129. Kane Willmott discusses Working with Brokers to Generate Leads for your Coworking Space

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Transcription

129. Former broker turned multi-location coworking space owner shares the detail of his broker program

00:00:01 Welcome to the everything Coworking podcast, where you learn what you need to know about how the world wants to work. And now your host, co working space owner and trend expert Jamie Russo Way. Welcome to everything. Coworking Podcast episode number 129. I have a great guest and topic for you today really quickly, before we dive in a happy holidays. It is the middle of December when you're listening to this, so things are probably a little bit crazy right now. I hope you're surviving, and I hope you can give this one a good listen.

00:00:41 It's super helpful, super detailed and very practical. So if you need to come back to it after the holidays, make sure to bookmark it before we jump in. Quick announcement. I have an e book up on Amazon. This has been a long time in the works. One of those projects that just dragged on finally got it up. It's great I have some five star reviews up there from folks who have been through it already. Easy for me to say it's great. I hope it's helpful. It's best for you if you have not yet open to space.

00:01:11 So it walks through eight steps to creating a profitable coworking space that you love to run and covers topics like What is co working today? Has a lot of things fall under that? A lot of different types of flexible workspace fall under that umbrella is starting a co working space for me? What does the business model look like? What size space should I start? How much money does it cost to start a co working space? What do I need to know about signing a commercial real estate lease and more so,

00:01:41 if you want to check that out, head over to Amazon. The fastest way to find it is to search for my name Jamie Russo, and you could search for co working as well. But that gets you a few other books to sort through. It is 99 cents. It is free if you have Kindle Unlimited. There are ways, but they are fairly complicated to make it free. If you don't have Kindle Unlimited, So it's 99 cents. I just wanted it to be super accessible. It is not excessively long.

00:02:10 It's meant to be something you can get through fairly quickly, but to be comprehensive enough to kind of give you that framework to think about how to approach this journey. So grab it over an Amazon and leave a review. If it's helpful to you, send me an email. If you have any feedback, would certainly I love to hear, so I'm gonna dive right into today's guest. Who is Cane Wilmot, co founder and CEO at I Q offices. He has been building his business over the last few years.

00:02:40 When I first met Cane, I think he had one, maybe two, locations and he is Buhman and has so much to share about the process of the growth of his business. I could have him talk about 10 different topics. But today we're talking about the topics of using brokers, local brokers as lead jen, sources for your co working space. In a lot of questions about this and cane. He's such a sharer as so many people are in this industry. But he in particular just dives right into the details of how what their program looks like and kind of the whats and wise.

00:03:13 And I asked him, Cem, follow up questions and he gets into it all. So I will let you listen. Okay? Today is very special. Guest is Cain will not co founder and CEO and I Q offices. And I kind of can't believe that Cane has not been on the podcast yet. I think I've been saving you and also recognizing how crazy busy you are. So cane was the is the past president of Theglobe Workspace Association, So devoted lots of time and energy to helping us grow and evolve as an organization and is busy expanding his own business,

00:03:52 which we'll talk about in a minute. And it always shocked me how busy Kane was. But how, No matter what was going on in his world, he always had time to help us work through something at the G W ay, make our weekly calls. He talked to anybody who needs help with their own business. Kane is one of the most giving people in this industry, so I'm thrilled to have him on, and we are actually gonna talk about working with brokers. Cane has a brokerage background and has a pretty unique program that he has developed work with brokers in Canada,

00:04:25 and we're going to dive into that in a minute. Caine. Thank you for joining me today. Thank you so much for having me. I'm excited to be on this podcast. I'd literally listen to every episode over 109. Right over 100. Yeah, you are in the one thirties. Yeah, I know. Total. Yeah, that's so awesome. I little bit so many great podcasts. And thank you for that intro. That was so kind of great. Nice. Totally. Well, yeah,

00:04:50 Well, it's an exciting time to be a part of the industry. And I know you share that view. There's so much to talk about and so much to cover. So cane tell us a little bit about you. So you live in Toronto, tell us about where to start, talk about your business, and then we'll kind of go into the background. So I'd love to hear the story of how you get started in co working and a little bit about your business today, your locations, and not to pile too much into this first question,

00:05:21 but a little bit about the uniqueness of your brand. Because you have worked hard to kind of differentiate you're offering and you're very clear about who you serves. I'd love to kind of wrap that into an intro. All right, that sounds good. Okay, so I'll give my kind of elevator pitch about like you do. So we started in 2012. I've been a real estate broker since 1998. So I'm old. You can tell yourself didn't really program over 20 years, So that was a long time.

00:05:48 But we started our own brokerage myself in my business partner, Alex Sharp in 2000 and nine and afterward at multiple Broken just before that, in 2000 and 11 we looked at co working as being an opportunity for us to expand, to really grow something at the time, were really focused on looking at businesses that were not as transactional as a real estate brokerage. So we're looking at something that we could really build up cash flows and really have a replicated will model was really what we're focused on at the time.

00:06:15 And we were actually in a co working space and a couple of co working spaces ourselves as the real estate brokers before we started our own co working space. So in 2011 Alex and I went down to New York. We saw we work second location in SoHo. It was 200,000 square feet, and it was like when their second location was 200,000 square feet. Yeah. Really? Wow. It was gonna be Oh, yeah, You got it? Yeah. We had seen nothing like that in Toronto. So what was in Toronto at the time was a couple of small coworking operators and Regis really were dominating the market place.

00:06:50 And so we went down, loved all the design, but one of the challenges we found, what the model was the lack of privacy in the space and the challenge was like sharing space. Yes, but do we need to share our i p And do we need to share our confidential conversations? Yeah, right. Boards and our computer streets, like all those things with other companies. So when we came back and we started to look at planning out this business and like you, we really looked at what it would take to create privacy within those faces.

