Let’s Get Real Episode 30: The Future of Workspaces: Exploring Co-Working, Flex Working, and Beyond
Discussions on the Workplace and Corporate Real Estate Podcast
Key Takeaways & Discussion Points
- Is there a difference between co-working and flex working?
- Has the pandemic experience shifted what types of space people are looking for?
- Is it true that the office is becoming primarily a space to collaborate?
- Is “time spent” in a location an accurate measure of its value?
- What is the flight to agility?
- Turning excess space into a co-working space is a possible solution for companies locked in long-term leases
- How do security and privacy concerns impact the desirability of flex spaces?
- Does a company lose its brand identity when coming into a shared or flexible space? Is that important?
- Does having highly desirable organizations in a flex space increase demand for that space?
- How do flex space and coworking contribute to building a sense of community?
- Sandra Panara on LinkedIn – Director of Workplace Insights at Relogix
- Jamie Hodari on LinkedIn – CEO and Co-Founder at Industrious
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Hey everyone, welcome to Let’s Get Real with Sandra and Friends, a workplace consortium podcast brought to you by Relogix. I’m excited to be sharing conversational musings about current events and how we envision the ever-changing world of work. I’m Sandra Panara, Director of Workplace Insights at Relogix. With 25 years of hands-on experience, I help value engineer global workplace portfolios and employee experiences by aligning workplace analytics with corporate real estate needs.
Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].
In this episode, I’m talking with Jamie Hodari, CEO and co-founder of Industrious, the highest-rated Workplace-as-a-Service company. Under his leadership, Industrious has grown to over 150 locations across more than 50 cities since its founding in 2013 and is recognized by corporate real estate leaders for its asset-light model based on landlord partnerships rather than traditional leases. Most recently, Industrious was named one of America’s 500 fastest growing companies by Inc. Magazine, and also appeared on Forbes’ annual list of best start-up employers.
Hodari holds a JED from Yale Law School, and an MPP from Harvard University, as well as a BA from Columbia University.
Hey Jamie, very excited to have you today as my guest! Why don’t you tell us a little bit about yourself?
Thank you for having me! So, I run industrious, we’re a workplace provider in about 65 cities. We allow people to basically buy their workplace experience as a product from us. We have a coworking brand, we do much larger suites for companies, and increasingly, in a lot of buildings will run all of the shared amenities and experiences for the whole building. We’re about ten years old, based in the US. And still, that’s our largest market, but we’re in 10, 11 countries now.
What inspired you to start Industrious?
Well, I was in a very different field at the time that my co-founder and I launched Industrious. I was running an organization that basically launched and runs hybrid universities in East Africa, where you watch your lectures at night at home, and then you do your homework in class with your classmates. And because of that classroom model, we were able to deliver a $1,000-a-year accredited US college degree in Rwanda, and now in more places. And I really loved that job. I wasn’t thinking about moving on from that at all.
Our largest funder was IKEA, the furniture company. And I had a meeting with the president of IKEA in the US. And our US offices were quite small. The vast majority of our staff was on site. In the US, we were in a shared workplace. I went to prepare for the meeting, and the conference room table was sticky, it was just not a great vibe. There were light bulbs out. So, I moved it to a Le Pain Quotidian, the coffee shop chain, at the last second.
And that night, I was just so upset. I couldn’t believe that I’m paying for a workplace, and it didn’t meet a standard of professionalism to where I was comfortable holding an important meeting there. And my co-founder, who was my best friend from growing up, had had a very similar experience. We were like, let’s just do this as a side project. If we think there’s a white space for a more professional, more elegant, flex workplace option, there must be 50,000 companies that want that same thing.
So, we launched as a side project, and for better or worse, it really took off from the very first moments. After about a year of trying to run both organizations side by side, it became totally unsustainable. I had to leave Kepler, and have been running Industrious full time ever since.
Wow, that’s quite impressive. It’s always cool that when you hear stories of people starting a business because of personal experience. Somehow that connection just makes it that much more different, where you recognize that there’s a gap in the market because you yourself are looking for that experience and it doesn’t exist. And then you go ahead and boom, overnight you have a business.
I totally agree. I think it has been helpful over the years because a lot of times people start a business because they’re in business school and they notice that this particular sector has great margins and good valuations, and then you’re building for some kind of external valuation metric. But when the origin of a business, when the sort of stimulating moment for starting it is about an experience, a desire to give a customer something that you yourself wanted, that can be very grounding and helpful, I think.
