Cat Johnson meets Jon Weinbrenn before he compares the the GCUC UK Coworking Conference.
CAT JOHNSON: HI JONATHAN. I’M LOOKING FORWARD TO HEARING YOUR PERSPECTIVE ON THE WORKSPACE INDUSTRY FROM A BROKERAGE AND OPERATOR PERSPECTIVE. HOW HAVE THINGS CHANGED FOR YOU OVER THE LAST 10 YEARS WITH THE INCREDIBLE GROWTH AND EVOLUTION OF THE SECTOR?
Jonathan Weinbrenn: It’s funny, on the one hand the sector is almost unrecognisable and yet on the other, many of the fundamental principles that drew me to the industry in the first place are still very present.
So for example, the choice and diversity of space has skyrocketed and with it so too has the quality of the provision and range of amenities on offer. I think this is a reflection of how the sector has matured and developed to the point where we are now seeing a rich and multi-platform offering not that dissimilar to what we are used to in more established segments of the market, such as hotels for example.
I can remember way back in the noughties when the range of options available to the consumer was significantly more limited – and less exciting. A lot of the operator product was vanilla and sometimes, to be frank, uninspiring. There were obviously exceptions to this and gradually you could see much more thought and care taken with the interior architecture and design of the workspaces.
As a sector though, even back then, the flexibility of term, the turnkey nature of the offering and the enhanced service levels were still a million miles away from the traditional/conventional model that was dominating the market. The term “disruption” is massively overused these days, but looking back, the early pioneers in the flex market were truly disrupting an opaque and archaic model that really needed shaking up.
Our opportunity lies in the enhanced features, amenities and services we can offer and by way of the unique structures that we deliver them. I passionately believe though, that whilst the aesthetics of the spaces we create are fundamental, this cannot be to the detriment of our core values centred on customer centricity. Operators that can exceed customer expectations, understand their client’s specific circumstances, resolve conflict, minimise customer effort and empathise with their consumers – it’s these operators who in my opinion, will be the winners.
YOU’VE SPENT MANY YEARS HELPING COMPANIES FIND THE RIGHT WORKSPACE FOR THEIR TEAM. WHAT INSIGHTS CAN YOU SHARE FOR WORKSPACE OPERATORS? WHAT ARE SOME OF THE KEY THINGS COMPANIES LOOK FOR? HOW CAN SPACE OPERATORS BETTER SERVE THEM?
Increasingly, the clients I work with are looking to partner with us to deliver workspace solutions that act as an extension of their own employer proposition. They know that the workspace has become a feature of the employee’s overall package and enhancing that experience will only make their staff stickier. Providing a workspace solution backed by concierge services that reduces attrition and churn rates and increases the opportunities for talent attraction is seen as key to the success of a project.
From a C-suite perspective, we can radically shift the status quo. Our clients tend to be much more sophisticated about their expectations and knowledge of the flex scene. They can see the palpable advantages we bring to their businesses in terms of agility, speed to market, flexibility and a total transfer of risk and capital. Far too many of them have been burnt by the rigidity and inflexibility of the traditional leasing model and are now looking to us to outsource this to a trusted partner. This increase in interest and activity has been compounded by recent global accounting changes and the implementation of IFRS 16, making it even less attractive to hold leases on balance sheet.
I’ve always found that the companies I work with appreciate integrity, empathy and personalisation. Life is never perfect so managing, meeting and exceeding customer expectations, whilst urgently resolving issues, helps build this trust.
WHAT ARE WORKSPACE OPERATORS NOT SEEING WHEN IT COMES TO BROKERS? WHAT WOULD YOU LIKE THEM TO KNOW ABOUT YOUR WORK?
I cut my teeth under the guidance of the pioneer of the broker model, Richard Smith, at SOS (now Office Freedom). This was in 2004, and just as there were less operators in this space back then, there were less brokers competing in the market too. Four of five of the key aggregators controlled the majority of the lead flow to operators.
Interestingly, the format and processes that these early adopters applied back then is largely unchanged today and I’m surprised with such advances across tech we haven’t experienced a more radical approach from the brokers. Most of these sites still provide a static listing facility and I can see a real opportunity here to enhance the user experience and also drive efficiencies.
Customers are increasingly looking for instant gratification whilst also demanding personalised information tailored for their specific circumstance. As the solutions that sit under the flex umbrella grows ever wider, could we see a more curated approach to account for the niche offerings appearing in our market place? Can AI be adopted to increase speed of data flow and funnel appropriate options to the user?
We’ve seen over the last 24 months many of the conventional agents responding to the success of our sector by opening their own flex desks, altering the balance of lead generation and business flow. Their model naturally lends itself to a more consultative and advisory approach. Many of these agencies had in the past referred enquiries to the web broker community on a fee share basis, but now compete directly with them and this is changing the landscape significantly, demonstrated only last month in London with CBRE advising their client HSBC, in acquiring over one thousand desks with WeWork in Waterloo.
At the other end of the scale, we are also seeing smaller, niche brokers launch and offering a really personalised approach, focusing on quality rather than quantity and this is really refreshing for me. The motto less is more is apt here –most operators crave better qualified leads where the introducer has taken time to really understand the needs of the applicant and the features and unique features and elements of the providers in the market. Time is valuable for all three parties involved in the process – the applicant, the broker and the operator – and we as a sector still have some work to do to make the process smother, more professional and more efficient.
