use all their furniture as is? Maybe, maybe not. Do you need to paint? Do you need to, you know, change out the carpet, et cetera? Usually a space is not truly move in ready and on a sublease the landlord is not gonna give you tenant improvement dollars."
00:18:08,"So you're spending some money to get into the space. Again, that is less than you would to fit out your own space. Anybody who is open and is an operator or is working through this process. And we just started our second cohort of our live version of our Coworking Startup School, which we love. If any of you are listening, I just listened."
00:18:31,"Kim Lee did was is one of our coaches. She did the first session. She's an amazing facilitator. I probably said this last time, but every time I listen to her I'm like, she's so good at this. But I listen to the recordings 'cause I love hearing everyone's story and what they're working on and where they are and how they're thinking about it."
00:18:49,"So the costs are pretty significant to lease commercial office space to do construction, to buy furniture. We'll go into these details in a minute, right? It's a giant pain in the butt. And I had to do this for, I worked before I did Coworking. Well, I went to business school, if you're watching on YouTube, I have my booth t-shirt on."
00:19:12,"But before that I worked for a Startup company and I was one of the first employees and we were the perfect candidate for a Coworking space, but it did not exist at the time. So we took, you know, I don't know, was it 2,500 square feet of space? Maybe it was 3000 square feet. And you know, we bought our own furniture."
00:19:32,"We had to get the internet set up, we had to, I mean, even the lounge furniture, we had to go by the lounge furniture. We bought Ikea desks, we had to put together the Ikea desks. It was a huge giant pain. And we had these really big clients that we had to service. And so we were working like a million hours a day and figuring all out all of this other stuff,"
00:19:53,"which was, it was ridiculous. And with this tiny kitchen that wasn't that great, we had to negotiate for a Nespresso machine, which I really wanted. So we just didn't have a lot of amenities. You know, it was, it was a perfectly fine office, but I cannot even imagine how happy we would've been in a Coworking space. And we were constantly adding people."
00:20:17,"Sometimes we'd subtract people after I left. They, they had some downsizing, but we were really unable to predict how much space we needed. So Coworking would've been perfect for us. Okay? So that's the other thing that's happening in the marketplace besides subleases, is spec suite. So landlords are creating spec suites that are what kind of what I just described for this small company that I joined."
00:20:42,"There were, I don't know, 15 of us in that office and I could do better math and figure out exactly how much square footage we had based on 15 people. But landlords are saying, okay, you know, if you need 2,500 or 3000 square feet, that's fine. We're gonna chop up suites, we're gonna put carpet in, we're gonna sort of make them,"
00:21:04,"we're not gonna furnish them, but they're gonna be pretty ready to go. So you have to get your own furniture, you have to get your own internet connection. If you want phone lines, you gotta set up the phone lines, you gotta do your own reception, you have to do all of those things yourself. But there's carpet and there's some walls and it's kind of set up probably about how you'd like it."
00:21:24,"That's one range. Some landlords are even doing sort of move in ready spec suites with the internet lit up, there's some furniture in there and some Coworking space operators. If you're listening and you're one of these folks, I think it's brilliant. Run an HQ model where you provide that type of suite in the building where your Coworking space operates so that those members can take advantage of Coworking services and one point of contact,"
00:21:53,"but still have their own private door access and their own private suite and all those things we were touring. Hey there, I'm jumping in again this time. I am speaking to those of you that are either getting ready to hire a Community Manager or who have a Community Manager and you would like to support their training and development. We know how challenging it can be for Coworking space operators to create their own training and development material to support their community managers."
00:22:31,"And this is so important in terms of onboarding new community managers and supporting the growth of your existing community managers. And we're getting towards the end of the year, what a great holiday gift end of year gift to give to your Community Manager. So the platform is really around a couple of things. One is access to a community of like-minded folks. We have a very active Slack group with really wonderful questions that are posed every single day."
00:23:03,"And we find that's one of the biggest values. We have community managers from all over the world and this is an excellent group of community managers that have invested time and effort into getting better at that role. And they are the kind of folks that you want your Community Manager to be by and hanging out with and they know their stuff or sometimes they don't and they ask questions and we help them out."
00:23:27,"So I am in the group, we have coaches that are in the group to support them. So we love when they ask questions for things they need help with because the other aspect of the program is really around helping them get resources they need to make their jobs easier and to learn things that they can use in their role to be better at their job."
00:23:47,"So we provide some done for you resources like Google business posts, detailed event ideas, et cetera, that they can just kind of grab and go and use. And we also provide monthly resources that add to our training library so they can do our certification. And then we have a lot of electives that help them kind of get better at all the things that that go with the role."