00:07:16 So try not to draw on too long on this, but really what? We focused on a number of different elements. From the privacy perspective, we put sound 10 u ation within our space, which is like enterprise quality. It's like white noise accepted stiff, you know, very high end version of that which really adds to the privacy because you can't make out what people say between two different. It's like a crowded restaurant where you here, boy, but you can't make conversation takes up the higher location.

00:07:37 So we put that in our space. We also put extra insulation between the walls. We put privacy screening on our walls, and we used a technology that created individual V lance private deal. And so everyone one was on an open network. And in today's environment, I think with one systems and the senses, I think a lot of you have heard of that 2012 that was really cutting edge. And it was one systems that was offering it. And so we put that into our space. And, you know,

00:08:03 we opened up Day one in 2012. We didn't have one office least we had no Peter cooling, so it was freezing cold. We were sitting in the corner office. I could see my breath. We hadn't least at one office. And I'm like, Oh, my God, what have you done? You know, if anybody actually don't like this, So anyway, we did end up leasing it out by performing was 12 months. We did it in nine. And you know, we found that there was a need for a product.

00:08:27 We really kind of from a differentiation perspective, we lucked into having a need for ourselves that we filled, and it also filled a gap in the market. And so that's something that we continue to focus on. I think one of the interesting pieces of your branding is those were early days and for you to sort of make this batons and be super clear and sort of like a little bit brave in terms of higher investment to do the type of space you were doing, like to not at some point be like I didn't really need to sound thing.

00:08:55 It's kind of pricey, like let's cut the corners like you really stuck Teoh, Who were you serving and what is your differentiation? And even though you had to, you know, invest more upfront, you're seeing that paying off over time, and it could be hard to do at the beginning when you're not sure 100% you know, and with Coworking Now we're starting to pre leased spaces because we're doing it for a while, so we know a little bit more about what we're doing. I mean, at the time we had a week's website and no Stu whatsoever,

00:09:24 you know, and so have you, as our timing was really good in terms of when we came into the market. But yes, I mean, I think that what we started, which was, I think, what smart was. We really thought about what our values were as an organization, like what we wanted to be, who we wanted to be. And one of the values that we have is first of all, we wanted to create an amazing experience at work. That was one of the big things.

00:09:43 So we thought about that through high touch experience, having lots of staff on site, being very thoughtful about how we create these connected experiences with our members and our staff and our members and our members and you know, everybody that comes in in touch with their brand But then that privacy piece was something that was just so important to us all the way through that we had to stick to it, really at the time. And yes, there was lots of times where we were, like, we really want to spend $50,000 on this line item that no one ever sees,

00:10:08 right? Right. So But, you know, it really has worked out for us. And again, you know, the timing was good and the that some of our competitors in the market don't have as much of a focus on the privacy. It creates a great differentiating point for us. So yeah, it worked out to be a business model that we've been able to sustain. So tell us what your business looks like today in terms of locations and kind of we were talking about square footage a little bit.

00:10:31 What's your typical size? And you just mentioned a pretty significant expansion in Toronto, which gives you 60,000 square feet. But tell us a little bit about your portfolio. So we have four locations in Toronto and one in Vancouver that are operational right now and running in the next week. We're gonna be opening up an expansion of working 1000 square feet just over 14 8 at the Royal Centre, which is an existing location in Vancouver and then a brand new location of just over 13,000 square feet. And then we're gonna be opening 24,000 square feet in Calgary on March 1st.

00:11:02 Then Ottawa is 13,000 square feet. On January 1st, we're going to be opening 35,000 square feet, all on 14 for crazy building in downtown Montreal, which is exciting. That's March 1st, and then we're gonna be doing to expansions here in Toronto, one on top of the existing location and the other one. I'm on top of existing location as well, one of which we're going to be putting our own office and two. In addition to that, we've been expanding our business model into what we call H.

00:11:27 Q. By I. Q. We love cheesy names, certainly not afraid of it. We got lost from eso es todo que is really looking at building. They're bigger spaces, as we have some spaces now that can accommodate over 100 people in them, and they're all built out completely ready to go. And so after one location in Toronto, we're doing that, and we're also putting our head office into that location as well. And then we have another location in downtown west in Toronto where we were forced to.

00:11:51 I have came on video and he looks like he gets sleep. But one would wonder, with all this going on, although I have to mention I mean one of the favorite topics. I talked about how giving cane is, but really, he's also super smart. And I mean, you're super smart to start with, and also he just is one of those people will ask a 1,000,000 questions. Go visit operators learn, learn, learn and develop this amazing organization.

00:12:16 So you said you have how many folks on your team today and growing Yeah, over 40. We should be over 60.

00:12:21 I would say 2020. We keep on hiring people, which is, you know, it's such an amazing thing because there's such fulfillment in creating these lively hoods and what I hope to be the most amazing job.

00:12:35 I always say, I understand people might not stay with us forever, but I always say it might not be your last job,

00:12:40 but I hope that your best job and so I would really hard. It's cheesy, but I love it.

00:12:45 I told you we're not free as many lines means simply, I get for it all the time. But you know,

00:12:50 it's so true that if we can create an amazing day at work for all of our stop and then by extension,

00:12:55 we can do that for our members. I find that to be such purposeful work, you know, and it's so much fun.

00:13:00 So now we're over 40. People were gonna be over 60 people soon, so we're the real drivers of the growth.

00:13:05 Is first of all this to serve our membership. That's one thing as well, because we're finding that we have a lot of satellite offices and they're in these other markets,

00:13:12 so they like to have us in those markets as well. It's great to have a presence in those markets,

00:13:17 but also to, from our perspective and the team, there's a lot of growth available within the organization when you grow,

00:13:23 so that's a real benefit of growth as well. So Cane is really thoughtful about his team in his culture and how he develops people on develops his systems around supporting his team,

00:13:34 and he did a presentation of the conference that will have to have him repeat at some point for folks that weren't there.

00:13:40 If you were there, I think you can access that. Send us an email if you were there and you want to see the recording if you missed it.

