Baby Boomers and New Business Trends – Pure Gold

I’m just ‘spit-balling’ here, but I think I’ve just struck gold

I just came across yet another listing for a desk in a shared/coworking office space.

I recently was talking about the new trends in share space. That’s where you can hire a desk is a group access work space that has access to boardrooms, WiFi, and other facilities.

co-work

Many of this kind of co-working hubs are filled with young, trendy entrepreneurs, startups and solopreneurs, but while they are the leading edge I reckon they won’t be for long.

Baby boomers are a huge part of the workforce, and as they age many of them are going to sell on or shut down their businesses.
With the govt wanting people to work longer and many baby boomers choosing to stay active rather than just simply retiring I suspect there will be a lot of new “consultants” starting up. Even baby boomers are going to see the move from big ungainly businesses to small, agile businesses being the way things seem to be going.

More and more I believe that in capital cities we’ll see small office suites, coworking spaces, and suburban offices picking up and taking off.

Time was when people wanted to be right in the CBD where the “action” was but the internet means that most people can work from anywhere and in reality if you can avoid a 90 minute commute every day into the CBD then why wouldn’t you?

Petrol prices are going to put pressure on people and businesses who don’t have to travel to work online.

Online co-working spaces are going to take over from CBD office suites, and small satellite offices will probably become the norm.

collective-3They are already starting up and becoming available all over the world. Office hubs where rather than hire space on a long term lease, you become a member and use the office on an ad-hoc basis.
As a business owner, you might only go in 2 or 3 days a week to use the facilities.
Some of these co-working space offices are members themselves of much larger organisations meaning that members can book and use their membership in any of the offices dotted around the globe.

As a commercial real estate investor, you’ve got to start wondering if this could make sense financially for you and which of the various models you could use to maximise on your investment.

Let’s look at a hypothetical example to work out some ideas.

Let’s say you have an office space of 400m2

Maybe you have 100m2 for a reception desk, a break-out / lounge area and a lunch area. Another 20m2 for a shared boardroom or two. Leaving 280sqm for desk space.

Screen Shot 2015-10-07 at 11.37.26 amA quick look on an office fit out website says that using desks like this you can fit 45 workstations into 280sqm.

These are full sized work-stations and this still allows for a open plan attractive space with full conference facilities and amenities.

 

Looking at some other offices for lease they were charging $375/sqm pa plus outgoings and GST etc.

Meaning that our 400sqm office could attract $150,000 rent (not including outgoings)

Desk rental at one of these shared spaces start at around $650 a month for a full time permanent desk and access to all the amenities, free use of the boardroom and breakout spaces (lounge etc).
That’s for an open plan desk – it’s a lot more for a private office in the same space.

So $650 a month X 12 months X 45 Desks (assuming 100% tenancy rate = $351,000.)
This would need to include outgoings since these spaces include all power, water and internet usage, etc.

Even at 70% vacancy rate you are still doing a lot better than just renting it out to one tenant.

thinkspace2

This would also allow space for people who only wanted part-time desks, overseas short term users and those who just needed one on an ad-hock basis.

The other thing that some of these places use is to charge people for a virtual office. This basically means that people can use your address as their own for postage purposes. This gives them to give the impression of being a bigger business while working from home.

For an extra price they include mail forwarding, scan to email and other small businesses services while not using up any office floor space at all. You could also offer telephony by allowing people to have their business line answered by a professional receptionist and have calls forwarded or messages taken.

Boardrooms are rented out on a booking basis for meetings for an extra fee and large conference spaces, online conference facilities could be offered and even gallery spaces for artists are rented out starting at $600 per day.

You can see that there are plenty of possibilities for running something like this and while it constitutes more of a business than just a hands free commercial investment, with that kind of profit margin you would hire a full-time manager and someone at the front desk to run the whole thing and still come way-way out in front.

So you can see that the market is there and only getting bigger, and all you need is the space and a little creativity and courage to start up your own co-working space.