00:24:14,"So the, our community managers wear a lot of hats. So we break our content into industry knowledge for new community managers, community building operations, sales and marketing and leadership. So the leadership bucket is great for our more advanced community managers. We also have virtual office and digital mail training and coffee training for anybody who needs to know how to use commercial coffee brewers."
00:24:43,"So we have some of the, I'm just gonna give you kind of a sampling of content that we have. So in our community building modules, we have hosting your first member events, building community with budget friendly events, member events, swipe files, our sales and marketing modules. We have tour training, we have the training on the full Coworking sales funnel so they understand what that looks like."
00:25:12,"We have social media planning frameworks. We have, what else do we have? Three simple steps to an effective marketing newsletter. These are just some of our samples. Ooh, these are some of our best utilized topics. Demystifying the process of letting your Coworking members use your address for their Google business listing. How to close a tour operations modules, how to set up automations,"
00:25:41,"how to do a new member onboarding audit. Simple ways to use AI to boost your productivity. We have over 40 courses in the program. So we cover kind of higher level topics. And then we also cover things that are timely, like the CMRA updates, Google business updates, et cetera. So we get together monthly to do official training and we also host a best practice sharing call,"
00:26:09,"which is one of the fan favorites of the group and the Slack group. So if you have any questions at all about the program, don't hesitate to reach out. You can learn more and register at Everything Coworking dot com slash Community Manager. Now back to our episode. So Studio by Tishman is a great example and Kane and I toured, he's, I'm sure he's toured their spaces before I had not been in one and we went into their D one of their DC locations and they have these great,"
00:26:41,"I think it's called Private Studio Private I think is what it's called. And they, it's, it can be fully serviced, they'll handle your, handle your it, they'll give you like op support, they'll stock your snacks, they'll basically do everything. But it's a suite that looks as if it's yours, it's branded, it's furnished, and you know,"
00:27:01,"it's all set up and it has a private entrance, but somebody's servicing it and it's in the building where there's Coworking. So I love that product. I think it's really smart. And for landlords that are getting kind of integrated with Coworking operators, that product's gonna make a lot of sense. So you're also competing with that type of product, which is priced more closely to a Coworking product,"
00:27:24,"especially with those services added on. So Tishman adds, or studio, I should say, adds a la carte fees for those services, which is also pretty smart. So you can opt into those or not, but certainly that will add up and increase your total cost of occupancy. So I'm kind of rambling a little bit, I'm weaving in a lot of topics here."
00:27:47,"Let's get back to the total cost of occupancy. So there's a lot of product out there, I guess that is now competing with Coworking, the subleases, the spec suites, the, you know, private studios being operated by landlords and Coworking space operators. So the mo least expensive of those would be a sublease. And now again, if somebody wants a sublease,"
00:28:13,"I'm not sure you're gonna be able to compete with that in terms of, you know, that the, a primary office, but you might be an add-on location, you might be an event location, you might be a meeting space location, might be an offsite location. You might be a hub and spoke solution. So there's a lot of the roles you can still play besides sort of the,"
00:28:36,"you know, long-term membership that of course we're all looking for, for ongoing, you know, recurring revenue. So, okay, so how do we think about this? If somebody comes in and, and says, you know, wants to talk about square footage. So total cost of occupancy is the, the concept of this is that it goes beyond the cost per square foot,"
00:29:02,"right? So the total cost of occupancy includes rent, yes. So it includes base rent, it includes operating expenses, so things like property taxes, insurance and maintenance in a sublease, some of those might be wrapped in and in a Coworking space, they're gonna be bu bundled into the membership fee. So additional cost of occupancy furniture, okay? Furniture costs a lot of money if you're buying it from scratch."
00:29:35,"So if you're competing with somebody who is looking for a small office and they have to buy their own furniture, the fact that you have that included and that's not an upfront cost for them, is a big deal. So you could do the math on how much would it cost them to furnish their own, you know, four person, 10 person, 20 person office plus meeting rooms,"
00:29:57,"plus all the tech they'd have to buy. Think about all, you know, the kitchen supplies. How about the fancy coffee machine? You know, Kane always mentions he spent, you know, he buys the fancy, you know, push button coffee machines that make amazing coffee. Those machines are like $30,000. So if you're already open or you're working on opening,"
00:30:17,"you know that the furniture and the equipment is really expensive. So that's usually 20 bucks a foot ish, maybe more if you're a higher end space could be a little bit less, but that adds up, right? So if folks are getting their own furniture and equipment, you have to include that in the cost of occupancy. So if someone is going to get their own office space,"
00:30:41,"they have to buy the furniture and all the equipment, if they're gonna join a Coworking space, it's already bundled into that membership fee. So utilities and amenities, again, like coffee, meeting rooms, cleaning service, those things are bundled into the membership fee. But if you are leasing your own space, you're gonna pay for those things as line items,"
00:31:03,"right? In addition to rent. So again, this is to get them out of talking, of comparing just the rent back to that, Hey, you're charging $120 a foot for this four person office. That's crazy when I can get my own space for $24 a foot. Okay? But that's only rent. So you have to add on operating expenses,"
00:31:24,"which we talked about, furniture and equipment, utilities and amenities, the and then staff. So I would bucket like your Community Manager into that. When I worked for the Startup and we had this small amount of space, we still had to have somebody who, like she was an office manager, she would meet clients, she would, you know, sort of greet guests,"
00:31:48,"she'd handle the mail, she'd call the Comcast when the internet went out, she'd deal with the landlord when, you know, a light bulb needed to be changed. So we still had to have somebody who allocated hours to managing the space. There's a, you know, sizable cost in there that you wanna make sure you're including, we had talked about like coffee and snacks."