00:13:46 But just about the evolution of the team and kind of staffing and developing so cane we could go on and on about a lot of different topics.

00:13:54 Well, let's talk about you a little bit. Personally. You live in Toronto, you have two kids who are big skiers.

00:13:57 Can you talk about that for a minute? Ski season is upon us. Yeah, so I actually lived two hours north of Toronto in a little town called calling with 20,000 people.

00:14:06 It's a ski town. There's five different ski resorts in this town. It's a two hour drive away.

00:14:11 We had massive snow this past Monday, so it was three and 1/2 hours away, so I really don't know.

00:14:16 Yeah. Oh, so it really depends on the day. But interestingly, now I've been doing that for almost nine years now,

00:14:24 where I drive down to the city on Monday, I drive back up on Thursday or I try to be there as much as I can on on Fridays.

00:14:30 It spend that time with the family? Yeah, we're very busy in the wintertime because the kids are competitive freestyle skiers with jumps and rails.

00:14:38 They're both on the provincial team here in Canada. So they just got back from Yukon this morning and I do a lot of traveling.

00:14:45 They do just as much TRIBE all through the wintertime as well, so it's pretty exciting. It's definitely proud parent moment.

00:14:50 And, uh, you know, my only regret on the whole thing is that I don't get to ski with them anymore because you're always training and,

00:14:57 you know, we have so much fun skiing together. But I figure that'll all come back, you know,

00:15:01 and then totally hopeful and right also. OK, so today's topic. So we get a lot of folks trying to figure out how to work with brokers,

00:15:12 and you have developed a program and you do a lot of education with your local brokers. Can you maybe start with like,

00:15:19 why should we be thinking about working with burgers as a lead source for co working spaces? And maybe who is a fit for that and who may not be.

00:15:28 Yeah. Okay, So when we first started our Cordy space in 2000 and 12 at our first location was 11,000 square feet.

00:15:36 It's really small. I would say that we wouldn't do with a location that small again, even anything under $50 where if you would definitely on the lower side,

00:15:43 we'd like to 25 kind of our sweet spot but back. And when I say that because back in 2012 we had all these broken related,

00:15:49 Jeff, because I had been a broker since 1998 I thought I'm gonna talk to all my friends and they're all gonna fill up the space for us in this community.

00:15:56 And then no. Okay, So in terms of the brokerage participation and I was surprised and I talk to people about it,

00:16:04 and what it really came down to is with the smaller spaces. So I should back up a little bit on our first location.

00:16:08 The largest office that we did with six people. Okay, so and at the time, it was six people in Toronto.

00:16:14 We were charging $5200 for it. I swear, I was so afraid we had two of them. I was so afraid of these two officers because it was a concentration,

00:16:22 uh, rental rate risk. And I was concerned that no one was ever gonna pay that. And they were the first ones to get filled There have always been filled.

00:16:31 Its you know, the larger we build it, the better the company says it better. I mean,

00:16:35 the larger the organization, the better the covenant in terms of the credit risk associated with them. And I find that the longer they stay and for us in terms of aligning with our brand,

00:16:44 they just they really appreciate what is that we have to offer, So that is going forward. But if I rewind back to 2012 and I look at when we had all the smaller offices I was finding,

00:16:52 it was difficult to get the brokers community engaged in bringing group's smaller groups. And I think the main reason why is just because from a broker's perspective,

00:17:01 it's it's really based on what is the conflict like and went from a brokered a large brokered shop. They have to do a split with the house and so on and so forth.

00:17:08 And they do a lot of transactions if they're small or lie on those big transactions to make a good living.

00:17:14 So I found that was difficult to entice brokers to really take Coworking seriously and have it front of mine because it just it wasn't big enough for that.

00:17:22 And at the time that they understand what it waas, I think that was part of it, too.

00:17:27 Yeah, there wasn't a lot of awareness in the market. Most of the people that I talk to you about our business said,

00:17:31 Oh, that's a great idea. How'd you come up with it, right, Right. Of course I didn't s O,

00:17:37 but people would be like, Oh, that's such a great business. So I really like that idea,

00:17:41 you know? So it was an education all the way around, like education everywhere. I went from dinner parties to our sales cycles too.

00:17:48 But speaking to brokers, anyone that I would talk about co working because, you know, I wouldn't talk to anybody about it.

00:17:52 They will listen, We have to take them up. The learning care and what I found is over the past few years,

00:17:58 with some of the larger operators in the market that there has been so much awareness, which is fantastic.

00:18:04 So I think that you're right. There's two pieces to it. I think one piece to it was the awareness of like,

00:18:08 This is small. What is it? I don't really know. I don't really want to get time to get to know because it doesn't really make a whole lot of compensation for me.

00:18:15 But I think in addition to that, with the smaller spaces, it was difficult for them to really cut two tickets.

00:18:22 And then I think, what now, with the bigger awareness, with people building bigger spaces and that's the piece that I was getting,

00:18:27 too. In terms of our development over time is that we started the bigger, bigger offices. So those that six person went to a 12 person that our second location went thio.

00:18:35 A 30 person nets are fourth location. What? You know now we're over. We have some that are over 100 people because it is just such a need for it,

00:18:43 and it's really been driven by the awareness piece of the market, and that has really created a ship.

00:18:48 I see there's a huge shift happening in the market right now where it's a zero sum game. In some cases where you haven't won office tenancy who would be looking for 5000 square feet,

00:18:56 who's now saying No, no, I don't want to build it out I don't want to sign a long term lease.

00:18:59 I want to get into the space quickly. I wanna have it served my needs And I wanna have flexibility because I don't have any visibility Be on the next quarter of how big were gonna be because I would spit into that because your head count you just don't know.

00:19:11 So I find that there's an adoption in the market and now the brokers are seeing this. Asim, wait a minute.

00:19:16 So this is 100 person requirements that they can accommodate. Now, this is something we're looking at, right?

