Facebook Twitter LinkedIn Google Plus RSS

Space age: Is co-working a model for the future or just latest real estate play?

By ,
Noelle Stary, owner and operator, The Co-Working Space, in Woodbridge.
Noelle Stary, owner and operator, The Co-Working Space, in Woodbridge. - ()

Noelle Stary's idea was simple: Conduct business in a shared work environment to gain clients — while also running the co-working space.

The idea came to her after starting her entrepreneurial marketing company, 20 Lemons, in 2008.

“That would allow us to have a vested interest in the growth of the companies that we worked with,” Stary said. “It was about partnering with businesses to work with and lay marketing foundations for them that we could tweak over time for maximum growth.”

She found that co-working was the perfect fit, albeit after some trial and error. After her business partner opted out of Stary’s first foray, a venture known as Launchpad Creatives, she found success as the founding owner and operator of The Co-Working Space in Woodbridge in 2012.

Audiences
It’s true — co-working is “hip.” Hence why Regus’ new brands — Think Kora, its entrepreneurial network, and Spaces, its minimally designed open-floor concepts — are expected to appeal to younger generations that may not already associate Regus’ traditional office suites with co-working.
However, Noelle Stary, founding owner of The Co-Working Space in Woodbridge, sees potential in the older generations, too.
“When we opened Launchpad Creatives, I thought we were going to get new, young entrepreneurs,” said Stary. “Instead, we got people who had businesses or had been in consulting for years. There is a mature audience and larger business community that also needs to be served.”
In fact, it seems more people want to learn about her co-working space than her marketing business.
“When I talk about 20 Lemons, I’m competing with 10,000 other marketing companies,” Stary said. “When I talk about The Co-Working Space, I can get into anywhere that I want to.”


Design
Cowerks — one of the more aesthetically pleasing co-working spaces in the state, with wrought iron, high ceilings and high-contrast furniture and fixings — spent about 60 percent of its starting capital on design.
JuiceTank — with its large-scale inspirational quote prints, its non-judgment rooms filled with lounge furniture and plush dice for decision making, and its fully customizable, semi-private pods that can be reconfigured in a number of ways — also held design in high regard.
But it’s another operator, Mission 50 in Hoboken, that says it goes all out.
“If a business typically spends $1 per square foot for architectural design, double that for us,” said Gregory Dell’Aquila, founder and president of Mission 50.

“We had a community of salespeople, marketers, mobile app developers and more that had been coming to Launchpad Creatives for years,” she said. “I didn’t want to shut that down. I really believe in small business and entrepreneurship and I believe that you have to give people the right tools to grow.”

Her faith was rewarded — Stary has increased sales for 20 Lemons by 65 percent just this year — and with good reason: Co-working spaces are not only the next big thing — they may soon be the only way to work.

According to the Deloitte Millennial Survey last year, 70 percent of millennials are planning to reject traditional business to work independently.

And with giant companies such as the $10 billion New York-based WeWork — which brought on nearly 20,000 tenants in less than five years — making plans to be coming to Jersey City, the industry shows no signs of slowing down.

The co-working ecosystem in New Jersey today is an intricately diverse one, with “co-working” meaning so many things to a growing number of collective businesses.

But even if everybody’s got a slightly different idea of what co-working is, one thing is certain: It cuts costs and makes money.

— — —

Co-working, according to Stary, is best known for its collaborative, yet unpredictable open-floor plan environments.

“Co-working itself is not always conducive to long-term retention,” she said. “People tend to grow and mature in their spaces and leave the nest.”

Biz in brief
Cowerks
FOUNDED: Asbury Park (2010)
SQUARE FOOTAGE: 9,000
BUSINESS MODEL: Common desk space and private offices; monthly meetups, workshops and events.
EMPLOYEES: 4
RATES: Drop-in is $20/day; full-time desks, $250/month; private offices, $650/month.
GROWTH: Grew 100 percent from 2013 to 2014; projecting additional 100 percent growth for 2015.  