Absolutely. You often refer to coworking and flex working when you describe what you do. Is there a difference between those two?
I think flex, at this point, is the name for the broad category of products that allow people to flexibly buy their workplace experience as a product from someone on a subscription, rather than having to sign a long-term lease, field out the space themselves, run it themselves. And then coworking would be the name of one of the products that sit underneath that, which would be highly productized space for teams of 20 and below, where you share a lot of amenities.
If you’re a six-person team, you might have your own private lockable office, but the conference rooms, the cafe areas, the focus rooms, the mother’s rooms, things like that, those are much more likely to be shared with other companies. Once you get past 20, 25 people, if you have your own separate floor, then usually people wouldn’t use coworking to describe that. But if a lot, let’s say more than 60% of the space over the course of your day that you’re accessing, is something that other companies are also accessing, I would think of that as the coworking part of the flex industry.
You said Industrious has been around for about ten years. Have you seen a shift in the last couple of years, especially since the pandemic in terms of the types of spaces preferred by people?
Yes. I’m trying to think how to even describe this succinctly, because I think it’s so interesting and it doesn’t always match what people read in the news. But yes, there’s been an enormous number of changes over the last couple of years in both the space types that people want and also at the most basic level, the way they conceive of what their workplace is how do I use it and what’s it for. Can I start with how people are actually using the workplace? And it’s easier to describe the physical impacts of that.
There are a good number of people who are working from home full time. That’s still not that common, let’s say single digits, but there are a lot of people who do it and enjoy it just as they were before the pandemic. There are a small number of people who still go in five days a week in white collar jobs where they’re not mandated to, but that works for them. And then the vast majority of people, 70%, 80%, go in a few days a week, but fewer than in the past. And they therefore have to pick which days do I go in? What types of things would be best suited for working from home versus the days I come in? And people tend to come in and they want to interact with colleagues, they want to see other people, they want a breath of fresh air, they want to go out to lunch. So, there’s more pressure on interaction space. The little vignette with the couch and the two armchairs, the cafe with the high-top tables. That was something people said in 2020—when people come back, they’re going to want to hang out.
There’s also a lot more demand for private space. Once you’ve gotten used to being on your Zoom in your home with very few interruptions, having someone 2 feet to your right and 2 feet to your left and you’re trying to do your meeting while you hear them talk about the bad date they had the night before, that becomes really painful. And so, there’s also a lot more demand than pre-pandemic for little phone booths, little focus rooms, places to retreat to. I would say if I had to typify it, instead of working in a big benching area at a desk with people to your left or right for 10 hours a day, you’re moving back and forth between very social spaces and very private spaces.
That’s quite fascinating, actually, because I’m currently in the process of pulling together some benchmarking data from the sensors that we have installed across the globe in all types of industries and spaces. We measure spaces in desk areas or workstation areas, private offices, closed meeting, open collaboration and the amenities and support spaces. And the eye opener for me was, looking at the couple of customers we have that are in the flex, co-working industry, this request for private space. I did not expect that at all.
And you’re seeing that in the private offices as well, especially right now with the return-to-office objective that’s been floating around for the last several months, looking at the distribution of the people that are coming back. Apart from the fact that occupancy is lower, looking at the data from the perspective of observing the people who are coming back, what is their preference or how has their preference actually changed? You do see differences like open workstations. The general, open areas are not as well utilized as the closed private areas. Closed meeting room space, amenity and support space, which is again, more like quiet rooms, nursing rooms, aimed for one person to separate from the rest of the people that are there.
Looking at the data was interesting. When I saw that, I went back and said, where did this whole story around a need for increased open collaboration come from? I do recall seeing when the pandemic had first started and we were right in the throes of it in late 2020, early 2021, again, looking at that small percentage of people that were coming back, the preference had definitely shifted towards this open collaboration area. The cafes, the lunchrooms, the large spaces where you had tons of elbow room, and very few, if at all, were going into the closed meetings. Private office space stays fairly consistent throughout the pandemic. People who had offices obviously felt more comfortable going in because they didn’t have to contend with being exposed to as much risk as the people who were using the workstations.
