332. Jamie Russo and Giovanni Palavicini Share Their 2024 Coworking Industry Predictions
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TRANSCRIPTION
332. Jamie Russo and Giovanni Palavicini Share Their 2024 Coworking Industry Predictions
00:00:00,"Welcome to the Everything Coworking podcast, where every week I keep you updated on the latest trends and how tos 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 a thought provoking operator,"
00:00:26,"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. Welcome to the Everything Coworking Podcast. This is your host, Jamie Russo. Thank you for joining me. We are a few weeks into 2024, but I would like to present the 2024 Coworking industry predictions that Giovanni Palavicini and I put together."
00:01:03,"We are also running this over on the Flex Uncensored Podcast, and if you're not a listener yet, you definitely should tune in. It's a little bit different than this podcast. We tend to focus on interviews. We do almost exclusively interview format podcasts. We occasionally do solo episodes, so we do interviews with industry thought leaders, sometimes vendors, folks that geo digs up that the world has not heard that much from,"
00:01:33,"and folks that you have heard from, like Ryan Simonetti and Jamie Hodari, et cetera. We actually just released the, what I like to think I was the very first report in-depth report of Vast Coworkings acquisition of Intelligent Office. And Vast also owns Venture X and Office Evolution, making it the third largest Coworking brand in the world now. So that was released last week,"
00:02:07,"and so we held our predictions episode so that we could release that in a timely manner. So we recorded this a few weeks ago and we don't have a crystal ball, but I think that we are gonna be pretty right on with our predictions. It'll be fun to take a look back at the end of the year and see what came true. We have some that are a little bit bold and some that are probably a little bit more expected."
00:02:33,"So if you don't know Giovanni, he is a commercial office leasing broker, focusing exclusively on Coworking and Flex deals for operators and landlords. And if you ask me, he has the largest Coworking industry network of anyone I know, maybe besides me. And therefore, he just really has the pulse on how different markets are performing, how deals are getting done,"
00:03:00,"how operators are innovating, what they're thinking about, worried about. But he's mostly involved in transactions. He helps operators find locations. He helps asset owners who are thinking about Flex. We do a lot of this work together because our skills don't overlap. He doesn't want anything to do with how to operate a space or to market a space. So he just has a lot of insight into what's happening in the marketplace."
00:03:28,"And then I, besides doing two podcasts every week, manage the Coworking Startup schools. So we see what new operators are up to the Community, Manager, University. So we have access to best in class operations through that program. And then we're also working with asset owners doing a lot of feasibility work on helping them see what does it look like to add Flex to their portfolio,"
00:03:53,"what does a management agreement structure look like? And we are working with some operators who are looking to take over existing spaces in their building for operators that are no longer going to run those locations. So we also see a lot of what's happening in the marketplace. So it was really fun for Gio and I to connect on this, and I think you're gonna enjoy this."
00:04:16,"And again, if you are not listening every week to the Flex Uncensored podcast, you should pull that up on your phone and hit the subscribe button and check it out. So happy 2024. This is our predictions episode, and we will see you next week. Gio. Well, I guess this will not be our first episode of the new year. It'll be our third episode of the new year,"
00:04:39,"but we haven't really connected. Happy New Year. Happy New Year to you. It'll be our first episode of the year predicting 2024. How's that? It Will be. It'll be, yes, it will be. And by the time this airs, we will have gotten to hang out in San Francisco. You never come to town. I'm so excited."
00:04:57,"Well, it's funny because I was working with Mark on some stuff with LiquidSpace and we've got something going on there and I'm like, one of us should really be there. And he's like, I don't know if I can make it. And I'm like, I'm happy to make it because I get to see Jamie in her backyard. And so totally, hopefully I'll get spend some time with you."
00:05:16,"And I reached out to Scott Chambers and Reed Thompson and try to think of what else, much as I can get in in 24, I guess I'll be there, right About 72 hours less than that. So, well, there's A development near me. I have to show it to you because it's perfect for somebody. So since you're in town, I'm,"
00:05:33,"we're gonna walk, we're gonna walk by it. Perfect. Yeah, maybe I'll have to see on Tuesday what I can, we have a bunch of stuff on Tuesday. That's why I was like, I could hang out with you. But we have a podcast recording on Tuesday. I have two, Yeah. Oh shoot. That night. A lot going on."
00:05:49,"Well, you're, today's your, today officially your last day in the mountains. You headed home. Yeah. We finally got some powder yesterday. We've had like, no, I mean, there's snow on the ground from whatever, you know, it snowed a little bit, but not while we're here. So we've been here for a while. So fresh powder and time for you to go home."
00:06:09,"Yeah. But we got some yesterday, so I'll take it. And then we just needed a little like I optimism that we're gonna get more. Well, good. Well, I'm glad that you're headed home. When's dad need go back to school Monday. She has stuff tomorrow. Okay. And then I booked, yes, I am booked solid tomorrow."
00:06:28,"Busy, busy. She's gonna segue nicely into our, wait, wait. Tell me where you are. You're in Florida. I'm in Florida. Just finished meetings with UFG, also known as Vast Coworking, also known as Venture X, also known as Office Evolution, also known as by the time this airs. Oh, good point. By the time this,"
00:06:51,"oh, okay. This is Also known as Intelligent Office. So they've officially, I was informed that they've officially acquired Intelligent Office. And funny enough, I was flying in to have a kickoff meeting with the real estate team, and the real estate team didn't even know officially. So I went to dinner last night to meet the real estate team and the executive team for Vast walked in with the executive team from Intelligent Office."
00:07:22,"I was like, Hmm, I didn't know dinner was this big and why are you here? And voila, I was, I was invited to the closing dinner. I said, I guess essentially between the executive teams, and I was sworn to 18 hours of secrecy, which, by the way, Jamie got a, I know something you don't know."
00:07:44,"And I can't tell you very tell You're kidding. You did not just do that. Well, I couldn't keep it in. I had to know. I had to say that I knew something that I couldn't Say. Well, I did. I wasn't gonna ask you. 'cause I was like, if I prod him, he's gonna tell me and then it'll get in trouble."
00:08:00,"No, I would, I don't think I, I'm, had you called them? Might've told you I wasn't gonna text it, but leave. No, if Jason Anderson was watching this, there was no chance I would've ever said anything to anyone. So, too funny. So, yeah, I mean, I think, so today's podcast is essentially about predictions for 2024."