JuiceTank
FOUNDED: Somerset (2012)
SQUARE FOOTAGE: 20,000
BUSINESS MODEL: Semi-private, uniquely configured pod space; private offices; themed conference rooms, including video conferencing; access to professional and peer business organizations.
EMPLOYEES: 4
RATES: Drop-in is $25/day; $250/month membership; $550/month private office.
REVENUE/GROWTH: Has helped launch over 85 companies in three years.

Mission 50
FOUNDED: Hoboken (2011)
SQUARE FOOTAGE: 15,000
BUSINESS MODEL: 60 percent private office space; 40 percent shared, including conference rooms.
EMPLOYEES: 2
RATES: Drop-in is $25/day; $1,500/month for its largest office space. $49/month gives you a mailing address at Hoboken Business Center.
REVENUE/GROWTH: On average, makes $150 per square foot and pays $25 in rent for said square foot.

Regus
U.S. HEADQUARTERS: Dallas (1987)
SQUARE FOOTAGE: Averages 20,000
BUSINESS MODEL: Over 3,000 locations,  including 38 in New Jersey; each has common lounge area, reception, co-working space, private meeting rooms and offices.
EMPLOYEES: About 100 in New Jersey.
RATES: $59/month for restricted access to any Regus business lounge in the world.
FINANCIALS: For the nine months ending Sept. 30, 2015, group revenue increased 16.2 percent, to $2.14 billion.

The Co-Working Space
FOUNDED: Woodbridge (2012)
SQUARE FOOTAGE: Under 1,200
BUSINESS MODEL: Semi-private desks in open-floor plan; private conference room.
EMPLOYEES: 2
RATES: Drop-in is $25/day; $320/month for a dedicated desk.

That’s why it seemed perfect for Bret Morgan, co-founder of the music merchandising company BandsOnABudget.com and of Cowerks in Asbury Park.

He and his partners originally saw it as a way to make some extra cash in 2010.

“We were familiar with the idea of co-working and saw it as a way to offset our expenses in a larger space,” Morgan said. “Then, as Cowerks grew, so did our business.”

Gregory Dell’Aquila — president of JDA Group, a commercial and residential development firm, and founder and president of Mission 50 in Hoboken — said it’s actually all about smart real estate development.

“Back in 2004, when I was leasing for our 80,000-square-foot boutique office building, co-working didn’t exist,” Dell’Aquila said. “But we were receiving a lot of inquiries for renting single rooms , so we started with 1,000 square feet of space and broke it up into smaller, one- to four-person offices. It gained traction, and currently we have 15,000 square feet of these 60 smaller offices.”

Stary said that divided mindset has become more common in the past few years.

“Big real estate organizations such as Regus have begun piloting co-working spaces within their (existing) locations,” Stary said. “The grassroots and corporate levels have begun to collide.”

With square footage often above 20,000 square feet, prices for traditional shared office spaces like the ones at Regus tend to be higher.

“When you’re talking about New York City, that’s fine,” Stary said. “But co-working in suburbia is a different concept. People are only going to come to your location if they are within 10 miles of your site.”

That’s a goal for Regus: With more than 3,000 locations — 38 in New Jersey — Regus is intent on making its mark.

“Maybe there is a startup company that wants more of a co-working environment, but their business expands and they then need other types of space,” said Maria Paitchel, vice president, Northeast, at Regus. “Regus’ models allow companies to grow into private space if needed.”

Although Mission 50 skews more toward the organic growth that the original, entrepreneurial co-working spaces embody, Dell’Aquila tends to agree with such convenience.

“Being located in a multitenanted office building where a company can start up and simply move down a floor when it’s grown is really important,” Dell’Aquila said. “Co-working is just property management at its core. All I’m doing is leasing office space from another landlord and my business is the margin between what I pay and what someone else pays me.”



Mukesh Patel, CEO of JuiceTank in Somerset, feels co-working space is far from just property management leasing.