So it certainly explains why we were seeing that difference. But I thought about, why was there a shift like what happened between 2021 and then going into 2022, when now we’re sort of emerging from the pandemic? Not that it’s completely gone away, but I think the comfort level around how to manage your surroundings has changed somewhat, especially with vaccinations and such too. What’s changed? I think the reason for that is back when we were going through the pandemic and there was still a lot of uncertainty, people had control over their environment. So, if you went into an open space, you could control your distancing. You couldn’t do that as well in a meeting room because you’re in a closed space. You think about air quality and circulation, and that became a little bit more worrisome.
And so fast forward now to 2022 and you’re seeing the reverse. Why, how has that happened? My suspicion is that as more people have become vaccinated, less concerned about being together, as we see that with people going out into the world and going about their day, the demand for the closed space is really to fill the gap, if you will, around what they can’t do at home.
So, if you don’t have office space at home, then you’re probably going to go to the office and you’re going to want to use a private space because it’s about focus work. And then likewise, if you’re going to have meetings, it’s one of the things that you can’t really do well at home. Yes, you can do them virtually, but occasionally there’s requirements to meet in person. And so those are the scheduled meetings. They’re not the ad hoc, watercooler type of conversations that you just have randomly because you happen to be in the right place at the right time. It’s fascinating to see that, and say, okay, is that really what the purpose of the office is? Or what it’s going to be going into the future? Because there’s a lot of talk about how it’s about bringing people together to collaborate, to innovate and that it’s going to be this great social sort of thing. But the data right now, at least, is not showing that.
I would say two things. First, I think everything you said resonates for me. And there’s also really an emotional component to the office. I mean, it’s a component to everything we do in life. I live on a block in Brooklyn that once a year does a block party. People talk about it for months in advance. Everyone on the block puts in $50 and we get a bouncy castle and whatever. It’s a famous Brooklyn block party, because it starts with the bouncy castle and clowns and then it turns into a DJ and dancing at two in the morning.
And it did live up to that, but I had probably five conversations with people by 10:00 PM who were like, damn, ten straight hours of socializing? I used to have another 5 hours. But this is really taking a lot out of me, because I think we’ve all become a little more introverted as a result of the last few years. And so, there’s also the mental and emotional tax of constant interaction on the days you’re in the office. People are less used to it. I think they have less comfort with it.
That’s probably the other one that we see. The other thing though, I would say a little bit to counter that point, is sometimes number of minutes spent or number of hours spent, it doesn’t capture everything. What we see for our customers is they might not be spending major portions of their day in those collaborative open environments. But for me, for example, I have a seven-month-old daughter and starting about six weeks ago, we could put her a little high chair at the table and every night we have dinner for maybe 35 minutes, me, my wife and her. And it’s only 35 minutes, but it’s like the most amazing, most impactful 35 minutes of my day.
And so, I do think for a lot of people who are going in, they’re spending a lot of time in private spaces. But those moments at lunchtime are those moments where they’re laughing a little bit and having a moment of levity or a moment of connection, even if on a pure percentage of total time spent. It feels small, but I think it’s very meaningful. And you see that a lot in customer surveys.
And what’s driving customer behavior right now? They just don’t want to spend 5 hours doing it.
Yeah, no, I totally agree with that. Okay, so let’s move on to understanding the customer. I’ve been hearing as of late, terms or concepts like flight to quality, flight to agility. How do you know what your customers want and what do those terms actually mean to you?
Flight to quality is definitely a word people are using a lot in real estate right now about in general, higher quality, fancier, newer office buildings, performing better. And I would position it as maybe a flight to relevancy. There are office buildings and work environments that are relevant to people. Either they’re very low commute spaces and so it’s a really relevant place for them because they can walk seven minutes and be out of the house, or it’s a stunning building with lots of great restaurants right at its base, et cetera. So, it’s worth getting on a 35-minute train for. But you do see that as a pattern. And then what was the second phrase?
Flight to agility.
And flight to agility. Well, look, we’re one of the big global flex providers and have been a huge beneficiary of this. 2020 was a very scary time for our business. And then as the vaccine started being distributed, we saw a spike in sales and then a spike on top of a spike and then next thing we knew we were selling three times our pre-COVID average sales every month. And that has continued pretty much unabated to today.