00:08:21,"So what a better way to kick it off than than that. Exactly. Right. We're gonna continue to see consolidation. We're gonna continue to see just mergers and acquisitions overall, in addition to, to being space that's handed back and then it's picked up by another operator. So I mean, the industry's just gonna continue growing and some is gonna be, same brand is growing,"
00:08:43,"some are gonna be, you know, different brands being acquired. And then last of all, I think there's gonna be continued organic growth by existing brands. Okay. So I have some questions about that. Yeah. Okay. So number one, Geo's prediction is, let's call it more acquisitions. I wanna dig into the acquisitions. Yeah, perfect. So do you think Vast will do another one in 2024,"
00:09:08,"or do you think one a year is we're maxed out? So, funny enough, you and I exchanged this earlier. The, so episode one, Flexon sensor was we coordinated specifically to have Jason Anderson on with the acquisition of Office Evolution by Venture X. Right. So that was our very first episode you heard Is your first Yeah. Wow. And then that's why when I thought about it earlier,"
00:09:34,"I was like, oh my gosh, I've gotta call Jamie and we, we've gotta get someone from Vast on, which by the time you, you see this, you've heard the, yeah, listen, you've heard the one with Paula Mercer. Yep. Which will go live, I guess, last week. But I mean, I think that's a big part of it is their goal is to be,"
00:09:54,"I don't have my shot Glass Bonvoy, right? Yeah. They're trying to be the bonvoy of Coworking. And so as we all know, Bonvoy has got over 35 brands now. And so to answer your question is I, I think they'll acquire other operators and they'll acquire them as quickly as they can. Oh, right. And so, okay. I don't know."
00:10:12,"Capital is not as No, no problem with capital. No. I mean, with the right deals, they can find a, you know, they get really strategic of, I mean, they've been doing this a long time, so they're very strategic about how they go out and acquire these. And I mean, Jason's been having a lot of conversations."
00:10:30,"I know that as a overall with various groups. And so it all, it's all timing as you well know. I mean, what did it make sense six months ago? Makes sense today. And what made sense months ago, six months ago doesn't make sense today. Right. And so same thing applies as we have these conversations, right. Is the,"
00:10:53,"there we're going into, I mean, this year is gonna be a really interesting year, right? To begin with. Every election year is already has enough chaos of its own. Now we've added a sociopolitical agenda and things that are going on on multiple fronts, you've added in financial markets that are shifting and changing. Right? I am, I've heard everything from interest rates aren't gonna come down for another year to two."
00:11:21,"Yeah. To, there's gonna be four to five drops this year. I don't know. Right. We don't know what that, how that plays out. Gas prices, we've got, you know, war and other issue, political issues globally that are going on. And so I think there's a lot of things that are affecting those things, and I think that will affect acquisitions."
00:11:42,"Yeah. Without a doubt. Well, right. I suppose if somebody has capital or strategic deal structures that don't require a lot of capital upfront, faster growth than construction, which is super expensive right now. Okay. I think vent Vast needs a premium, even more premium than Venture X. I think we need to go the other end of the spectrum."
00:12:07,"Yeah. Without a doubt. I mean, again, and Even Jason, if you're listening, that's my opinion. Yeah. And, but, but even then, if you look at, I mean, let's take, I mean let's, again, let's just stick to Bonvoy. If you take the Ritz Carlton Yeah. They've got Four Seasons, they've got the Ritz Carlton,"
00:12:23,"they bought the Autograph line, those three right there are all super high R Bonvoy has the autograph. Yeah. We stated an autograph in Rome. Yeah, yeah, yeah. And so even that's high-end, but it's high-end boutiquey. Right. The Ritz Carlton is high-end luxury. And the Four Seasons is what I would call a high-end luxury almost. I mean,"
00:12:43,"yeah, they're not like super bougie like the Ritz, but they're all high end Yeah. Platforms and brands. And so the answer, I think they could add multiple of these, right? Yeah. And so I'd like To see them add maybe something boutiquey that gets them into, here's my, one of my predictions. Food and beverage. I think."
00:13:02,"Yeah, I think venture, I think the industry is going to start adding food and beverage. It's not easy. You know, I, we talked about, I toured some spaces in London. Did they all have food and Bev? I mean, it was a pretty serious trend. Like the cafe in the front, great vibe, great amenity for members."
00:13:22,"Just not a lot of brands doing that here. So I think we, we need to experiment and figure out that model. So I think Vast could use a brand that helps them learn how does that work and have sort of a premium experience, even more premium than Venture X for their portfolio. Well agree completely, right? I mean, I mean,"
00:13:42,"to me, venture X is, if I'm using something, I know they've heard them use the Four Seasons, I would probably use something closer like the W than I would. Yeah. Four Seasons. So I think you had the opportunity to do that. And I think even stepping out from there, I think you're gonna see some of the other brands."
00:14:00,"I mean, you've seen IWG do it, right? They changed from Regi, IWG, because now they've got Regis, the traditional, they've got Signature, which is kind of a merge between Regis traditional and A spaces. So there's three brands right there. Then they have Regis Express, not in the us, but they have it overseas. They've got their,"
00:14:21,"what's it's number 18 or something like that. It's number 18 In Atlanta, which is over the top social club type of deal. That Yeah, that's what I'm talking about. Wasn't ever monetizable, right? Yeah. No, no, no. Not scalable. Not kind of a weird, yeah. But, And then they've got a couple others in like Asia and stuff like that."
00:14:40,"But so we're gonna continue to see that, right? So in my opinion, we're gonna see Industri continue, try to figure out do they come up with another brand that allows them to grow outside of the urban cores, right? Because yeah, you can't take that brand of the secondary and tertiary markets, right? Yeah. I think you, you can,"
00:15:00,"you cannibalize, well They had that experiment. We should get somebody on to talk about the experiment they were doing with Aval. Was it Avalon Bay? They were doing those little like outposts of 2000 square feet. Yeah. And we were like, how's that gonna work? You don't think it's gonna work? It Doesn't, it doesn't work, right? I mean,"
00:15:17,"it's almost like what Regis tried with Regis Express. They're just, I mean, they're just not monetizable. They're not big enough. I mean, you have to have a pretty significant network of hub and spoke to even get spokes on your spokes, because that's what that ends up being, right? Is a spoke on your spoke, right. Try riding a bike with a spoke on a spoke."
00:15:36,"It just doesn't work very well. Hey, there I am jumping in to share with you a free live training we have coming up on February 15th called Four Ways to Fund a Coworking Space in 2024. It's 2024. And you know, there's more demand than ever for your Coworking vision. You wanna create your first Coworking business, or you'd like to add a new location."
00:16:00,"But interest rates are crazy town, SBA loans same. And lenders look at you like you're the abominable snowman when you say you wanna do something in the commercial office sector. So what's a passionate Coworking entrepreneur to do when the going gets tough, the tough, get creative, creative but realistic. Join my totally free masterclass and we'll walk you through for creative ways to fund your Coworking space."
