Expect to see your peers’ idle common area spaces, well-appointed clubhouses and stunning rooftop views in TV commercials as well as influencers’ TikToks, Instagram posts and on YouTube.
The sheer number of content producers is exploding, and each is looking for the ideal setting to create their content. Enter the flexible rental event market. It represents another breakthrough way that apartment operators can potentially earn more than $1 million annually in ancillary income simply by allowing others to spend a few hours in their space.
“Co-Working and Event Flexible Rentals,” part of the Flexible Rentals Investment Conference, spoke of this strategy and other innovative approaches to driving revenue by leasing vacant units to residents and the public who are seeking co-working spaces.
The session featured panelists Jon Hile, Senior Vice President Business Strategy, CORT; Eric Schoup, CEO, Peerspace; and Roxette Miranda, Account Executive, Coworking Division at Yardi; along with moderator Steve Lefkovits, Joshua Tree Media.
The ‘Up Side’ to Spaces’ ‘Down Time'
Peerspace partners with properties – such as apartment communities – that have underutilized space, usually in its common areas, Schoup says. Its inventory touches all 50 states and it offers 30 types of spaces and unique venues, with a particular focus on 30 key markets. Users can book by the hour, by the day or by multiple days. It has made 200,000 bookings.
“We look to book the ‘down time’ moments for these spaces,” Schoup says. “There might be really well-appointed rooftops or lounges that could be ideal for an event.”
Peerspace has leased space for CNBC television interviews, Accenture corporate meetings, a VISA holiday retreat and a Facebook brainstorming event, for example. More common, these spaces are clever alternatives for those seeking one-of-a-kind birthday celebrations or landmark events for families and friends.
Schoup says five of the top 20 REITs use his site, which lists 7,000 locations, and the list is growing. “In 2019, one of our customers – a big-time apartment owner – earned $1.1 million in revenue. That’s at 100 percent margin.
“There’s been an explosion in content creation the past year with the proliferation of TikTok, YouTube and Instagram,” he says. “These influencers need cool places to shoot their videos. You never know what kind of aesthetic they are looking for. It could be your rooftop. We’ve had our spaces used for fashion shows, headshots, commercials.”
The company is also poised to serve the recent steep rise in distributed work – 60 percent of corporations are allowing their workforce to work in another city outside of their headquarters and 70 percent of workers are moving away from their headquarter city for lifestyle reasons, Schoup says. Nearly three-fourths of companies say that they need their employees to be in at least one in-person meeting per month to be productive, he adds.
“With scattered workforce, and a dial-back in office space size, anyway, companies are turning to unique settings to host these meetings. And for some, they are booking regular meetings – such as an event at a given venue one day a month and 12 months a year.”
Good-Bye to Old Era Co-Work Space
Yardi’s program focuses on co-working spaces. Miranda explains that co-working office space has evolved, even in the past year, away from yesterday’s grey carpets and florescent light offerings.
“We’re simply leaving an old era of flexible space and welcoming a new one,” she says. She likens it to a gym membership model.
“Lifetime Health Clubs started as a gym, but they realized very quickly that having both residential and workspaces as part of their health brand would provide additional services that their members can enjoy,” Miranda says. “They perfected the concept of memberships and retention by providing a high level of services, luxury amenities to serve the work-live-play crowd with a cult following of celebrities and influencers.
“If you take the same conceptual model of a gym membership to do a reposition, you can easily transition into co-working, and you’ll be able to see additional revenues beyond just offering a desk and quiet office space.”
She says apartment operators can oversell co-working membership (like local gyms do), knowing that not everyone will be using the space at the same time.
“Having 5,000 square feet or more will generate at least $9,000 per month, solely on these memberships,” she says.
For example, Alabaster Group, an award-winning, local real estate developer out of Canada specializing in premier multifamily projects, entrusted the interior design firm it used for its high-end residences to create sleek design for its co-work concept.
“Aside from the beautiful design, it offered equipped kitchens, upscale lounges, secure areas with fob access for spaces that featured such perks as showers, change rooms and bike storage areas,” Miranda says. “It’s thriving by offering things through co-work membership such as private offices and professional boardrooms and meeting rooms with the latest technology for video conferencing. On top of that, to provide privacy and security for their clients, they offered enhanced acoustics treatments and secure, high-speed Internet management.”
That connectivity can be a make-or-break proposition for any co-working space, she says. Yardi Kube is a product that connects co-working operations into a single, connected solution, and ties together accounting, IT management, security access, property management, marketing and member experience to make operations run through automation. It is a SAAS solution that also can include hardware infrastructure.
Taking Care of the Furniture
All that’s really missing for some co-work spaces is the tasteful furniture. That’s where CORT comes in. Hile says CORT is now more than just a rental furniture provider.
“Having a dedicated space in your community helps provide a private-office alternative during the COVID restrictions for residents who have been cooped up in their unit too long,” Hile says. “These renters can recognize the value of this option.”
Pre-COVID, about 3.6 percent of workers worked from home half time or more each week. Now, it’s up to around 60 percent, Hile states.
“We’re seeing that workplace amenities are a leading desire of renter,s and have become a critical component for the properties,” he says. “We convert vacant units into co-work spaces. This works best for studio or one-bedroom models.”
CORT offers variable revenue-sharing plans for operators and their renters. Residents can subscribe to the spaces at a discount. CORT also is offering it as a free amenity to lease-up communities. CORT uses its proprietary sensor tracing technology in spaces to help track traffic patterns. The information helps it to reconfigure the areas to determine where to set up space dividers for temporary conference areas.
Apartment operators are warming to the idea of trying something new, the panelists say.
“Our way to convince property owners to list with us is to show them that many others are doing this,” Schouk says. “We ask that they just give us one space to try out. They don’t have to dive in with two feet. We assure them that they have full control of what types of events will be held in their spaces and what types of people will be the guests.”
Miranda says so much of Miami has a work-live-play vibe. Residents who live at the property can take advantage of these perks for free, and we also open up these spaces for rent to the general public.
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