Global Entrepreneurship Monitor reported that more than 27 million, or 14 percent, of working-age Americans are starting or running new businesses. Smaller cities are investing in reurbanization; co-working facilities are in nearly every metropolitan area; yet downtown office vacancy rates are at the lowest levels since 2007.
Is there a problem? Or, are we watching yet another industry’s digital disruption?
I founded my company in early 2013 and we were several months into operations before we outgrew my dining room table and needed dedicated office space. Location was only one of our key requirements. I wanted the company to be centrally located and close to major highways since I was recruiting from Baltimore, Washington and Annapolis. Ample free parking for our staff and clients; walking access to food or coffee, and a safe and secure building. I preferred a bright, contemporary space that inspired creativity and collaboration. I wanted a relatively short lease, to ensure the location and price was right. I knew that I could browse inventory, narrow my options and visit real contenders.
Even back in 2013, consumers could turn to Zillow, Redfin, etc. for a home search or apartments.com or Craigslist to rent an apartment. Unfortunately, I quickly found that there wasn’t an analog to the consumer experience in the commercial real estate market.
Finding and Transacting Office Space is Changing
Today, there are far more options, and it’s much simpler for start-ups, small businesses and remote employees to find space. Not all small companies or individual entrepreneurs want to be in shared offices like WeWork or Regus, or even in accelerators. Not all companies want to be tied down in multi-year leases either.
There were some savvy entrepreneurs that saw an opportunity to enable businesses of all sizes to search and transact for office space in a more modern way. These new approaches offer businesses more flexibility in the types of office environments and time commitments, easy and efficient leasing models (that look more like licensing agreements than leases), and on-demand inventory. Over the past few months, companies like Kinglet, LiquidSpace, Breather and PivotDesk are changing the corporate real estate market for companies of all sizes.
Their timing in the market is impeccable. RE:Tech › Insight reports that 90 percent of tech startups directly search for office space online; they did not utilize brokers. Market disruption.
Offsetting Fixed Costs
Like most small companies, I fight to keep operating costs under control. I found a property that met most of my requirements; however, I made some of the classic mistakes young companies make. I’m locked into a multi-year, expensive lease, and I overestimated the amount of space we needed. On the plus side, my employees and contractors are comfortable, inspired and productive. And, our property management team is stellar.
Several months ago, an investor introduced me to Kinglet, a tech company right in the center of the CRE disruption, here in the Maryland/DC area. Kinglet enables companies (hosts) to list their available furnished office space for other companies (guests) to find the ideal sublet that best matches their needs.
I’m now a Kinglet “host”. My guest is a solo realtor who values the very things that attracted me to my space. The leasing process was simple and our financial and legal engagements are handled through Kinglet. Everything is month to month with my guest, so there is no long-term commitment on either side. The rent is auto-deposited in my account every month, so I don’t feel like a landlord knocking on doors for rent on the first of the month. Instead, my guest and I just interact over coffee.
My operating costs are offset a bit by the guest who has taken a piece of my office.
Kinglet’s approach comes at an interesting time in the market. Where I had little choice but to go down the traditional office space route, the company offers a simple platform to find co-working space, solo offices or even full floors in a host’s building. Companies and solo workers have unique needs and their approach is to provide well-curated, diverse inventory for guests. This would have been an ideal solution for me back in 2012 when I was looking for space, before I knew exactly what I would need long-term.
As entrepreneurs, we don’t have to conform to the traditional corporate real estate model. Now, entrepreneurs have options. Consider this:
- The on-demand office ecosystem is relatively new, but it is an efficient way for businesses of all sizes to search, find and transact the space that best fits an organization.
- Companies can lower their operating costs by subletting excess space.
- Entrepreneurs should be picky about where, when and why they choose their office space. In many cases, they can try-before-they-buy by leveraging furnished office rentals via corporate sublets.
- Company leaders must factor in the type of environment their employees need to feel safe and productive.
Digital disruption has entered this market as well and now there’s flexibility and efficiency that benefits companies of all sizes. Although I had a frustrating, lengthy search back in 2013, I did find the perfect office space for my company. Thanks to the disruption in this space, a possible future move doesn’t give me the angst it once did.
To find out more, visit Kinglet directly.