00:32:11,"So those are all direct costs. How about the cost of flexibility in a Coworking space? Maybe you're signing for a year. If you're taking more space, you might sign for two years, but in general it's pretty darn flexible. Subleases are not gonna be for a year, they're gonna be for longer, right? And a commercial lease, the spec suites may be shorter term,"
00:32:33,"but again, usually you're still gonna have to do a bunch of things yourself. So the total occupancy cost is still more than just the rent. And they want at least a year. Maybe they want more like three years. So the ultimate flexibility really lies in Coworking. So that's really important too. And the ability to flex up and down so you're not paying for a fixed amount of space."
00:32:55,"You can flex up if you need to hire folks. You can flex down if things change in your business. So you really want to show the layers of all of the costs of occupancy that someone is going to incur depending on the type of space that they take. Again, if they're taking a sublease that's fully furnished, that's the perfect size for them,"
00:33:18,"they are still going to have some costs and it's possible that it comes out to be a little bit less than a Coworking space. But there's still a whole bunch of things that they need to do to manage that space. They still have to get their own internet, they still have to manage. They go get their own IT equipment, set it all up and manage it."
00:33:35,"Somebody still has to manage the coffee and greet the desks, greet the desk, gr greet the guests, maybe put together the desks. So there's still a bunch of stuff that has to get done if somebody's taking a sublease. So this is the challenge is this might seem obvious to you, like of course, like Coworking is plug and play and is worth,"
00:33:53,"it's totally worth like every penny. Well, why would you think about it in terms of square footage? It's about the experience, it's about the community. I mean, we haven't even covered that, right? You know, in most small companies, there's nobody managing the community, there's nobody hosting member events, there's nobody doing all of those things like creating a vibe."
00:34:13,"Nobody's doing that. Creating community, bringing people together, hosting happy hour with the charcuterie board, hosting, you know, pumpkin carving day gift wrapping stations that if, if that is happening, that's a, there's a person with cost associated with that. So, so, but so, so the perfect Coworking customer just gets that, right? Like that's intuitive."
00:34:36,"They don't really need to do the math. They're like, oh yeah, easy button over here. Very hard button over here. But brokers and folks that are used to commercial real estate, they think in terms of square footage, they're not kind of framing it the way we're framing it. So you have to help them frame it. So by having these conversations with them,"
00:34:59,"and this takes some work because this is like hardwired if they've been doing this for a long time. So if you've got brokers who've been selling commercial real estate for 20 years, it's gonna take some unwiring for them to get used to this idea. Like all, you know, what comes in the package and how do you compare that? And we do this great breakout that Kane designed in our course for the brokers that really just helps them have this aha moment."
00:35:27,"It compares the total cost of occupancy. So we go through a bunch of cells on the Excel and then you hit the summary tab and it shows you how Coworking is actually usually less expensive. And by the way, for the brokers listening, this is a sort of a separate topic, but I'm just gonna bring it up as a bonus. The broker gets paid on the total cost of occupancy in a Coworking space,"
00:35:50,"right? Because it's all wrapped into the membership fee in a traditional lease, they only get paid for base rent. So that's it. So they don't get paid for all of the other things that the tenant is paying for. So the broker can do quite well when they're placing folks into Coworking spaces, especially when it's multiple seats. Not usually if it's a flex desk or a dedicated desk or a one person office,"
00:36:14,"but when we're talking about multiple seats, things get pretty interesting. So hopefully this is helping if you can provide a visual handout to the folks that are sort of, you know, having this challenge and bringing up these questions that can help you usually also really have to walk them through it. I love the blog post idea. Certainly it's good for SEO,"
00:36:39,"it cannot hurt. We're gonna have, we have an opt-in for a sample blog post for this. You can grab that at Everything Coworking dot com forward slash tco for total cost of occupancy. So let me just think about here, what else we wanna talk about here. Again, the other, there's direct costs and then there's indirect costs. So you also,"
00:37:03,"especially these days, you really want to walk people through the advantage of the flexibility that you have in your space. So it's not just about the direct costs, the coffee machine, the furniture, the actual, you know, lease, the internet fee, the cleaning services. But the advantage of being able to flex that up and down as needed is really compelling to a lot of folks."