“You may not get the value of community in traditional office environments,” Patel said. “Shared office spaces, even though they might say they have co-working elements, might not encourage the same level of conversation and collaboration. They are usually very quiet environments.”

That’s not the case at JuiceTank.

Patel intended for JuiceTank, founded in 2012, to be an incubator and idea lab for entrepreneurs, using co-working as a way to attract companies that might turn into possible investment opportunities.

“They’re OK sitting next to other ventures, collaborating and building their ideas and companies,” Patel said. “Sometimes, three or more people will come together and merge into the same company. Or, if one person’s isn’t going well, another might say, ‘Why don’t you come work for us?’”

Though JuiceTank’s 20,000 square feet also includes private offices — which are currently at capacity — its pride and joy is “The Tank,” the open co-working space in which companies often share resources.

“We have companies here with expertise in entrepreneurship and technology, including mobile, Web and social media,” Patel said. “Members can simply walk 50 feet, ask a question and get the help they need.”

Patel is also vice president and on the executive board of the New Jersey Business Innovation Network, or “the umbrella organization of incubators and co-working spaces in New Jersey,” and a co-organizer of the New Jersey Entrepreneurs and Tech Startups MeetUp group.

“We try to wrap entrepreneurs with shared resources and make introductions,” Patel said. “We also help them build holistic advisory boards beyond domain experts and introduce them to potential investors.”

Though not an incubator owner herself, Stary said co-working spaces organically lend themselves to this kind of work environment.

“Almost every business owner working out of The Co-Working Space is their own salesperson. You don’t have just one black book — you have (access) to eight black books,” Stary said. “You’ve got people working on a project for a firm that can create a team within our space and go in and pitch together. That often results in getting bigger projects.”

CoWerks — which is highly design- and developer-focused — uses its vertically focused element to make its business indispensable.

“We also serve as a white label agency for mobile and Web applications,” Morgan said.

As founder of the Jersey Shore Tech MeetUp — which now has almost 1,400 members — Morgan sees this form of co-working to be instrumental to the tech movement in New Jersey.

“There’s almost like a Jersey pride towards the whole tech industry here,” Morgan said. “Co-working will be an important part of that grassroots equation.”

— — —

Which business model, then — entrepreneurial, real estate or incubator — makes the most money?

The answer: All of them.

Whichever space a business chooses, both Stary and Paitchel agree, they will likely be saving up to 60 percent by not signing a long-term office lease upfront.

“All you are buying is desk time — you’re not responsible for overhead costs, electricity bills or purchasing coffee or ink,” Stary said.

It’s a cost-effective decision for both entrepreneur and corporation alike.

“You take only the space you need when you need it and have the flexibility to grow as the business dictates,” Paitchel said.

It’s a wildly popular way to conduct business — and the reason why each of the top co-working businesses mentioned have imminent expansion plans.

Though Stary wants to keep The Co-Working Space small — or a “co-working hot spot” — she is considering a licensing model for owner-occupied buildings for smaller communities.

“If I were a building owner and charged $2,000 in rent, I might be able to bring in $5,000 if I instead converted that space into a co-working business,” she said.

Both Mission 50 in Hoboken and Cowerks in Asbury Park have acquired new space this year.

“We’ve taken an additional 5,000 square feet in this building, and then, we are opening up a second space with 4,000 square feet over the next six months,” Morgan said. “Then, we are going to start looking at other areas in Monmouth County and New Jersey. … First, we’d like to try to hone our business model in our own backyard before expanding.”

And JuiceTank — which currently runs specialty programs and boot camps for those interested in starting their own entrepreneurial businesses — will be spinning-off a formal accelerator in which to do so.

“We can make more of an impact here in New Jersey, where we can help advance the entrepreneurial system, than we would if we established ourselves in Silicon Valley or Boston, which have more advanced and evolved ecosystems,” Patel said.

E-mail to: megf@njbiz.com
On Twitter: @megfry3

More From This Industry

Write to the Editorial Department at editorial@njbiz.com

Leave a Comment

test

Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
View Comment Policy

Comments

close