00:19:23 Yeah. And the customer is being The tents are starting to say this is what I want. So now you're a lot more focus on it.

00:19:28 So we're kind of riding the wave on that a little bit, I would say so. The brokers know more about what we're doing.

00:19:35 We're starting to see a lot more engagement from the brokers community. But I can say that since 2012 even though we didn't have as much engagement,

00:19:42 we still spend a lot of time servicing the brokers community because we always believed that they had access to the tendencies.

00:19:48 And we always thought, from a leverage perspective, we could go to a building and call every 10 in the building,

00:19:54 which we don't D'oh. But if we were to do that, I was trying to find a needle in a haystack.

00:19:58 Whereas you talkto one broker, you could have access to hundreds of tenants that right there Potentially Yeah, And so there is such a great resource,

00:20:07 and I think that overlooking them as being a lead source for you, I think, is really walking out one of the really good channels that you have attracted people to your space.

00:20:16 Do you see sort of this awareness interest in bringing leads? Is that consistent across markets like does that present itself more strongly in Toronto,

00:20:27 which is probably the largest market urine? Or is that consistent in some of the smaller markets as well?

00:20:32 Well, yes. So now we're in number of different markets, travels the largest market in Canada, that one in Montreal,

00:20:40 Vancouver, Calgary and Ottawa. Auto. It's quite a small market stalls market that we're in right now.

00:20:44 We have a vegetable markets that we have our eyes on. Their smaller, too. But I find that isn't really predicated on the size of the market.

00:20:51 In fact, I find it much easier and smaller market because there's way less brokers and real estate agents in a smaller market.

00:20:57 So you can tap into that community much easier, which is fantastic. And you could get to know very quickly who the movers and shakers are.

00:21:05 So our processes going into Ottawa's an example. We have a real estate broker at CB Richard Ellis, who secured the space for us.

00:21:13 We used him as a resource to say, like, Who can we talk to at a decent young and J jail and Colliers and Cushman Wakefield?

00:21:21 I know missing somebody. There's all the difference which houses they made the introductions for us, which was fantastic.

00:21:27 And then I went in and talked with all of them, even across the brokerages. They didn't hesitate to connect you to competitors,

00:21:33 essentially, exactly. You know, and it's kind of it's really interesting because in the real estate game on that,

00:21:39 because I was a broker for so long, people do tend to be fairly secretive. You know, I was thinking that was sort of an advantage.

00:21:44 It worked out to be an advantage when you started your space because you were brokers like cord information, right?

00:21:50 But that's part of the competitive advantage, you know, knowing stuff that your competitors don't know. So when you were talking about your space and like,

00:21:57 I don't want people to see the by screen and the white board and you know, some people think,

00:22:01 Well, that's collaborative. Cool. We're all you know, You're like, No, no, I gotta hide it.

00:22:05 It turned out to be Oh, you know, you were onto something that other people felt, too.

00:22:09 But partly I assume that's where it came from. You just drew a line there that I've never got me for.

00:22:14 That is very interesting. Yeah, you're right. It was. It may be because I worked as a broken for so long and knowledge is power program.

00:22:21 A lot of ways, I mean, I should. It's not the only thing, because relationships are at the heart of everything.

00:22:25 But the knowledge was extremely important because if you knew that something was available that no one else knew was available,

00:22:30 then you had a serious advantage. And if you were in the middle of a transaction that may or may not happen,

00:22:35 the last thing you'd want is to frustrate that transaction by letting someone else know about it, Right? Right,

00:22:40 So that's really interesting. Doesn't dig into the psyche on that whole thing was a good one. I like that.

00:22:45 I might explore that a little further, but yeah, I think the brokers community now is super educated.

00:22:49 In some markets where you don't have some of the larger competitors, they're not as educated, mostly reading the papers.

00:22:55 Anybody who's in real estate has an interesting co work. There's no one in real estate that we've counted now where we say we're in the co working business,

00:23:02 like what's that? That's fantastic. So that really advances those conversations, so that's which is great, and it just helps us to get in front of more groups.

00:23:10 And I could tell you that everyone's curious about it. The real estate brokers are curious about at the property manager are curious by developers,

00:23:17 landlords. Everybody's curious. Yeah, everybody has an opinion, but they're curious, which helps. But it starts with conversations.

00:23:23 So tell me about the workflow. So when you showed up in Ottawa and you ask for the intro,

00:23:28 what happens then how do you reach out? What is the education process look like? And then what kind of value proposition are you creating for the broker?

00:23:36 So ours might be a little bit unique because we came from a brokerage background, So I started in office leasing.

00:23:43 So I literally sat in their seats before, and I understand what it takes to put least transactions together.

00:23:48 I understand the difficulty of putting together the timelines and so forth. So what? We sit down with the brokers community.

00:23:53 It's really talking about what are the differences between a traditional East and a co working space just so they can understand it?

00:24:00 And then, from there, looking at as a broker or as a real sedated. How did you get involved in this?

00:24:05 So if this really is transformational, which I believe that it is and that Coworking is gonna be the new way consuming space up to a certain size,

00:24:13 then it's something that they want to be educated on and understand. And so what we do is we go in and speak to the real estate broker is about what is a co working strategy for as a broker.

00:24:24 And we talked to a number of landlords, but the same thing. What is it? Working strategy for a landmark.

00:24:28 And from a broker's perspective, there's some key differentiated pieces. When you look at a traditional office, space for us is looking at a co working space.

00:24:35 And so we really highlight those and help them to understand kind of. Here's what the differentiators are between those two things.

00:24:40 So we start high level there, and then we look at what's the difference here between I Q and some of the competitors there.

00:24:46 So and we look at it really more from a perspective of an education that we do as like a big advertising for I.

00:24:54 Q. I love the fact that it makes us very visible. I really think it's extremely important to connect personally with all of the brokers and spend the time with them instead of just firing out mailers.

00:25:04 It's real important to spend time and make those connections, so people do business with those they know, like in trust.