I think it’s driven by a few different things. It is driven by the fact that companies want agility in the sense that they don’t want to sign a ten-year lease and have to plan in cycles that are not commensurate with the actual day-to-day lived reality of their business. But the other half of the flight to agility, if you define it broadly, is that a lot of the workplace strategies you see companies deploying more distributed ways of working, hub-and-spoke models where you might have a smaller than before central office in downtown New York, but then you have a no commute space in Brooklyn and no commute space in New Jersey.
It’s very hard to accomplish those via leasing a bunch of space and controlling it yourself, unless you’re JPMorgan or Google. For the vast majority of businesses, you would need some kind of agile partner that can help you buy that as a product on a one year rolling basis. And then if the Brooklyn office has really taken off, you add more seats there. And if no one’s going into the Westchester one, you shrink there. And that ability to basically give your employees something if they want it, but in a way that allows you to adjust over time as you’re seeing what people are actually doing, or if what they’re actually doing changes year to year. It’s very much, I think, what’s in demand right now for businesses.
That’s interesting. One of the things that gets asked quite a bit when we’re speaking to customers, and even on previous podcast episodes that I’ve done, is about customers who currently have leases that don’t have expiry dates coming up for at least another ten years or so, what do they do? They might look to coworking and flex space as a great alternative just because of the decentralization aspect of it. But then you’ve got this central office that you need to deal with. Just curious, does your company go into those types of spaces and help companies figure out what to do with that space? Is there an advantage to doing that for you? Or how do you deal with that?
One piece of context, if my answer seems overly diplomatic, is that one of the main points of differentiation from Industrious with our competitors, is we don’t sign leases with landlords. We do management agreements with them, which means the asset owners and landlords are really our business partners in delivering these spaces. And as a result, I think there are a lot of companies that are breaking leases or going to landlords and saying, it’s just not working for me and we need to figure something out. But maybe I’m not totally in a position where I could advocate for that particular avenue.
I think one thing that is possible is finding other uses for the space the companies are on the hook for. And what we do, because what we do is very in demand, is very much a viable option. So we have been approached by probably 200 companies to say, could you take half my headquarters, rejigger it, and make it a coworking space, or make it suites that can be rented by the outside world and help us to free some of the cost of this?
It doesn’t always work. It costs a lot to reposition that space. Maybe they don’t want to spend that money, et cetera, but in a few cases that has worked out and it’s working out really nicely for the company, it’s working out nicely for us. So, I think that will not be 90% of how companies deal with the disposition of spaces that are too large, that they’re not using, but it’s a nice niche option, especially if people have offices in high traffic, very desirable areas.
Interesting. As you’re talking, it makes me think about a couple of conversations I’ve had in the past several years, one with Convene. Just before the pandemic, I was at a conference in New York, actually, and obviously Convene’s focus has always been more about meeting and collaboration space. It was interesting to start to learn about what they were doing. Coming out of a company that had quite a bit of excess real estate, long-term leases. How cool would it be if a company like that could insert themselves into an organization? Convert the space into something that’s shareable? While the company then could collapse their space into the floors that they need and they want to maintain. Mostly because of privacy and security concerns that a lot of organizations have about going into flex and coworking spaces. And we’ll talk about that momentarily, but then making that space available to their employees so that as they collapse their space, their space is just workstations and offices, but then the meeting and collaboration or the event space, if you will, kind of is sandwiched in between. So, it’s no longer exclusive to just that company, it becomes available to anybody in the building and even people outside of the building.
And I always wondered if that was something that companies are considering, like if there’s been talk along those lines? At least from some of the conversations that I’ve heard around, coworking being great, flex is great, because of the financial reasons, but usually there are the security and privacy concerns around who’s in that space. You don’t want your information to get into the hands of the wrong people or someone listening into a conversation or seeing something that they shouldn’t be seeing. Obviously, there’s protocols around what you do and what you don’t do when you work in coworking space as an employee of a company. But I’m just curious, have you seen anything like that in your travels?
What you’re describing, basically long-term leased controlled space by a company, adjacent to flex space that the company’s employees can move back and forth between is something that doesn’t really have a name, but people talked about it for a long time. Some people call it fixed flex. Some people call it core flex. And I think it has been one of the great promises of our industry. If you’re a Prudential and you don’t know if you’re going to have 400 people in Denver or 1000 people in Denver by 2028, but you know you’re not going to have zero, then you should sign a lease for 400 people and have the next 400 people worth of space sit side by side and have that deflect space.