00:16:25,"In 2024, I funded two Coworking spaces using creative financing. And I work with dozens of operators every single month through my Coworking, Startup, School operator mastermind group and coaching programs who are finding creative ways to fund their launches and their growth. So come join us, find out what's working and what's possible. Join our free live training on February 15th. If you can't make it live,"
00:16:52,"that's cool. We have a replay. Just register, save your spot. And that's the way you get the replay. But if you can join us live, you can ask all the questions you want and engage in the discussion in the chat to register, open up your podcast player, click the details for the episode, and the link is right there."
00:17:10,"We hope to see you there. And so I, I think you're gonna see Industrious have to figure that out. I think that you're gonna see, you know, as WeWork comes out of this, right? They bought Common Desk as, as you well know. So I think we're gonna see some continued change changes in shifts there. Because I mean,"
00:17:28,"even WeWork, if you think about WeWork, they have WeWork, they had the HQ model at one point, right? That they were doing, then they did, they bought Common Desk. So I think you're gonna continue to see that brand diversification, right? So I mean, if we're using prediction one is growth overall, right? Yeah. And so I think that's from acquisitions to some of these are just continued brand growth and creativity on platforms,"
00:17:54,"right? I think, and I'm not a marketing person, but I have been in this side of the business for 10 years and then 10 years on the retail side, you, you have to have brand DI diversification and identification from that. I mean is like, you've got the W and then you have the Aloft by W, right? They, they didn't name a watered down version of the WS Junior or just the W because then you have an expectation."
00:18:22,"Yeah. Funny enough, I'm staying in an AC hotel, which is kind of a newer kind of business. I, I've ever been In an ac Yeah. Yeah. So an AC is like a Marriott by courtyard for business people. So right about the same PLA price point, but it's on the bougie side, right? You walk in and they have a big open area feel like the Bougie Yeah."
00:18:44,"I'm not as bogie as you, but I do. But I kid you not, I was probably 15 feet from the front door and I could already smell the smell the hotel, because they have scents. The scents, you know, Ws a scents. Yeah. Lots of these used scents. And so I know what, when I walk into one of these places is gonna look like,"
00:19:03,"right? Last night I stayed at a Fairfield. I knew what a Fairfield was gonna smell like. Right? And no, that's just it, right? Is you start getting an experience, you know what you're getting, right? And so it's almost like when I go to Convene, I know what I'm getting in convene, right? Is yeah, you Do High end hospitality with,"
00:19:24,"you know, multiple touchpoint from a hospital standpoint, from their team, right? Yep. We can have a discussion over do they have too many team members or not all day long. Versus an industrious where I'm getting in a person and a half, maybe two people in the center, again, great locations, great build out. But there's times where I walk in and there's not someone sitting at the front desk and you know me,"
00:19:47,"I help myself. Joe likes to be greeted. Yeah. Geo likes a little, a little fanfare when he arrives. Oh, duh. I mean, this is coming from someone who's like, I can't believe it. I walked into space in London and no one knew who I was. Totally. I for sure, like some fanfare. But yeah,"
00:20:06,"so Everybody does. I mean, seen, I think that's True story. Yeah. But I mean, I think that's a, I have one more thing to say about acquisitions. They're not that easy. It's, no, they're not that many big brands. Although even Kurt, I loved Kurt's emails. Has anybody heard of these guys? They have eight locations."
00:20:22,"Where have they been hiding? So, hey, if you're listening and you have eight locations, we'd like to talk to you. And I'm about to admit something pathetic that I probably shouldn't admit. Like I just got off a GWA board call in which we're trying to figure out some different things, right? From, and you, you just to run the organization."
00:20:37,"So, you know, we're trying to figure out, okay, who are we? What are we, how are we serving people? And this has all shifted and changed, right? Yeah. 'cause there's no more people that are involved, there's more vendors, there's all kinds of stuff. And one of the questions that one of our board members asked is,"
00:20:52,"how many location or how many brands is there in the us? There was six of us on the call. Nobody knew. Four of us answered it, including myself. And I was the last one to answer with a ca caveat of, it's pathetic that none of us know on this call how many, how many brands There are. Yeah. Or how many spaces there are."
00:21:14,"Oh, I mean that, yeah. 8,000 spaces in the us, six to eight, but right. Brands, right? Well, six, Have we not know, you know, someone threw out five, someone threw out seven, someone threw out eight, someone threw out over 10. And that's the problem with our industry is it's not new, but it's not mature and sophisticated from the standpoint of like back to hotels,"
00:21:38,"is I can buy a Star report and tell you exactly how many rooms are in the submarket, where I'm sitting, what the average occupancy is, what the average rate is, and understand all those things. We don't have that. And so at some point we've gotta figure all these things out in a way to consolidate stuff. And you and I have had conversations with instant,"
00:21:58,"with LiquidSpace, with office r and d, you name it. And it's going, how do we create something that's consolidated so that we have a better understanding for the industry as a whole as to what's going on? Yep. Yeah. Well, right. So the industry is fragmented and I think that makes acquisitions challenging because I mean, the vast strategy,"
00:22:23,"it makes a lot of sense because they can acquire, they can acquire brands that don't have to line up with their specific brand identity, right? So they're buying a portfolio of brands that each brings something different, which I talked about this already. The challenge with like an industrious going and buying an operator is like, there are not other spaces that are,"
00:22:45,"you know, ready to be industrious. It's a, it's challenging to buy other operators. I also think generally, if an operator, not always, but generally, if an operator's for sale not going that well, so what's the opportunity? Right? Well, and here's, let's even think about it from an a bigger standpoint, right? Is what is,"
00:23:03,"and we've had Ray, we've had Jason Anderson on talk about the acquisition with Office Evolution. We've had Ray Titus come on and talk about just UFG as a whole, his position on Coworking in the future of work. And we're gonna have Paul on from an operation standpoint talk about what does all this look like? Because I know what was going on behind the scenes when OE was acquired by Venture X."
00:23:27,"Everything from what the franchisees opinions were on both sides to what was going on on the operations team on both sides. I just, all of it in general. The, the other side of it is also if you stop and you think about what other acquisitions are there, right? What's made a vast three technically really two acquisitions, right? Venture X was an acquisition,"
00:23:50,"but that's how they're, how they started the platform. Yep. Second OE was a franchise group, right? With the 80 plus locations that had kind of stalled and hadn't been able to be overall financially stable, if you will, a family that owned it basically. Or the two families I think that owned it basically got sick of cutting checks and you know,"
00:24:10,"they, they, it was time to move on, right? And so there was franchisees involved, the acquisition with Intelligent Office don't know a whole lot about what their financials were. I know that they brought in Heather Harris to kind of help stabilize and figure out growth and all those great things. And we had, we should do, we should do that job."