AS AN INDUSTRY INSIDER AND DATA ENTHUSIAST, WHAT NUMBERS OR REPORTING DO YOU FIND THE MOST COMPELLING AT THIS MOMENT IN THE GLOBAL WORKSPACE INDUSTRY?
There’s now so many sources of data and market insights. That simply wasn’t the case even five years ago. Reassuringly, most of it supports that our sector is robust, vibrant and growing at exponential rates. I’ve been particularly impressed by reports released by C&W, CBRE, Instant, Savills, Colliers and Deskmag. It would be good to see more granular information, for example reporting by occupancy only shows half the story if for example work station rates are in decline.
I’m really looking forward to moderating the “Coworking by Numbers” session with James Rankin (Instant) , John Williams (Instant) and Carsten Foertsch (Deskmag) at GCUC UK. I don’t want to steal their thunder so I’ll shut up now.
FROM YOUR PERSPECTIVE, WHAT ARE THE BIGGEST CHALLENGES FACING THE INDUSTRY?
I’m pessimistic about the state of the global economy and concerned about recent economic numbers, including rising corporate debt, weak economic data from Germany and China, stocks under pressure and tumbling bond yields. Against this backdrop and in spite of our resilience in previous downturns, our sectors footprint is radically bigger now. So with a much larger supply pool can we sustain the growth the sector has experienced over the past 36 months? Take up across London has been running at 20 percent of late and to add a new dynamic to the landscape, the traditional and institutional landlord segment is delivering their own brand of flexible solutions to the market. CAT A plus (partially fitted) landlord space is becoming more commonplace.
Ultimately, the market is blurring and the clear definitions that existed previously are now fuzzy. In may ways this is great news for the consumer as there is a wider choice of options around flex, but for some operators this only adds to the stress of an already congested market. Recently in London we sadly saw The Clubhouse, a members club and meeting space with four locations in the capital, fall into administration. Talks are ongoing with IWG to potentially step in. As pressure increases it’s likely there will be more causalities announced and further M&A.
The good news is the structural change has happened and we can be sure flex is not just a fad – it’s here to stay. We have successfully challenged a system that has existed, without evolving, for over a century – the last major amendment to the Landlord and Tenant Act in the UK was in 1954. We are redefining the supply and delivery of real estate and those who can deliver exemplary service standards with strong brands and a focus on hospitality will still continue to thrive even if a recession bites.
TO GO BIG PICTURE, HOW DO YOU SEE THE WORKSPACE SECTOR AND TRANSFORMATION OF COMMERCIAL REAL ESTATE AFFECTING THE LARGER SOCIAL, CULTURAL, TECHNOLOGICAL AND POLITICAL TRENDS?
That’s a great question. As landlords and operators, we have a massive obligation and responsibility around reducing our carbon footprint and fighting climate change. Our buildings need to be greener and cleaner and our behaviours need to adjust. We should be leading the charge and encouraging our customers to follow – many of our customers already expect this of us and we also need to learn and listen to them.
AI and smarter buildings will become more common and the data around usage, efficiency and productivity will significantly increase. Seamless technology will enable us all to work smarter and complete tasks quicker. But I’m a firm believe that we are a people business, first and foremost, and these technological enhancements won’t replace the intimacy and empathy of human interaction.
We are deploying new smart office technologies, in testing phase now, but these are primarily in place to help reduce our carbon footprint and enhance our customers’ experience. This will also include new biometric and finger scanning platforms. I’m dubious about the claims some in our space make, that by deploying these technologies and other app and IT platforms, this makes you and technology company and by definition then increases your valuation multiple. Personally, I believe that our businesses primarily are a blend of hospitality and real estate – those operators who can master the art of both, can then layer in enhancements through tech and AI.
From a social and cultural standpoint, I think the coworking movement has a lot to be proud of – we are creators of communities, of social and work events and people-to-people introductions. The sector is championing diversity and inclusion and I see so much giving back in the form of mentoring, active participation and fund raising for charities and investment in our own people.
AS COMPARE OF THE UPCOMING GCUC UK CONFERENCE, WHAT CONVERSATIONS ARE YOU LOOKING FORWARD TO HAVING WITH SPACE OPERATORS AND INDUSTRY SERVICE PROVIDERS?
GCUC has totally ripped up the rule book when it comes to coworking events – it’s reinvented the format, brought together the world’s most eminent experts and its hugely entertaining. So it’s a real honour and privilege for me to be a part of the two day event. I’m excited to learn, listen and share ideas, meet new colleagues and catch up with old friends.
Genuinely all the sessions and panels are hot, topical and relevant as we enter our next phase of growth as a sector. The awards segment is great new addition and I’m hoping there will be some heated debates and discussion – mixed in with a bit of controversy for good measure.
If you don’t have your ticket already, get shopping.
ARE THERE ANY TOPICS YOU FIND PARTICULARLY COMPELLING OR HOT RIGHT NOW IN THE UK COWORKING AND WORKSPACE CIRCLES?
WeWork IPO? No I really can’t discuss this for the 100th time today.
There’s a tendency to focus exclusively in London whilst ignoring our second cities and towns, which is a massive mistake. Bring on the regions I say and watch this space.
Join us at the GCUC UK coworking conference in London 23-24 September to further the conversations around brokers, workspace data and the future of the sector in the UK. Reserve your tickets.