00:25:10 You got it. That's right. So I think it really starts there. Do you meet with them one on one?

00:25:14 Or do you do if heard you talk about, you know, trying to get in on their quarterly meetings are How do you but tactically get in front of them a few different ways?

00:25:23 What we first go into a market usually one on ones where I just want to meet with whoever is an influencer within that shop.

00:25:29 Sometimes it's broken record. Who's basically the Boston runs the shop. Sometimes it's One individual is leading the charge in Love's co working and wants to hear more So and I utilize relationships with existing real estate agents and brokers within the market and say,

00:25:42 Who should I talk to who's of interest, like Who would pick up the flag and wave it for us?

00:25:46 You have, you know, looked within their own shop. And so it starts there. And then from there,

00:25:51 we usually trying to get on, go to one of the sales meetings. Most brokers houses have a sales meeting every week,

00:25:56 like every Monday every Tuesday, you know, and usually it's a morning's not always like. There's definitely different ways of different companies doing it,

00:26:03 but they'll have it on one day, and I'm well organized so that we go in. On that day.

00:26:06 I'll usually bring in my regional person or my local person that they're gonna be in contact with every single chance.

00:26:11 I'm not in bank over all the time, so I'll bring it by community manager from Vancouver. And then we'll talk about this job.

00:26:18 So I have this whole presentation they put together. Sometimes I'm standing at the front of the room and I do the presentation like you're standing at a podium.

00:26:24 Other times it's super casual, and we have this. It's very interactive. We have lots of conversation.

00:26:30 It just depends really on the engagement of the different people in the room. And but it's a great opportunity to number one,

00:26:37 meet all those brokers, which is just great because there's such a great resource for Coworking number one number two.

00:26:43 It's a great opportunity to really get out into the market, be seen from the organization's perspective. And I think that as well,

00:26:51 that US educating brokers rust, providing brokers with more information on Ko working really helps everyone within the market like it.

00:26:57 I think it helps like you Thanks gain right, Yeah, I know, but I think that but we all do better from that.

00:27:04 And I think that's the end of the date. We all have different products and different things, and I will say it's not one thing.

00:27:09 It's all the things that come together to make an organization, and I don't It's never been my goal to be the only co working space that one of my customers are prospects is going to see.

00:27:17 That's never been my goal. My goal has always been I want to be on the list. Please don't be honest,

00:27:22 right? So I think if you like, if you approach it from that perspective, have it less sales you have it more about.

00:27:28 I'm just trying to help everybody understand, and also to get all this feedback from real estate agents and brokers as well,

00:27:34 because I say like, we'll take to put us on the list and you, How are we doing wrong?

00:27:37 What are we doing right? How can I make your life easier? I mean, what's interesting is our business is very much predicated on reducing friction from a transaction problem says,

00:27:45 from getting into space from creating a better work day. But there's all the years of business that you have to look at reducing friction,

00:27:51 the sale cycles, that you have, the real estate brokers. If you make it difficult for them to get access to your information and you give it to them the little bits of piecemeal.

00:27:58 And when they call, they don't get a callback for 48 hours. You know how I feel about the phone.

00:28:02 Yeah, you got to answer that phone. I mean, not to jump into the kind of end value proposition too quickly.

00:28:10 But to your point. For brokers, getting only stunned could take a year. Right? Moving 100 people into your space could take weeks.

00:28:18 Yeah, yeah, in two weeks where we had a group, MoveOn. Within less than a month,

00:28:22 a broker was paid well over $100,000 on in commission. No, I mean, it was a great transaction for them.

00:28:28 A great transaction for us. We ended up opening up with sports. We have this ability to do this HD by accuse with And so I think it's a great value proposition for the brokers perspective.

00:28:37 And yes, when I was doing office leasing, if I get paid within one year from the time that I had met somebody,

00:28:43 that was light fast, I mean, it could take six months to get an L. A Y a letter right now for all the people out there trying to sign leases.

00:28:51 They're like, Oh, it's wild. That means food. I love how you put me to the friction in this industry.

00:28:57 Still, in the traditional commercial leasing is so painful. So you have to share all your secret sauce.

00:29:03 But what's a framework for compensating a broker? I get asked this all the time a How do you get them to pay attention to you,

00:29:08 which you've started to talk about and then be, How do you compensate them? Yeah, so we really follow with has been industry standard in every market that we've seen,

00:29:18 which is 10% of the reappearing stand on the first year and then 2% for every year after that. That's what we pay.

00:29:24 We really stuck to it. Interestingly enough, I don't find that doing bonus commissions and not really make all that much of a difference I've tested.

00:29:33 It didn't really help. I would say that either your space works or it doesn't. If you have a good relationship with a real estate broker,

00:29:40 they're gonna put you on the list because they want to see if it works or not. If one space is painting a bonus commission over another space,

00:29:45 not paying upon this commission, I mean, I think for a lot of the brokers that idea with that doesn't really come into the value prop for them like they also may be right.

00:29:53 Find the right fit for their client, right? So if that really bonuses, yeah, yeah, yeah,

00:29:58 So either it fits or a dozen right. In addition to that, it's usually a relatively short term transaction,

00:30:04 so they want to make sure what's most important is make sure that their client is happy because they're probably gonna get them back in a year or two.

00:30:11 All right, which is another advantage, right? That can kind of keep tabs. They know where they are,

00:30:15 you know, that can come in if they need to. Like, if that 100 people is going to turn into,

00:30:21 you know, 300 people and look for their own space than the broker is able to kind of stay with them and and follow them and find them a short term solution.

00:30:28 What, do you pay them upfront? Yes. So as soon as the we pay them within 15 days of occupancy of the space.

00:30:35 So once we receive the security deposit for us, we do two months, two months security deposit, and then the first month's rent.

00:30:40 So once they've been in the space for 15 days, then check it out. Okay, But you're floating some of that can commission,

00:30:46 essentially. So you need to have the capital to support that, you know, because we use our security deposits to pay.