00:24:26,"We had her, no, we had her on a few episodes ago. Yeah. Now maybe we put a link tied to Jason. Yeah. We should Ray and on it. Yep. But the reality is they're another franchise group with 50 locations, 55 locations, I wanna say. And 42 franchisees stop and go, what other franchises there for them to acquire?"
00:24:48,"There isn't. Right? I mean, other than maybe a one on, you know, a group that we may not know about that's licensed or something like that. Yep. A franchise is easy to acquire. That's still complicated, right? Yeah. But it's easy to acquire franchise group. But for you to go acquire a operator that's not franchise that,"
00:25:08,"let's just use Flip as an example, right? If they went and acquired Flip, which the conversation may or not have been had, then Flip has 20 whatever, 25 locations, he's not gonna stay on as a franchisee and pay royalties on those 25 locations. Right? Right. I mean, the goal is do you get franchisees to come on and buy those locations?"
00:25:30,"Well now you've added a whole new dynamic. You gotta get 25 people, whether one by one or in chunks Yeah. To agree to take over leases Yeah. To then pay you a royalty to take over. Right. So those acquisitions are way more complicated. Yeah. Because I know UFG well enough, and Ray Titus is not taking on 25 corporate leases Yeah."
00:25:57,"In order to go turn around and sell them. He's not closing until he is got 25 people ready to take those 25 deals and not have to carry any of that liability. Right. And I could be wrong, but I think I know Ray pretty well. And so that's the reality is these acquisitions become more difficult. Right. Is there franchise groups outside of the US that that could potentially happen One,"
00:26:20,"or is there brands outside the US that you could bring to the US and franchise? Right. There you go. And you know, how do you do that? What does that look like? I don't know. But I mean, those are all dynamics that this isn't a corporate entity going, it's not a PE firm going and acquiring other right. Companies that they're gonna run as corporate locations."
00:26:41,"Right. Which, by the way, I do think that we will see that in the next few years. I do think that a PE group will come in and buy one of these Who gimme an example And decide to grow it. Like who, from a PE standpoint, Like who Shift? I love the Shift brand. Right? I think you,"
00:27:00,"you could grow shift across the entire country. You could. Okay. So they're gonna, I mean, PE usually wants something that's a little bit like not optimized already. Shift is pretty, but let's Back up. We can argue all day long that they're great in the three locations, but why aren't they at eight to 12 locations in Denver? Yeah."
00:27:17,"So scale. So there's an opportunity to scale. So yeah, number one, they could turn on operational, right? A hundred percent horsepower And just kinda, And I think there's a group that goes in and, and acquires Actually BA should buy shift. That's a great example of a bougie brand with I know you're probably working on it. Okay. Food and Bev that I like."
00:27:35,"That's, I'm gonna put that on my predictions list. Yeah. Is that too specific? And so here's, here's again, back up, they only have three locations, right? They don't have 55, But still they're bougie and they have a culinary concierge. I love that. For Sure. A hundred percent. Which goes back to my point of your question of who would a,"
00:27:54,"you know, why would a PE group and who would they acquire? But the other side in my, again, prediction long term, right? This is a, I, I think a three to five year prediction, okay? Okay. Is a PE group is gonna put be put together and they're gonna go acquire firms, right? They're gonna acquire,"
00:28:11,"and I'm gonna throw out names. None of these conversations are being had. So don't, none seems right. They're All hypothetical Attorneys or Right. You know, I think you're gonna get, you know, you got Cato's got what? Yeah. They're pushing double figures in locations. Right? They own their real estate. Cato. Yeah. Now you've got Fuse in Austin that has,"
00:28:29,"you know, currently they own three locations where they own their buildings too. You got shift we just talked about. You've got, I mean, another big one, one, How about firm space? Firm space has a handful, right? What's Chicago? Did you see That? The problem with firm space is they don't have any, they don't have any mass,"
00:28:50,"right? From the standpoint of shift's got three locations in Denver. Oh, fuse has three locations in Austin. Yeah. Kato's Got, they don't have any hub and spoke Eight. Yeah, yeah. Right. Yeah. You know, Then you look at a Atch, right? Atch has how many locations already throughout the country, right? Privately owned."
00:29:09,"Yeah. But again, model, I don't, That's a funky model. But again, let's be honest, I mean, there's plenty of funky models out there. It makes money, right? If it makes money, Pacific is another one, Right? Pacific. Yeah. 25. No, Lauren's not, not the youngest. Right. Laurent's getting ready."
00:29:28,"And Lauren, If you're listening, didn't mean that I, I meant it. Right. He's ready to retire. He would tell you. Right. You've got, and we've seen other people do it, right? I mean, we, there's people that are just get to the point where they're like, you know what, I'm ready to cash in my chips and,"
00:29:42,"and move on. And you know, you've got Pacific, you've got pipeline, right? Or we're, I think we've been talking to Philippe about getting got, I don't know, pipeline if they've been to the, if they've been to the conference. If, I Don't know if he has. But it'll be great to, I meet actually meeting him tomorrow here in Miami."
00:30:01,"And then Okay, great. On, I guess the next couple weeks on here. We're recording with him next week. But really smart guy, Harvard grad has done really well. Take further. You've got, I always butcher this borough, but yeah, Michael, That guy has been grinding for a long, right? We should have Michael on. Lets Get Michael on bunch of locations."
00:30:22,"Yeah, I I'm working on it. You've got Laura, who, we've got Laura scheduled Laura with Quest, right? Yeah. Who's been grinding for a while. So there, there's, people don't stop. And I mean, you just mentioned, I mean, the text that we got or email we got from Kurt asking about someone that's got eight locations."
00:30:39,"And I'm like, I, I don't even who these people are. And so Next prediction, That's yours I gave up with the first one. No, mine was food and beverage. You got a List. Mine's food and beverage that more brand brands will start to experiment with integrating food and Bev. Well, and I think the bigger part about it,"
00:30:57,"we've been talking about this for a while. It's not just the brand, it's the asset. Right? And so if you look at the overall office model is broken, right? Is these large middle to large office buildings have cafes that are operated by an individual operator who literally is typically like a donut shop. It's a family that runs it. It's an individual."
