27. Case Study on Adapting to Coworking Market Trends
Welcome to episode #27 of the Everything Coworking Podcast!
Welcome to the Everything Coworking Podcast #27! Today I spoke with Keith Warner. Keith is the managing partner for Pacific Workplaces. He manages three locations in the Silicon Valley area — Cupertino, Sunnyvale, and downtown San Jose. Pacific Workplaces overall has 15 locations in California and Nevada. Pacific Workplaces officially started in 2003. A few centers were merged in, that had been under operation for many years. In fact, the Cupertino location was started by his dad 30 years ago under a different name, American Executive Center, not to be confused with the good folks in Philadelphia. Pacific Workplaces is a great model for a company that’s looking at the landscape and looking for what’s next and how to make sure they’re kind of staying on top of that and being appealing to the next generation of people looking for flexible work space. I will be asking Keith a few questions about what Pacific Workplaces is doing to move into today's shared workspace environment.
Enjoy our conversation!
You recently changed your name from Pacific Business Centers to Pacific Workplaces. Can you talk about that a little bit: It has been almost 2 years now that the change from Pacific Business Centers to Pacific Workplaces, but even before that, Jeff and I were running American Executive Center here in Silicon Valley. Even if you track it back to the trade association, back then it was ESN or the Executive Suite Network. A lot of people don’t remember that one, but before it was Executive Suite Association it was the Executive Suite Network. And so that word Executive, whether it be our trade association or many of our names as in our American Executive Center, really kind of fit the type of client we had. As the association moved from that name to OBCAI, which is Office Business Center Association International, was right about the time Jeff and I merged with Pacific Business Centers. So, we went from having “Executive” in the name to “Business Centers”. That’s really kind of what the trade association did as well. It kind of fit and things got kind of more casual. Down the road as the association made the decision to change to GWA (Global Workspace Association) to kind of incorporate all the different ways people work, so did we. It just fit with how things were going in the industry and rolled with it.
Do you see other business centers in the industry making a name change like that? Has anybody else done something similar? You know, that’s a good question. I don’t really see a lot of companies making that change. I think you would see it in new names. Of course co-working spaces has so many great creative names and that probably is some of the influence we had as well. I think maybe the new ones coming up will probably incorporate that.
You changed the title of your client or member facing staff. Can you talk a little about that change as well: It really comes from the influence of the co-working spaces. We try to stay on top of the trends and what coworking spaces are doing. We attend GCUC each year. We try to incorporate a lot of those great ideas. It just did not make sense to have the title be center manager and receptionist that had been for so many years. We changed to community manager and community coordinator is the front desk person. We actively encouraged our managers to foster community in their space. Having more events. Getting involved in connecting. It made more sense to actually change their title along with it. It really helped drive the point home to the person we were actually trying to encourage to foster this community.
What do you think was the biggest challenge was in that shift for your staff? I think that they are just so busy with what is really important stuff like sending out invoices, sorting mail, visitors, conference rooms reservations. Just trying to take that time to be involved with the members to help create that community. They all certainly wanted to do it. There are a couple of centers where the center managers title changed, they also lost their office. They just had an open desk. If you walked into the space and looked around in the open area, it’d be kind of indistinguishable between who the managers and members are. That was bit of a cultural shift.
Jamie: I want to make one quick comment on this. Business centers have been around for a long time and have figured out operationally what’s economically sustainable and important. Some of those things are meeting room revenue and virtual mail revenue. Centers can do very well in those areas and certainly go above and beyond what’s possible to do with space. Managers are really busy handling those things. Coworking spaces, some of them are so focused on the community aspect of that and don’t have the resources or not using their resources to focus on some of those other revenue generating aspects which can be challenging because then they don’t have the sustainability that they need to support the community. I think that the real opportunity is for the two sides to come together and figure out what’s the right balance and how you optimize that. How do you create a more community focused atmosphere that is still economically sustainable?
Keith: Right, a lot of that community type of activity is not immediately recognizable as revenue generating. We know that it ultimately leads to happier members that stay longer and who recommend the space. That means you have more members which eventually gets down to more revenue. It’s hard to see that at the beginning.
Let’s talk about your experimentation with coworking memberships. Your spaces have been more traditionally office focused, but you’ve done some experimentation in a couple of locations: I’d say that it has moved on from the experimental phase to definitely working. The success that I have had in adding coworking to these so called traditional business centers is really kind of directly proportional to the risk that I was willing to take in each center. For example, the San Jose center, we had an extra wide hallway in the back of the space. Its interior really unused. We were able to put in some nice open desks and casual seating. The only real risk there was the cost of the furniture. The success there is kind of marginal. Only a handful of workers. There’s not a lot of community going on, although I would say that traditional business centers do have community.
If we move over to the Cupertino Center, the risk we took there is actually taking out a wall between two exterior nice window offices. It’s a center that pretty much stays full. You are risking the opportunity cost of those nice window offices. The nice thing is that when you had it the two offices, when you did have a vacant seat it would go a month or maybe two months at times before you released it. You may go from a nice revenue down to zero for a month while you are releasing and then you would go back up. With the coworking you’re going to lose a few and gain a few, but you are never going to go down to zero.
How will you approach the layout of new spaces as you have more of an opportunity to update? We are pretty much filled up on the coworking space now so if we can add more desks we would. Who knows, maybe we'll just keep going down the line and keep taking out more walls at a time.
What do you think the shared workspace landscape will look like in the next 5 years? Will we be able to tell the difference between coworking space and business centers? As you know they are kind of converging. I think you will still probably be able to tell the difference. There still will be a place for traditional business centers. They’ll survive. I think they are missing out on having that other way that people love to work now. That becomes a pipeline into their other services. For example, I’m sure at Enerspace, probably a lot of the people that take your offices are previous coworkers. And that’s the case for us. They either move up or down.
We didn’t talk too much about virtual offices and how our centers are thriving with the virtual offices plan. A lot of our coworking memberships will get a virtual office plan as well and give them some discounts if they bundle the two together. Virtual office being more important if they need to have a bundle of meeting room hours along with it, getting their mail there, maybe they want us to handle their phones to have that professional feel of personalized phone answering whereas the coworking is just out in the open. Many times we have people come to us and say “Well that’s great. I do work most of the time out in the open, but I do have client meetings as well so I need to use the meeting room”. We do some discounts for putting both of those together. In my 3 Silicon Valley centers I can pretty much pay my rent to the landlord with my virtual office revenue.
You have been a long time active member of the GWA. What would you tell someone that’s considering a membership? Well, right off I would say join. I have been a continuous member for 30 years now and never regretted it. Of course the big draw is the conference and that’s filled with great educational content and there’s some awesome associates members there. I think the benefits go way beyond the conference, but it sort of starts at the conference. It’s the people you meet at the conference who become your resources throughout the year.
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