I think that is something where Industrious has really been the industry leader on that. We do a lot of that. Oftentimes, customers don’t want to talk publicly about it. So, I can’t name tons of names, but we do it in England. We have a big site with one of the largest banks in the world where they have a large space controlled by them and then an adjacent Industrious space.
And the employees oftentimes don’t even know when they move back and forth between the space controlled by Industrious and the space controlled by the bank. We are about to announce a really ambitious example of this as one of the biggest tech companies in the world, with another of the biggest banks in the world. And you know, it is complicated. It requires a three-way contract between the provider, the landlord, the large occupier, but when you pull it off, it’s really special. I do think you are right to flag it and I think by five years from now it’ll be a very common pattern of usage for companies. You just have to get over the fact that it’s a pain in the ass to set it up and do it. Once you do it, it’s great.
We slightly touched upon security and privacy. Obviously, there’s a bit of a requirement for shifting the mindset. I’ve had this conversation with Mark Galbraith several months ago when he was a guest on our podcast. We talked about the user of these types of spaces and the small business versus the enterprise and some of the challenges that are presented by those different user groups. Do you see that one group is more challenged by another? Are they virtually the same? What are you hearing?
I think both physical security and digital security is one of the primary considerations for companies when they work with a flex provider. In the end, you are allowing someone else to control what it feels like to work every day as a bank employee or as a British Airways employee. And that’s a big thing to hand off to someone else. And that includes some very central things.
It has been a long time since I would say that’s been a major obstacle for Industrious at this point. We’ve had defense contractors, the largest consulting firms in the world that are working on very sensitive information, the drone division of one of the largest aircraft manufacturers in the world, etc. You do have to work at it. You have to sit with them and say, what are your IT, security needs and what are your protocols? And how do we make sure that you’re in a place where this works for you? And you do sometimes have to get creative about having those employees be on their own, separate network, etc. But I have found over time that almost anything is doable.
One analog for me is in the early days of outsource manufacturing. We’re kind of an outsourcing industry. You’re outsourcing your workplace. People said, okay, well, you can’t do outsource manufacturing for the really important stuff. You can make your tchotchkes for your annual investor meeting. And now the iPhone is manufactured by Foxconn. You’d say, look, for logistics, for really important logistics, we can’t have DHL or UPS do it. And now everything that Amazon does for the most part goes to UPS, etc. So, I think in a lot of these B2B outsourcing businesses, there’s an era where people say, there’s something so fundamental that we, the customer, need to control. And then eventually the providers get good enough to overcome that objection and say, no, you’re going to get just as good of an outcome when you let us do this for you is when you do it yourself. And I think security is one of the things that squarely fits within that dynamic.
Let’s talk a little bit also about brand thinking, about branding space. So again, another topic that’s come up quite a few times around the difference between having your own space and then using a shared space of some sort is, who ultimately owns the brand? Does the company lose their identity when they’re coming into a shared and flexible space?
I think that is one of the considerations. There is a productization, I guess, that happens in this circumstance. The whole way this works is that if McKinsey leaves the space, let’s say they have a 60-person suite in Toronto, BCG has to be able to move in 30 days later or 60 days later with a little bit of repositioning, or else the business doesn’t work. I think that’s a very good thing. I think the process of ripping everything to studs and rebuilding it every time a tenant leaves is horribly environmentally impactful, very inefficient, and I’m not sure in the end provides that much. I think a small amount of aesthetic differentiation in the last mile goes a long way. I’m not sure most employees are like, I need to know that Ernst and Young rewired the HVAC systems and the electrical distribution to my Ernst and Young special needs. But I think perhaps more importantly, one of the big things that happened during the pandemic is companies have gotten a lot better at listening to their employees.
We have 250 customers, and what I see every day is that companies that three years ago would have said, our CEO is very into marble, or our CFO really wants us to be at Rockefeller Center because that’s going to impress — our clients are much better at saying, I think the marketing associates on the team really want to make sure there’s a Sweet Green nearby or what have you. Companies are getting better and better at saying what employees who are using the space care about. Very few of those employees care about Squarespace branding or stuff like that. And therefore, I think that concept of company branding is on the way out a little bit because the actual users of the space don’t care about it that much. Companies are getting much better at saying, what are the things that these people are actually asking us for that’s going to make them more engaged, that’s going to make them have a better day of work? And that’s the kind of stuff you see companies pushing on right now.