00:31:21,"They're working up, they're waking up early to grind for breakfast. They're open till about two or three. They're typically, they're typically not paying rent. They're typically paying a percentage of rent because they don't make enough money unless it's the asset's big enough. Yep. But in most cases, the landlord is basically funding the operation to some extent. Almost like a gym,"
00:31:42,"right? Yeah. It's an amenity. Yep. And Hey there, I'm jumping in again this time. I am speaking to those of you that have, 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."
00:32:13,"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."
00:32:44,"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."
00:33:06,"And they ask questions and we help them out. 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."
00:33:28,"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 kinda get better at all the things that go with the role."
00:33:55,"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."
00:34:24,"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,"
00:34:51,"so they understand what that looks like. 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,"
00:35:21,"how to set up automations, 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."
00:35:46,"And we also host a best practice sharing call, 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. And so I think a lot of those went out of business during Covid and haven't been brought back because there's not enough people to drive."
00:36:15,"It was already an issue to, for one of those operations to be funded by the people in the building. You were hoping for people to walk from one of the adjacent buildings or just be like, oh, they've got a great sandwich shop and you stop by from somewhere else, but not likely. So I think that these landlords are now looking for operators that are gonna be able to program the building."
00:36:37,"And that includes f and B. It includes overall programming for events, right? Happy hours or you know, Institutional landlords. You're talking about institutional landlords like somebody, well, and not even, I mean, let's define institutional, right? I mean, I think it's the most medium to large operator owners, right? Yeah. Because we've seen Bridge do it."
00:37:01,"Who he's, they're not, I wouldn't argue they're institutional at whatever, 16, 17, whatever, 20 million square feet to me institutions. Okay. I mean, okay, 50 on the road Plus million per feet. Okay. Right. Yeah. Semi institutional. Yeah. Yeah. But even back to it, I mean, I think some of the smart,"
00:37:18,"a great example quadrant investments, right? You've never heard of them. If you looked him up, they're in Dallas based guy was at a very large firm before and he just, he's super trendy and cool. And he, he's doing developments that are boutique office buildings. They're more like you would see in a trendy boutique hotel or apartment complex. Right?"
00:37:42,"And so the feel is completely different. They're not institutional. They, they are. Okay, let's Call that, yeah, let's call that a trend. The resort office. Yeah, totally. Right. They, you've got, people have to have a reason to come, right? These are exactly this all included in F and B, right? And I think just part of it replace FB with magnetization of office."
00:38:03,"Okay. Right. Let's, let's call it the, the, the resort notification of office. Totally cool with that. Right? So you've got the F and B component, you've got the programming, which includes fitness, social, Peloton Overall just property management. Right? Property management Gonna be activation integration. Yeah. Yeah. And, and we're seeing that already."
00:38:24,"I can't say we're seeing it done well in most cases. No, I, that's what I think is like infancy. I mean you've Right, you named a couple of examples here and there. JLL Flex, right? JLL Flex. Yeah. Now falls through the property management arm of JLL, right? EY has been trying to figure out how to do that."
00:38:42,"Yeah. All the big firms. I mean at one point, CBRE had, man, I wanna say four different property management platforms that were all trying to figure out the same issue. I mean, I still remember walking into space in Atlanta and there was the security desk, the security kiosk. There was a spaces desk next to them, totally not attached."
00:39:03,"Then there was an x, I think they call it like X, Y, Z or something like that, which was like their cafe with Coworking space. And I'm like, there is way too much where, which desk do I go to? Yeah. To get needs met. And so I think ultimately we're gonna continue to see that, right? Is it gonna become more,"
00:39:24,"more like a hospitality, a hotel play, right? A hospitality play property manages all gonna tie into that. And I, I think operators are gonna play a big part of that if they play their cards right. I, yeah. Because they're equipped to do it. Okay. I'm gonna, I'm gonna flip, I'm gonna go from desertification of office to the other side."
00:39:43,"I think we're gonna see more co warehousing. Yes. Is that on the list? Is that on your list? I see that as just continued brand diversification and product offering. Right? So yes, I think there's gonna be more of that. I think that's one of them. Right. And the problem is who's gonna be good and who is not."
00:40:03,"Right? I mean, your great example is we can you who, the Phoenix space that you were trying to help. Yeah. The galvanized landlord do an assessment of Coworking and everything else. You showed up and they had co warehouse and you're like, oh my gosh, it's a hundred percent leased. They have a waiting list Crush. Like we're killing it."
00:40:20,"They're, and and the best thing if any of the brokers are listening, they were like, yeah. Our broker was like, I don't know what to do with this. So we just leased ourselves and it's full. Yeah. And they were like, what is this even? Yeah. Then you've got the Saltbox Guyses and you've got a Cup Cube and a couple of these other co."
00:40:37,"Which by the way, we need figure out how to get these people on. Yeah, for sure. Yeah. I know the SALTBOX folks a little bit. Megan reached out. 'cause I'm guessing the GW is looking for something. But I had them teed up for a panel that I did on co warehousing, but I think they were too late. But Dave and Laura Fisher,"
00:40:55,"did you meet Dave and Laura at Juicy? They're in, yeah. Houston, they're doing co warehousing. Another guy comes to GAW conferences. Seth. Oh, I'm gonna get it right. Is it Rosen? Oh, Seth, I gotta look up Seth's name. He's doing some co warehousing in Albany. So I think we're seeing even like smaller scale operators."
00:41:14,"Yes. Get into it. But at the same time, I'll tell you, there's groups that have tried that are failing. Oh yeah. They haven't thought through. Looks Easy. But's not as easy as it looks. Well, part of'em are, I mean, figure out who you are and stick to who you are. Right? Yeah. And so,"
00:41:29,"you know, this even plays into, not it's a prediction slash a trend, but landlords that are trying to do flex. Right. And we'll get it. I think that'll be three. We'll get into that next for sure. But there's some of these operators that are like, oh, we're co warehousing, but we're kind of Coworking. I'm like,"
00:41:43,"what are you, are you in office or are you co or are you Warehouse? Right. You Gotta lean into one for sure. And Even Thought Box did it. If you look at their model originally they had call it, I'll use say a third of their office space or a third of their space was office. Yep. With some conferencing. Then they had the reception,"
00:42:00,"then they had the warehousing. Right? Yep. The last few that I've seen, their offices are actually in the warehouse portion. And so it's really co warehousing that happens to have an office component within the, the warehouse, as opposed to, Well, they probably saw that's how people are using the space, right? That's, they're not sure really."
00:42:17,"More integrated than not. And so some of these spaces that I've seen went over the top in their overall buildout. Right. They spent too much money, can't Have co warehousing not gonna work. Yep. I mean, if, if you're showing up to do a, you know, you own a soc, a monthly SOC company. Yep. How nice does your space have to be?"