00:37:28,"And then the amenities. And also just, how about this, how about the easy button on Coworking for creating an office that people actually wanna show up to, right? It can be pretty hard to create an office that folks wanna come to. And again, you have to have someone on staff who's doing the member engagement activities and all the fun things that make people want to come to the office."
00:37:51,"Or you have to pay for really expensive amenities that maybe don't come with a building. Maybe they do come with a building. But oftentimes Coworking spaces are choosing locations that have these built in, and including meeting rooms and offsite rooms and event spaces and all those things that can be really useful to your company. And allow a company, sorry, I'm talking as if you're the client,"
00:38:14,"and allow the company to really take only what they need, right? And then use these meeting rooms and offsite rooms just as needed. So they're paying a la carte a lot of times for that space, which is also a huge advantage because think of all the meeting spaces that are sitting unused or the desks that are sitting unused in traditional office space. So that's an indirect benefit as well."
00:38:38,"Coworking spaces are usually in central locations, which can be convenient for employees. So these are some of the like other benefits that you might, that are, it's not really total occupancy cost, but there's sort of a cost in quote, you know, to that the convenience factor for employees and clients, because again, usually Coworking spaces are, we pick those locations to make them easy to get to,"
00:39:03,"usually easy to park. Okay? So when talking to a potential member about total occupancy cost or total cost of occupancy, I guess you could, you could do TCO or TOC, we're gonna do TCO. Total cost of occupancy. When you're talking to a potential member, one, know when you're not gonna win and let it go, right? There are folks who just aren't a fit."
00:39:30,"They're really, really just like stuck on this idea that they want their own space. They would never use a Coworking space, or they just cannot buy what you're selling around total cost of occupancy. And so just let them go because there will be folks who just really get it and are thrilled that you're here. So you need to, you know, spend your sales and marketing time on folks that are more likely to convert."
00:39:54,"So just, you know, kind of, kind of feel it out. And if you don't think you're gonna get anywhere, if that somebody's just way too difficult, just, just leave it, you know? But you can use some tools. So I love the blog post. We'll give you that. You can use a visual that kind of stacks the total cost of occupancy against the one membership fee with everything all bundled in."
00:40:15,"Sometimes people just really need to see a visual that helps drive it home and really make the point. So if they're not used to framing it that way, using the visual can like have a major light bulb moment and train your team. And actually, now that I'm thinking about this, we have done total cost of occupancy training for our community managers. And I'm going to refresh it and bring that back up for them because this conversation is probably happening more and more."
00:40:43,"When I say our community managers, I mean, I mean in our Community, Manager, University. So if this is a topic that you are struggling with, enroll your team into Community, Manager, University. And they can go through that training and really kind of get it ingrained. Because if it's your team that's giving tours and having these conversations in person over email,"
00:41:05,"you want them to really get it right. You want them to be able to have these conversations and walk potential members through it. So that's a great way to do it. My computer screen, oh, I know why I put, put my ring light up and it keeps tipping over my giant computer screen. Anyway, you can only see that if you're on YouTube."
00:41:22,"You see me my like re rewriting the, the monitor. Okay, what else do we wanna talk about? So th this is an important conversation to be comfortable with. This is probably mostly important if you have offices that are not one or two person offices, right? You're probably not having this conversation with very small groups. You're having this conversation if you have suites or larger spaces."
00:41:46,"So be prepared for those. And again, have these conversations with your team. Do some role playing, you know, play role, play the pain in the butt client who only wants to talk about, you know, cost per square foot. Know that the brokers are gonna come in thinking that way and don't, don't hate on these people 'cause they think that way."
00:42:05,"It's just how commercial real estate is usually talked about, right? So you gotta help them think differently about it and certainly, you know, be willing to have the conversation. So, okay, that's it for today. If you guys have more questions about this, send me a DMM pop in the Facebook group and the blog post is available at Everything Coworking dot com slash tc."
00:42:34,"Oh. All right. We'll see you next week. Thank you for listening to today's episode. If you like what you heard, tell a friend, hit that subscribe button and leave us a rating and review. It makes a huge difference in helping others like you find us. If you'd like to learn more about our education and coaching programs, head over to Everything Coworking dot com."
00:43:11,"We'll see you next week."
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