That’s interesting, because I’ve always wondered about brand. I totally agree with what you’re saying around keeping the space fairly generic so that you can swap out different customers on a dime. But I often wondered about the impact of the brands that are using specific spaces and how that plays into the demand, the cost, the exclusivity, if you will, of certain spaces being more attractive to a potential end user than others.
So, let’s imagine you have a space that has representation of some of the FAANG companies or some of the highly coveted companies that people want to work for. There’s the learning aspect of being able to go in and sit down and talk to someone casually that works at some of these companies and learn about what it is actually like to be a product manager, or whatever the conversation is about. And how does that help from a brand perspective or location perspective to drive the demand for the space? The second part of that question is this whole idea of pay to play. I’ve seen some spaces here in Toronto that have that sort of flavor and you don’t really know for certain what’s going on, but you wonder, why are some spaces way, way more expensive?
It’s like hotels, right? If you’re planning to go on vacation somewhere and you want to stay at an exclusive resort that usually costs $700, $800 a night, but then you look again and suddenly that same hotel is $2,000 a night. It’s because maybe some celebrity is there and therefore they charge more. So, if you want to be part of that, you’re going to be paying a premium to be able to be at the same resort with that celebrity. So, I kind of wonder, does this kind of environment create that and what is the impact either positively or negatively? Because I think it has pros and cons either way.
It’s funny you mentioned this, because that was something we thought in the early days of the business we were going to see a lot of and for whatever reason, we almost never see that in the history of Industrious, that when a very hot company that everyone wants to work for moves into a space, it doesn’t make the office next door any more likely to go.
I do think the people themselves make a difference. I think spaces that have a great community, but it also feels professional, and I think people are hyper aware of who they’re working around and the vibe and the types of social interactions and I’m going to make new friends here. We have a Brooklyn location near where I am right now that a lot of young parents, a lot of non-profits, and people like that are bonding over stuff like that. So it seems to oftentimes take the form of, who are the other people in the space? Rather than, what’s the corporate entity they work for? Maybe other providers have observed something different, but that’s definitely been our experience.
It’s interesting because you look at that and you think, okay, from a coworking operation business, obviously you’re trying to make the space accessible to all. But you wonder, in the future when brands fully embrace it (because I think it’s still in sort of the early stages), does that pose a risk where then suddenly it becomes unaffordable, if you will, for companies to really be truly distributed, because there may be premium spaces that people want to be in? I wouldn’t necessarily say that you would want to go into a space to start generating leads for sales, right. But you start to think about that as you get these communities that are being created.
I heard recently of a company that is theme based, so the people that go to these communities all have a shared interest. And so, as someone that might be selling trinkets or whatever it is that I’m selling, if I know that that’s my target audience, I might want to go into that space because that’s an opportunity for me to go in so many different directions.
Right now, we’re thinking space, we’re thinking about work, we’re thinking about solutions to the problems that we’re seeing emerge right now in the marketplace around real estate and work as a result of everybody working from home for the last 30 plus months. And guess what? You don’t need to be committed to space from a lease perspective. There are alternatives that can serve that need in a variety of different markets and neighborhoods. And everybody wins, right? Companies win and employees win. Like you said, you’ve been doing it for quite some time, but would you say that you’ve achieved critical mass in the last ten years, or are you seeing critical mass approaching as we sort of come out of this pandemic?
I think we were approaching critical mass, and now the definition of critical mass has changed because the number one observation about what people want out of a workplace that changed during the pandemic is they want to go a couple of days a week, not five days a week, but just under that is the threshold for the commuting distance. What people are comfortable with has transformed. We see this in our Paris locations, in our London locations, in New York and Atlanta, that people really started to get frustrated with commutes pre-pandemic once they hit 40, 45 minutes. And I’m not exaggerating when I say now people start to get frustrated after 15 minutes, and therefore all of your neighborhood locations are on fire, doing extraordinarily well. And we’re just launching more and more locations in mixed use neighborhoods and even in places that are traditionally considered residential. And so now, we have probably not a critical mass in the sense that to have a true Toronto area network or a true Chicago area network, if you want to touch not just the great business districts of Chicago, but all of the mixed use and more residential ones, you need 25 locations, not six locations.