00:42:37,"Right? Yep. Not nice. If you're sending contact lenses bimonthly to Costa Rica from mid the Midwest, why does it matter what your space looks like? Right. And so I think that's just it. And that's just growth. It's just learning. It's just Right. I think that's a si like a cycle of industries, right? So it's like overinvestment and then people figure out,"
00:42:59,"oh, that doesn't work. I mean, we've seen it in Coworking. You can't spend, you know, there's the limit to what you can spend and make that back. Yeah. With, without a doubt. Okay. So I think that's, that's gonna continue to be something that gets worked out. But I mean, just a we therapy space,"
00:43:16,"right? I mean we have, oh Gosh, we have therapy space. Yes. And, and who would've guessed, right, is signed two leases with him. We're working on a few more. I mean, they're, they're pretty aggressive over the next few years on what they want their growth to be. And all they do is counseling space, right?"
00:43:35,"Yeah. Therapists. So They need, well they need a similar build out. Do they push for like have ETI and free rent? Like a No, I mean our deals are turnkey, right? Oh, turnkey. We're trying to find, well, we're Trying to find, you know what, that's really funny. 'cause I had two similar models go through my Startup school and they also both got turnkey buildouts."
00:43:57,"Interesting. Yeah. But again, their turnkey buildout was, and the last one we got was 48 bucks. Right. So we're getting $50. He's office heavy, he's doing an office heavy model. And you need good, but Again, we're looking for four to 6,000 feet thousand square feet in most cases that are already built out pretty Efficiently. You're not,"
00:44:14,"Hey, we need 20,000 feet and we need a hundred bucks to foot. Yeah. Right. You can Find, I can go up and fine four to 8,000 feet that Are I know. If I was gonna start over, man, that's the model I would do. Yeah. Yeah. As opposed to if you're going out to find 10 to 20,"
00:44:29,"you're having to find out significant build out. Yeah. Which by the way, is either really old today or it wasn't built right. Because Yeah. We're in this era where people are like, everything's open and collaborative and we only need four exterior offices and everything else is gonna be, you know, neighborhood working. Well, you know, it And,"
00:44:50,"and part of it too, remember, therapy space is looking for hard wall, hard door offices. Totally. I can go find millions of square feet of that were built in the eighties that we can slap lipstick on and make it work. We're not saying Saying, and it, it's okay if the offices are a little bigger, I guess in that case."
00:45:07,"Yeah. Right. The couch. I'm not going the sofa I'm, We need Yeah. Right. You know, you're not having to do all glass office fronts and glasses in setting windows, I mean in doors and everything else. That's a good Business. So it's little Different. So, you know, co warehousing, you've got the specialized space with,"
00:45:25,"you know, the therapy space example. You've got people that, I mean law firms we've seen that happen already, right? Is you're kind of building out the same kind of space. And people tried that a while back. I think we're gonna continue to see that as people go out on their own more and more. Because they're like, why am I part of a firm?"
00:45:41,"Or, you know, I don't wanna go all the way to the urban core. You know, we're gonna continue to see that. I think what we haven't seen yet that I think we're gonna see is healthcare. Right. And that's A total different, you've totally seen that. I have had a bunch of folks go through my Startup school doing shared healthcare spaces."
00:45:59,"And a matter of fact, I need to get them on my podcast, putting them on my to-do list. Gosh, you make me come up with all the hard people and you take all the good people and Totally, I do make you come up with the hard people. You're like, we need to come up with more people. I got a list of 20 People."
00:46:13,"I haven't even been helping you out. I know. I'm just like, geo, you know what? Because you know, it's hard. I can't do it for two podcasts. It's too many people to think, think about. I know. I know. And you're very good about that. You, you're not ever like, oh wait, I want them on mine."
00:46:26,"There's been a couple times where like, you know what? They'd be better on yours. I've Been a little tempted. Right. In typical It's when they're, they're super uptight and they're like, I need pre-questions. I'm like, I'm not the right person because I'm gonna stump you on purpose. I'm gonna ask you lots of personal questions. Yeah, For sure."
00:46:42,"Yeah. I, so I think we're gonna continue to see that. I mean, we're seeing it. I, you know, part of what, I haven't done a whole, I need to reach out to a couple of these groups that were doing, like these biomed spaces where you had all this lab space in the middle, and then they had their individual offices for r and d or whatever they were doing."
00:47:00,"Yeah. Well, like the woman from, oh gosh, what is the brand? The woman who was on my panel at the GWA a I'll think of it in a second. Yeah. Yeah. And so I think we're gonna continu see stuff like that. I mean Yeah. We've, the, the crazy part about it is people don't think about this."
00:47:16,"Like, we've seen artists co-ops and, you know, creative types do this for a long time. Yeah. Right. Yeah. And so typically it's in warehouse space or tertiary space that's cheap because not very bougie. Yeah. But I mean, we're gonna continue to see that evolve is just overall use of space in product. Yeah. Yep. Okay."
00:47:42,"So I think we probably both have this on our list. I called it management agreements. You're calling it landlords getting involved. Yeah. I mean I think there's two sides of that. I think landlords have realized that they need to be in the flex space one way or the other. Right? Yep. And the easy part is a lot of those are just gonna do more and more spec suites Yeah."
00:48:03,"Or turnkey spaces. Yep. I think that's an easy one. Yep. From the management deal side of it. And we had Peron that was a great example of great example. People talk about all these management. He, he said the two words that are being overused are management and enterprise Snowflake. Oh yeah. Yeah. And so part of it is they're really partnership deals slash you know,"
00:48:29,"some type of percentage rent deal. Right? And so more and more these landlords are realizing, hey, we wanna participate because we wanna say in how it's built out. We wanna say in how the, the tenants in that inside the space are, are gonna grow within our space or contract or, you know, have a collaboration even where people are going,"
00:48:48,"Hey, we need two floors, but then we need another space to contract in and out of, to some extent, in some cases it's even just for meeting space or ideation space or things like that. And so, you know, that's a big part of it is what does that overall look like? And you know, how does that play out?"
00:49:09,"But, you know, I think the management side has been overused and is not, there's not as much of a runway as people think there is. Right. Because, and again, I wanna be very clear, there's a difference between a management non-traditional, the management deal and the non-traditional retail type of percentage rent or partnership agreement. Right. Those are two totally different things."