00:30:52 Okay, so there's a little generally cover it. Okay, Generally cover. Yes, and someone says it might not.

00:30:57 It was a very long term transaction. We don't you over the long term transactions. But it is one of the important things of having two month security deposit up front.

00:31:06 Having that way, you have to manage your cash flows match that. Got it. Okay, So for folks who don't have spaces that are,

00:31:14 you know, not gonna put in 100 people in smaller markets where they might get attention from brokers for smaller offices,

00:31:22 does it? From your perspective, I've heard people talk about, you know, Well, I get the burgers in,

00:31:26 you know, happy hour beer, you know, food, whatever. And then I'll pay them, like with Amazon cards like,

00:31:33 because the smaller deals are not sort of worth it when they have to split it with house. Have you seen that or done that nearly days,

00:31:40 Or what would you recommend in cases where we're talking about smaller deals? So that was a little tricky.

00:31:47 And because I am a real estate broker, I've worked at brokered shops. I understand a little bit of the politics going on in the background are Catholics,

00:31:54 right word, but I understand structure of what's going on. How's that? That's a better word. And so if you look at a real estate brokerage.

00:32:01 They may take up to 50% of the commission. So a real estate broker makes $100,000. $50,000 will go to the shop.

00:32:07 Whatever that amount is, maybe it's 5%. And it's, Ah, residential brokerage. Whatever. That split ISS.

00:32:13 If you pay a broker directly in the gift card, yep, that you're effectively cutting out. The brokers rang from making a profit on that,

00:32:20 and that is kind of isolating the group that you're really wanting to support you in that local market. So I think it's a little bit tricky.

00:32:29 You're missing the relationship sort of with the House, like maybe you've got a, you know, a relationship with a specific broker.

00:32:36 But if they know if they were aware of that, then that's risky from a longer term relationship perspective.

00:32:44 Yeah, I, you know, everybody's got their tolerance on those sorts of things right out of our perspective.

00:32:49 I like to get an invoice, and I like the baby invoice and I'll have to be super fair.

00:32:53 And I like to pay everyone really, really fast, right and make sure that they love doing business with us.

00:32:57 That's really my focus so you know, I know people do it. I know it's been done from our perspective,

00:33:02 though we want to make sure that everybody who's owed is d'oh or do you? Oh, you know,

00:33:08 the way you think. Do you have any recommendations for people who have? You know, I say you have 13,000 square feet and you still have I don't know how many offices that is 25 offices to fill.

00:33:22 Like, is it worth creating a relationship with the local broker or multiple brokers? In that case, how did you get their attention?

00:33:29 Okay, 100% because I think that one of the things that we have a challenge with early days that we had smaller offices.

00:33:35 But to your point, the bigger challenge was that people didn't know we did. So you had to take this huge education curve for a fairly small amount of dollars at the end of the day.

00:33:45 Whereas now everything goes according as and brokers, there is usually what I found when I was in roasted brokerages.

00:33:52 The smaller the requirement that more of them there are. So what that means is that there's 10 or 15 1000 square foot requirements for every 10,000 square foot?

00:34:01 No. Yeah, I think that's one of the surprising things about our industry. It's like I think the stat is like 80% of commercial leases are under 5000 square feet.

00:34:11 It's like shocking. You know, we think of large people taking down, you know, 30 50 100,000 square feet,

00:34:18 and that's just rare to your point. So there's a huge market for those people. And now, as an operator,

00:34:23 you have the benefit of built in awareness because the brokers already know what you're selling. Yep, so but I think also to you have to attack it for a bunch of different angles.

00:34:34 If you do a broker reception, have bunch of people over and give them free beer when you prizes,

00:34:39 whatever the case may be, that's one thing. I think it drives the awareness piece, but if you really want to get people to send people your way,

00:34:47 you have to spend time with them. You have to connect with them. You have to have a relationship where they trust you,

00:34:53 where 1000 square foot requirement comes in and immediately they give you a call because you're just the obvious choice.

00:34:58 They know you're gonna take care of them. They know that if they grow or something happens and they're gonna be leaving this face,

00:35:03 that you're gonna contact them again, right? And I think that's one of things that it's so time consuming.

00:35:08 It really is right. But I just think you have to really commit. It's not a one and done have people over.

00:35:14 Give him your card. It's ongoing, really. You have to stay in front of them. It's again he sort of long term sales process.

00:35:20 You have to keep that relationship and get those touch points in every so often and ask the right question.

00:35:26 So when you're in front of a real estate broker, if you have some space or specific need talking to them about it,

00:35:32 saying, what do you mean? We've got this in the maybe in the suburbs of Chicago. I've got this five person office in Chicago like you running around with any small requirements the last month and has anybody inquired on problems?

00:35:43 Murphy. Right, So you just asking those sort of questions keeping in front of mine, they say,

00:35:48 Oh yeah, I don't need melon that a few days ago we showed him a couple's faces. I'm not sure we're gonna go fire over the mullet,

00:35:53 see how it goes. So those are the kind of things that could really bear fruit. So we talked a little bit about kind of developing a relationship.

00:36:00 Anything else about sort of in reducing friction for them, make it easy to, you know, to work with you,

00:36:05 and then the compensation. Is there anything else sort of in the program that we should be thinking about?

00:36:11 Well, the compensation piece is huge because if you look at it like when we're doing a comparison, a commission on a one year transaction is as much as a five year transaction on traditional office spaces.

00:36:22 So that is really compelling. And so if you're gonna do a five year deal, it's gonna be substantially more.

00:36:28 So you get paid like it's just such an obvious to put it onto the list because you get paid faster,

00:36:34 you get paid more is what the client wants. Yeah, it's easy to show it's easy to do the transaction and you get them back in a shorter period of time.

00:36:42 you're not waiting out of five or 10 year lease. So from the brokers respect that there's a lot of value propositions built into that.