But it’s great for our business, so we’re excited to be on that journey.
Yeah, it’s really interesting. I think the future is definitely looking up with respect to that. I think it’s great also that if you’re going into more of those residential type neighborhoods to be able to support the neighborhoods that I think are in most need.
Again, another very common argument is, well, why would I go and use a coworking space in a downtown location or even a midtown location when my office is there? It kind of doesn’t make any sense. If I have to do the commute, then I might as well just go to the office versus if there’s something close by that gives me access to the space. But then the flip side of that is, are you then going to the space to work, like to do the heads-down stuff that you could do at home, or are you going there to meet up with co-workers, who are distributed all over the place? And again, if it’s about community, how do you centralize community? Because centralizing community again, comes back to having a location that everybody can come to. And then you get into that, well, if I have to go to a coworking space, I can go to a cafe or I can go to a hotel or a library or a restaurant where it’s mutually convenient for both people because they’re all over the place.
Those are the types of, I think, rebuttals that you might get when you’re trying to position coworking as an alternative, in the sense that, yes, it absolutely solves the commuting issue and having an alternative location to work at. But then in the same token, if the whole objective of coworking is building strong communities, it’s really expanding into interacting with other people, because I believe that that’s how innovation actually happens. It’s not just the people that are within your space. It’s talking to other people, bouncing ideas off each other, just having a friendly conversation that you just learn so much about things that kind of gets the wheel spinning in your brain.
And what you’re describing right now is one of the main considerations I see customers wrestling with. If our 12 Denver employees all build bonds by being together or in a big metro area, if the Brooklyn employees get to know each other better and see each other a few days a week. And the New Jersey ones do, and the Soho ones do. But they’re not gathering all 200 people more than maybe once a quarter. Does that accomplish a lot of what I want to accomplish? And I do think most companies are saying if it builds bonds, if it builds affiliation with the institution.
When you go to university, if you go to the University of Toronto, you’re not seeing all 30,000 students all that often, but you might see the people in your major and in the end, years later, you still feel affiliation to that university. And so, I think most companies are saying, if I can get those clusters, that does accomplish a lot of what I would want out of that sort of institutional business community building.
Final comments — as we think about the value proposition for business, when I say risk and reward, which one do you think matters more?
Risk. But I would define it differently than a lot of companies do. I think historically, when people talk about risk, the biggest risk they talk about in real estate is, what if I get into this lease and then market rates move? Or it was sort of financial risk. And I think for a lot of companies now, the biggest risk is, have the bonds between my employees frayed, do I have a less engaged workforce? And figuring out how to manage that risk and flip it into a benefit and say, I’ve found a way to have a team of people that love working together, that like this company, that want to keep working here and like their job in a very complicated world, would be the great reward that a lot of companies are chasing right now.
Yeah, I think that’s a really nice way of putting it. Just this morning I was thinking about how we put a lot of emphasis on the real estate. Recent dialogues have been around trying to figure out the purpose for the office and you hear about incentivizing people to come back to the office and what amenities and things can you put in the office. There’s all this focus on the office versus to your point, how do employees actually benefit from that? Be more focused on the experience that you want your employees to have and then figure out how space fits into that. Because the degree to which you might rely on space is obviously going to vary from company to company. And that’s really driven by that specific experience that you want your employees to have.
From what I gather from what you said, it seems that the position that Industrious takes on the market is you’re not necessarily there to disrupt, you’re there more to complement. Would you say that’s fair?
Very accurate. Very accurate.
Okay. Any final thoughts, comments?
I think this is a very exciting moment. Any time where you’re seeing companies get better and better and better at listening to their employees and democratizing decisions that used to be very top down and very coercive, is a wonderful thing. I trust the collective wisdom of employees to probably care more about sustainability and equity and having workplaces that work for everyone than I would trust a CFO to unilaterally make those decisions. So, in general, I think the fact that we’ve moved into this era now where companies are doing a much better job of trying to understand what their employees need and deliver on that as regards workplace policies, etc., is really good at the individual level. And over time, I think it also is going to yield a lot of benefits at the population level as well.
That’s great. Jamie, thank you very much for your time today. I really enjoyed this conversation, I learned a lot. So, thank you for the learning opportunity as well.
Thank you. This was great.