00:49:35,"A management deal is very s it's middle of the fairway, literally landlord, you are putting all the money up a hundred percent of the money up. You're putting a hundred percent of the money up for the build out. A hundred percent of money up for the ff and EA hundred percent of the money up for Yeah. The operation of the business. You are putting a hundred percent of the money up for the operation of the,"
00:49:56,"the triple nets of the building, right? Yeah. So literally the landlord is a hundred percent responsible. Yeah. The tenant really. And it's not even a tenant. What they are essentially is an operator that has a hospitality agreement is running the space. Right. So I don't think there's that many of those deals. No, there's not that many of those deals."
00:50:14,"And I'm working on one for a landlord. I won't say where, but he called me and he's like, he did not know who I was. I don't, can't remember how he found me and sent him a proposal and he was really nervous. He's like, you know what, I have this, you know, proposal and I think it's a scam."
00:50:34,"And so how do I know you're not a scam? It's like, okay, I totally get it. Let me walk you through like, you know, what my background is and, and what I'm doing and give you a couple of examples. And he's like, this management agreement thing is, looks like a scam to me. I was like, okay."
00:50:51,"Right. That's one way to look at it. Yeah. So I think, I mean, you're seeing it. We're both seeing it. We've worked, we have a lot of overlap right now too. We're working on a bunch of similar, working on different angles with a bunch of folks on these projects. But I feel like all of a sudden asset owners,"
00:51:14,"property managers, like all sorts of folks sort of getting, they're starting to get it. Like, we need to get involved here. What does that look like? Some of 'em wanna learn to do it themselves. Some of them want an, most of them want an operator. A lot of flavors of that. But I think we're really starting to see the flywheel on that start to spin."
00:51:37,"Where'd you go? Yeah. So I think that's gonna be interesting. So the, the way that continues playing out, because I, a lot of people that have heard the overused buzzword of management deals think that's, I mean, I even know there's some franchises trying to go after management deals and I'm like, guys, by the time you pay or franchisees,"
00:51:56,"by the time you pay your royalties on a franchise Yep. And then you pay Some type of management fee and then on top of that, who's actually signing for the franchise location, the numbers just don't make sense. Right. And I think as a lot of these landlords dive in and really take a look at it, as long as these operators look at it,"
00:52:15,"I mean, you and I have run a couple of these courses in different capacities and hopefully in the next few months we'll do more and more of 'em. But the reality of it is, I tell people, are you ready to get a boss? Right. Because the minute you sign one of these deals, you have a boss. And I, I think the great example I that we use with Perry was like,"
00:52:34,"oh, trust me, we have people that are literally calling us every week and they wanna know exactly what the numbers are and who they are. Actually, no, it wasn't it, you know what, it wasn't with Scotty, it wasn't, it was in Dallas that you're talking to and I'm talking to, he is like, oh, I can tell you right now,"
00:52:49,"if we ever did one of those deals, my partner would be one of those ladies that would call every single week. And she does currently in the existing space that we have with Common Desk. Yep. And she wants to know what the numbers are, what the occupancy is, what, how many leads they got, how many people toured, how many deals they closed."
00:53:04,"And I'm just like, you imagine that, right? Imagine getting a handful of those landlords and they'll drive you crazy. Yeah. And literally you're doing it for peanuts. Well, I mean, I think that's the thing. You should be all over those numbers as an operator. That should not be the hard part. But having to spend the time and of course then you're like,"
00:53:24,"you're probably never gonna win. They're never gonna think it's enough. And so just having to go to sleep worrying about that every night. I hear you Gio, Jamie. Let's stop and think about it. If there's 8,000 locations, yeah, I would be very comfortable telling you that 75% of those locations do not have that information that you just said. I know."
00:53:42,"You're totally right, Gio. Okay. You're right, they should. That's all I'm saying, right? Pick Up the phone right now and call Flip and ask him what the occupancy is in each of his locations. No, a hundred percent. No way. Yeah, He does. Yeah. He just, I missed a call today. He did a KPI session on new locations."
00:54:00,"Remember Juicy, my kick kickass panel. He was on there talking about numbers. That guy knows it. Somebody on his team knows it. Flip might be busy playing, playing tennis. That's a different story playing Tennis. I would, Someone on his team doesn't, I didn't say that I said, flip's too busy playing tennis to know these numbers. Yeah."
00:54:15,"Right. He prepares and he knows and he's got a team that does it. But my point is, there's plenty of people that if you picked up the, the phone and called the person who your relationship is, and that's why example I always use is when you do a deal with Industrious, you're not talking to Jamie Hadar, you're not talking to Justin,"
00:54:30,"you're not talking to Perry, you're talking to someone down the, the same as Comm Desk. You're not talking to Nick Clark, you're not talking to Dawson. Probably talking to Nick. And so that's the reality of you have to have the right people that are supporting you Yeah. To be able to answer those questions. Yeah. And know that when they get the call from the landlord,"
00:54:47,"that number one, they're, they can handle it enough. Yeah. Number two, they are able to communicate. And because if you think about it, most people that know those numbers are not super outgoing people that can manage the relationship well. You're judging the nerds, the number nerds. No, I'm not judging them. It's reality. Okay. It's reality."
00:55:07,"And the same way as if someone called me and ask me for detail. Jamie, come on. If you were to ask me to figure out how to finish, you're gonna, you're gonna end this recording right now. Yeah. And you're gonna send me the link and you were to ask me to figure out how to get this on the calendar on a date with the right context on the right platform."
00:55:33,"Well, I have an SOP for that. You know what, we can skip a few weeks of the episode so you feel better because I don't even know where to go. Right. I know you're so Happy. But that's the reality of it. There's a lot of these operators that wanna go out and do these deals that have, don't have the ability to follow through with what it takes to,"
00:55:53,"to do a management, The reporting. Yeah. I guess you're probably right. I probably am. Again, giving fellow humankind too much credit. Okay. We're, it's the long one. Geo. Wait, what else is on my list? I gotta go back up to the top here. co. Okay. That was it. I put three on there."
00:56:10,"So management agreements, co warehousing, Bev, which we've changed to the resort ification of office space. You had specialized space or acquisitions, you also had landlord involvement. What else? So the last one I'll, I'll say is the financial markets, right? The financial markets are gonna dictate a lot of what happens in the next year. And from multiple standpoints."
00:56:34,"Number one is there's people that have existing space and buildings that are gonna go back to the lender. You know? And so what does that relationship play like? Right? And think You mean Existing, sorry, operators or, Well, the existing operators, if you're operating a space in the building and the landlord can't pay their rent anymore. Oh, I see."