00:36:49 Yeah, I could still see some education, probably in some markets that needs to be done to sort of uncover that for them to help them,

00:36:55 you know, frame it up and help them see even some I think you do. You have sheet with some math and examples on it to help them like really driving home.

00:37:04 Yeah, it's not like you say one and done Just saying it once does not necessarily get the message out there to everyone.

00:37:10 I've been talking about the relationship on the commission side and talking about getting the clients that we've been talking with us for years now.

00:37:18 And even still, there's many times where I talked with real estate brokers, and that's what we pay them every quarter.

00:37:22 If they're so, that's a shorter commitment is an example, like let's look at what six months and then they stay for an extra quarter what we pay them on that more than we paid cash for.

00:37:29 So and one of the challenges is a real estate broker is that sometimes you put a tenant into a building,

00:37:35 and this isn't true for all buildings. But for some that you put them into a building of when it comes time for renewal,

00:37:40 that it may be difficult to get protected on a beat on that. So with ours, it's set it and forget it.

00:37:45 You know they happen, Ray. Remember, their client goes into the states. They get paid every quarter.

00:37:49 They don't have to call us and say, You know, I need Thio, you know, negotiate or whatever the case may be,

00:37:55 in order for us to extend this so that we could take advantage of more admission just automatically comes in.

00:37:59 So it really makes a whole lot of sense from that perspective again reducing the friction process. Who on your team is responsible for tracking this and doing the payouts?

00:38:09 Oh, accounting. And it is. You see the spreadsheet? Well, that's that's like, Oh,

00:38:13 boy, this is a commitment, right? Yeah. So has not only do we pay 10% for the first year,

00:38:22 and then it knocks down to 2% for every year after the first year, so that has its own complexity.

00:38:26 but it seems the routes of the straight for to deal with. But if you have a client states for six months,

00:38:31 remember six months and then they go and they grow into twice aside space. Let's say they go from a 10 to a 20.

00:38:37 Okay, then on the original 10 they get paid 10% for the first year, too after and then it resets on the growth piece,

00:38:43 which would be the extra 10 people, right? So now that would be for a year. That would be tempers.

00:38:49 So that's what I mean about Yeah, this book traces for I got it. So you need a crazy spreadsheet to do it with your local team responsible for feeding that data up.

00:38:58 Like when somebody expands, they need to make sure accounting knows. Or is that the sales team that handles that?

00:39:04 Yeah, it's the local the community manager at the location that would say, I'm going to be expanding this group now.

00:39:10 Everything's documented, So if we're going to expand them into a larger office, we haven't amending agreement. So we would have been many agreements signed at that point that goes to accounting when accounting looks at that.

00:39:19 One of the check box? Is this a broker TRIBE? I got it. So do you see a point where brokers air sort of becoming so savvy?

00:39:28 That and again, rising tide lifts all boats, so not necessarily feeling one way or another, But our brokers going to start sort of saying the landlord's Well,

00:39:38 I'll just manage this for you within your building. I mean, it goes back to the whole, like,

00:39:43 you know, how much service do you need is maybe a long answer. But our brokers becoming savvy enough that they could sort of managed this process for a landlord,

00:39:52 the process of running the stage like a shorter Yeah, like the 100 person requirement, for example. I mean,

00:39:58 I guess the thinking through the question more. I mean, they're not going to handle the furnishing and the design,

00:40:03 and it's not really possible unless the landlord is gonna get involved from a design. The space without the space sort of create a turnkey Sweet.

00:40:12 There's not really a way for a broker to do this without you. I mean, I think that brokers,

00:40:17 depending on what we're talking about in terms of the different areas of the brokerage. You have Hannah with C B R E.

00:40:22 Yeah, so you do have brokerages out there that are looking at it. I think they're looking at it more from a property management perspective that therefore brokers perspective.

00:40:30 I think they're looking at it as we do property management. It stops here. What can we do to expand the property management business into more of,

00:40:37 ah catered business? And how can we service small suites? And that's what we're seeing on that side.

00:40:45 And I think there's so much space in this market that we're only seen the beginning of this wave of the man that's coming in terms of these groups that are coming off these long term leases that are now saying,

00:40:55 Whoa, look at all the options. This didn't mean this five years ago when I signed my lease.

00:40:59 So there's a need for show sweets. There's a need for large suites on a short term basis, flexible,

00:41:06 built out and ready to go. There's a need for subleases, obviously at but under ah, more friction free model.

00:41:13 But there's I believe, that there will always be a place now for a really hospitality focus space. I think so.

00:41:19 When I look at that one of the threats to our businesses that you have Landler to come into the business and they're gonna do themselves right?

00:41:26 Yeah, and I think when I look at that first, I think that makes us all better when there's more competition in the market.

00:41:31 But I think that what we really need to focus on as an organization is how do we really create this amazing experience for,

00:41:38 like a rich like experience and their people enjoy coming to like you so much so right that they become oil to the bread and you really only becomes their bar right?

00:41:48 For yeah, experience. I was turned. Remember who I was having this conversation with earlier this week?

00:41:53 Oh, it was on the air talking to one of our G W. A member's who's doing some market research and one of the questions they were sort of posing is,

00:42:02 you know, do enterprise customers. Does this just become the bar? And what do they like if they've worked in an I Q.

00:42:10 And have this amazing experience with your trail mix bar and your amazing staff and privacy and beautiful spaces. You know,

00:42:17 it's a great experience then. You know, they sort of don't want anything less than that, right?

00:42:22 So if anybody is sort of getting into offerings, they have to find their sweet spot of who they conserve appropriately.

00:42:30 Because, you know, you're right. You're serving who you're serving in a specific way, and they're a lot of people who are gonna demand that.

00:42:36 And where does that you can the landlord deliver on that on their own? Yeah. I think the niche is really important from a business model perspective.

00:42:43 But I think what we're seeing as well is that what the customer wants is changing so rapidly. Like now we're doing treadmill phone booths and we're doing massage chairs and right people actually use the treadmill phone booth.