00:56:53,"Yep. It goes back to the bank. Yep. Right. And so we're not rent. They're paying their mortgage and then the bank Is like, I'm sorry, who's this on the third floor? Yeah. What is this business model? Yeah. And so you gotta figure that out, right? Yeah. So there's gonna be some that's affected by the markets,"
00:57:06,"right? Because there's been, because people's loans are coming up and they can't afford to pay. Yeah. I mean, did you know the SBA loan right now is 11.5%? No, I did not know that. That's Insane. It's, That's like a credit card. Some of these landlords, Hey, hey, put your build out on a credit card."
00:57:22,"Exactly. Some of these landlords that have, that have leased that they have, sorry. They have paper out. They have agreements with their banks. They have notes out at three point a half, four, four point a half, five, five and a half percent are gonna start getting renewals on their paper at six point half, seven to 9%."
00:57:43,"Right. The numbers just don't make any more. Don't make sense anymore. And we're already seeing big names, big landlords handing keys back. Right. So some of the operators gonna have that happen in space that they, in buildings that they're in, and they're gonna have to figure out that relationship with the bank. Right. That's the reality of it."
00:58:01,"Number two. Yeah. Help with that. What are we doing about that? I don't what? Yeah, we had, we need to get an economist on the show. Yes. You're on It. Who has one? It's Bill Bennett. Yes, he does. Let's gets Bill's economist People. So the other side of about Macro, you're Gonna see more and more people that wanna buy buildings because there's building buildings are gonna go back to them."
00:58:24,"And I'm already seeing this. People are like, well, why aren't we buying buildings? I'm like, well, the buildings that you, that are going back to banks right now don't want. Right. Number one, you can't afford number two, they're not in the right location. Right? Yeah. If we're trying to build out in Austin and you want buildings in the suburbs of Austin,"
00:58:39,"those aren't going back to the bank. Right? They're just, those Are occupied. Those those are doing, If you're in the urban core, different story. Do I think there's gonna be banks that, buildings that go back to the banks in downtown Austin or in the urban court? Yes. Yes. To some extent. But those aren't buildings we want."
00:58:56,"They're not buildings we can afford. If you wanna, if you wanna take risk and go into, I guess, gentrifying or financially struggling markets and wait it out, you've got enough cash to wait it out. San Francisco, right. Suburbs of San Francisco to some extent, right? There's gonna be that opportunity. Seattle, Minneapolis. I mean, there's gonna be some of those markets where you can,"
00:59:21,"but you're gonna have to wait it out. Make sure that you buy it right. Make sure you have enough money set aside. And the other part that people don't think about is when they're like, oh, we wanna go buy our buildings. I said, well, you realize there isn't a TI package when you buy buildings. You are now responsible for the purchase of the building and for the build out of the building."
00:59:38,"There isn't a PI For that though. Help you get, right? Nobody's giving you Oh, absolutely. You can finance it At nine point half, 10%. Right. At Right. Which doesn't make sense anymore. Right. I mean, I can tell you I've had deals fall apart over the last six months over the fact that they made sense at 5%,"
00:59:53,"even five point a half percent. They don't make sense at seven point a half, eight to 9%. Yeah. They just don't. Right. And so that's just for the purchase of the building. Now you're trying to put in all the build out and then all the FF and e, right? So let's say you're acquiring a building for 200 bucks foot."
01:00:09,"Now you're Ing Me on the low end. Tell me something, tell me something happens. But there's Opportunity. But there's people that are gonna be able to do that, right? There's opportunity on that side of it. There's people that are gonna sweep in and buy those buildings that go back to the banks that are gonna be able to take advantage of that."
01:00:24,"But the reality is, it's not gonna be easy, right? I mean, financial markets affect everything. But for those of us that are willing to go out and work hard and get in the way of opportunities like you and I have already, there's gonna continue to be more of those. Right. And there is no doubt that my number one desire for my clients is to own their real estate."
01:00:49,"Right? Because I know you're playing, I Just mentioned that on my own podcast. I was like, if anyone had ever suggested that before I did my first location, like I would be on the beach right now. Not talking to you. No, but I mean, I just Yeah, I agree with you. And so, I mean, you're gonna continue to see that."
01:01:07,"So from financial markets is gonna affect a lot of what happens in the next year. I'll give you another example. We just signed another lease right now, or I've got two leases out, three, no, three leases out right now. Nice. One is in Nashville where we've signed the lease. Yep. And it goes to the lender for approval."
01:01:25,"So the lender has to approve the ti. Yeah. And I'll tell you right now, that client of mine, yeah. Has already had one landlord say, no, we won't sign the lease in Virginia. So we literally negotiated signed leases to the point where the lender said, we're not following through with this. And that was, but But we'll not support like a commercial project."
01:01:47,"No. And it wasn't against Coworking. They just didn't wanna cut the a hundred dollars commission check. I mean, the a hundred dollars high check. Oh yeah. So that's one. I've got two, which are contingent upon SBA lender approval. Right. And so that's Who's getting a loan at 11%. The numbers work if you do the right deal,"
01:02:09,"that's why you gotta call me. I'll negotiate the right deal. Okay. Just keep in mind, so we're negotiating anywhere between nine, and I've got a deal right now that's got 18 months of free rent, another one that's got 24 months of free rent. So the reality is, is our per, in a perfect world, we, we basically,"
01:02:28,"it's gonna take us six months to build it out, right? Where we've got free rent for another 12 to 18 months, call it, we're 24 months in two years, the financial market looks different than it does today. Yeah. It has to, even if it's three or four years, you basically refinance at a, at a later date and your interest rate comes down."
01:02:45,"And I think as most SBAs are fluid anyways, I don't think you're locked in for a time period. So the part that's horrible is it could get worse. Yeah. But it could get better. Right? And so 11.5% is pretty bad. Yeah. Hopefully we're, and so that's just the reality of it is. But those are three deals that I,"
01:03:06,"on my own currently have tied to financial markets. Right. Whether it be a lender that's approving the existing deal that they have with the building, or two operators that are out getting their own SBA loans. Yeah. So you're at the mercy of the capital markets. Yeah. Yeah. Yes. So if those deals don't go through, I'm moving in and your guest bedroom in Tahoe."
01:03:33,"But that's just, that's ultimately what we're having to, to go through is the, and, and it's not the first time. Right. People act like the world's, you know, doom and gloom and everything. So in, in you and i's professional life, there's been three of these already, right? This is, it's not like a once in a lifetime deal."
01:03:52,"I mean, this happens every 10 to 15 years. They just look different. And this time looks very different. Yeah, totally. Okay. 2024. Here we go. Let's see. We'll, we'll, it's gonna be an awesome year. We'll do a, we'll do an end of year review to see how our predictions came out. I'm excited."
01:04:15,"Awesome. Thanks Gio. 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. We'll see you next week."
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