00:42:56 Well, this was so one of my watch. Allie's people like to walk and talk myself included. Yeah.

00:43:01 So if I could walk into podcast interviews, I would I know. It's like a time to be sitting here.

00:43:06 Yeah, I could be walking right. This sitting in this chair. So this was the thought. This is one of the idea that we're floating to talk to members about it.

00:43:13 It's been well received. So we're building the minority location. So I will be able to tell you in okay months a year from now,

00:43:19 whether these things are overused or this is just one of Cain's crazy ideas really was gonna put sensors in there to test.

00:43:25 Yes, I think that what we have Centra shatters some of our spaces. And the purpose of that is more to understand what the occupancy is in our space.

00:43:33 You want to make sure that we're never over identifying our spaces. Yeah, so yes, that there's occupancy.

00:43:37 We can put centers in the test. That would be really the two point over of understanding what some of the different groups are using and what's being utilized,

00:43:44 not being utilized, that we find the deuce eating that you have, like a loved receding myself included,

00:43:50 because it doesn't need to go and sit in that environment where you still have access to your office quickly here,

00:43:54 private spaces plea. But you could still be out in one story, have music, and you have people in very surrounded by actions.

00:44:00 Totally. Okay, well, you have to keep me posted on how the phone booth give you till I die.

00:44:05 I will let you know how they get you Analyze. Yeah, I think the respected I'm looking at it in the early days.

00:44:10 It's just gonna be seeing if people like it and they're just like, Wow, this is really weird.

00:44:13 It's weird. Total Maybe next week, maybe next car. Yeah, maybe they go in and don't turn it on.

00:44:20 I guess we'll see. Just stand there on the weight. Doesn't take up the whole space. Like,

00:44:26 is there a chair next to it? Or do you have to use the treadmill? Know this face is built for the treadmill.

00:44:31 Will you open the door? It's got a treadmill. It's got a desk up top where you put your computer and you can hop on the phone.

00:44:36 You have to add to your insurance to offer this Good question. I'm gonna have to talk, and I think about her to make sure I don't know.

00:44:43 I'm just picturing like, you know, YouTube, mim of something. A work call like you should get a pad behind it.

00:44:52 I believe it only goes a certain speech. I don't think it's probably nobody's jogging while they do a call.

00:44:57 I mean, no breathing hard and yeah, no, it's not meant to be a full work. And you just you keep you moving,

00:45:04 right? Totally. Journalism does it. Yeah, yeah, yeah. So, I mean, I know it may sound like a little bit crazy idea,

00:45:10 but we're always focused on what does it take to engage people at work like So when you come into one of our spaces,

00:45:16 you are fully engaged and you have all these different work environments that you can go to where you can have privacy or you could be social,

00:45:22 or in this case, you can be active right hand while you're doing your work. So and I mean,

00:45:28 I find myself personally and speaking to our members as well is that they don't like to dissident a desk all day long.

00:45:33 We do sit, stand, destined for days. It's totally Yeah. So just give you all these different environments.

00:45:39 I love it. Okay. Is there anything else that we need to cover on the brokerage topic? Anything I didn't ask that I should have.

00:45:45 We've covered a lot on the brokered side. I think the big thing is that no matter what size of space that you have there.

00:45:51 Still good to spend time with the brokerage community because they really know who's out there looking for space. That's the reality.

00:45:57 And they also know when someone says I'm in a jam and I need somewhere to have a new event.

00:46:03 What do you know of any spaces and that sort of thing? You know, So like, there's so many things.

00:46:07 They're so well network. That's right. It's their job. Their job is to yeah, and literally is their job.

00:46:12 So let's say, like if you have five brokers, even in your market that you have really trusted relationship with that are very active in the market.

00:46:20 Just those five relationships. You can have access to hundreds and hundreds of conversations because every single day they're having those conversations on states needs.

00:46:27 Yep, real quick, in terms of the math on paying them, your view is pay them all day.

00:46:34 It's a marketing fee because you talked about overwhelming demand in Toronto, but you still feel like the value prop is air filled.

00:46:41 The office faster with the broker. Yes, I think that in hot markets like Toronto, you certainly there's a lot of demand.

00:46:49 There's a lot of supply so that they have a lot of choice. But I would say in the smaller markets,

00:46:54 it's even more important because in smaller markets you're going to recycle those same relationships over and over and over again.

00:47:01 So it's extremely important to pay them well to pay them quickly to know that they see the value proposition of bring those clients to you and calling you and making you the first call.

00:47:09 That's my goals, that they give you that first call once they have that requirement. And even in a market like Toronto,

00:47:15 where there's so much demand, you're still perfectly happy to have ah broker walk through the door with a client or send an email.

00:47:21 Or however they refer people versus trying to fill it yourself without paying the broker fee, right? Yeah.

00:47:26 I mean, I had to see that the cost of doing business in terms of its a trusted relationship,

00:47:31 I am more than happy to pay a real estate broker for bringing a client to our space because if they do,

00:47:36 they're gonna help us fill it, and they will help us fill it long term, and that's a relationship.

00:47:39 Every time we pay a real estate broker, that's another solidified our friendship. Yeah, yes, right,

00:47:45 So that's an investment. Don't think of it as a cost of doing it. The old think of it as an investment in the future of filling your space because those relationships will keep on paying off.

00:47:53 Yeah, I love looking at it that way. Cane. Thank you for sharing your insights again. I feel like we could have you on for multiple topics,

00:48:02 so hopefully you'll agree to be a guest again. But this is a great topic to cover today. Really helpful.

00:48:08 We get a lot of questions about how this works. And I knew you had kind of, ah,

00:48:12 gold standard approach to this. So I appreciate your time and sharing your wisdom. Thanks. Jamie has been absolute pleasure.

00:48:19 Thanks for having me on thought something's came. Thanks for joining us on this episode of everything co working.

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Jamie Russo