Before becoming president of the Venture X coworking space franchise, Jason Anderson was an established real estate powerhouse who earned a spot on the Forbes’ “30 Under 30” list in 2012. He later joined United Franchise Group and launched Transworld Business Advisors, which provides business broker, franchise consulting, and franchise development service to business owners. In 2018, Venture X was acquired by United Franchise Group and Anderson was asked to assume the role of president.
Although coworking spaces are becoming increasingly popular due to brands like WeWork, The Wing, and Impact Hub, not much attention has been put on the investment side of this industry. He wants to change that. Anderson spoke with BLACK ENTERPRISE about the lucrative opportunities in franchising and what makes Venture X a good investment.
BLACK ENTERPRISE: Why should investors consider the coworking space?
Anderson: There has been an increase of 6,000 coworking space members in the last five years. If you look at the trends in commercial real estate, it’s pretty clear that flexible workspace is the Uber of this industry. They are predicting a 25% growth rate. Flexible working space currently represents 5% of commercial real estate and is expected to grow to 20% to 30% by 2030.
What type of investor should be looking at coworking space?
There’s no question that the coworking category is at the higher end of the investment scale. For Venture X, the minimum cash investment is $450,000, with locations being between $1.5 to $4 million. Many of our investors come from the hotel franchise world and are not first-time entrepreneurs. Coworking space ownership is very similar to hotel ownership but without many of the operational challenges. You’re purchasing or leasing the space, furnishing it, and renting it out. But with coworking, you have significantly fewer employees, less furniture, and the rentals are long term. Plus, the added bonus is that coworking space is typically corporate hours, Monday through Friday, from 9 a.m. to 5 p.m.
What is the revenue potential in coworking space?
As with most franchises, we don’t make any predictions or guarantees around revenues. That said, what’s great about coworking is the large amount of data that we use to determine the potential success of the business. Very few industries have the amount of third-party reliable data that we do. Similar to hotels, we leverage all of the commercial real estate data available. In our case at Venture X, we work with Cushman-Wakefield for market analysis. Using the data, we determine what the best locations are for a coworking facility that will give owners the best opportunity for 100% occupancy.
Unlike fast food, there’s no “average ticket” in this business. Based on the size of the location, we determine the number of occupants that would work in that space. Currently, our smallest location is 8,000 sq. ft with our largest being 40,000 sq. ft. We determine what the average occupancy rate should be and how long it will take to get to that point. Then we determine what the membership rates will be based on local analytics and competitive data. But what’s been incredible is the additional benefits we’ve been able to help investors negotiate. Our owners are getting, on average, $1 million in tenant improvements for construction and build-out. They’ve also been negotiating seven to eight months of free rent—resulting in $20,000 to $115,000 in free rent.
Our peak occupancy averages have been at 100% for locations that have been open over a year; 74% over six months; and 24% under six months.
Why should investors go with a franchise as opposed to doing it alone? And why Venture X?
People go with franchising because it’s a better option than doing it alone, amongst other reasons. Franchisors have already done a lot of the work on behalf of investors, such as acquiring data, securing essential partnerships, negotiating vendor contracts, etc. We’ve removed a lot of the back-end work that it takes to get up and running, and the guesswork on what it will take to fill the spots. Most individual investors don’t have the buying power to negotiate the best deals on construction, furniture, etc. They end up spending more getting up-and-running and can often make mistakes in the design. In addition, the exit strategy is better when you’re with a franchise. Being part of an established brand that has multiple locations around the country, will make your business more valuable.
Because Venture X is part of United Franchise Group, we’re able to take advantage of the infrastructure and a network that has been in place for over 30 years. When a qualified candidate contacts us, we can have them meet with a local representative in their area within 72 hours. In addition, we have Discovery Days (where potential franchisees come to our corporate location to meet with various departments)—more frequently than most franchises—which, by the way, we cover the expense of candidates to attend. But I’ll let the numbers speak for themselves. We have sold a Venture X every other day on average. This year, we’ve had 92 Discovery Days, and 50% of those have ended in closed deals. We are on track for 100 signed agreements in 2019.
What can an investor expect in terms of a timeline for opening the business?
Once an owner has signed their agreement, we quickly move to presale. This means that we start advertising in the area that there will be a new coworking space facility and start incentivizing businesses to sign up for membership. We provide businesses with a complete turn-key solution for office space. So, from the time owners come aboard, it’s typically 12 months to the grand opening. That doesn’t mean that some businesses aren’t already in the space and operating. As soon as the build-out is complete, members can move in.
more recommended stories
UPS Is Looking To Fill 100,000 Seasonal Jobs For The Holidays
With the holiday season around the.
Charles “Chazz” Scott: Teaching Youth To Overcome Adversity Through Positive Thinking
BE Modern Man: Charles “Chazz” Scott Cyber.
Angela Davis Inducted Into the Women’s Hall Of Fame
The National Women’s Hall of Fame.
‘The Wendy Williams Show’ Renewed Through 2021-22 Season
She may have had some slips.
Alkaline Water Acquires Sean Diddy” Combs-backed AQUAhydrate
The thirst is real! As reported.
Comcast Giving Away Free Streaming Set Top Boxes
By Helen Coster and Munsif Vengattil.
Credit Card Debt Has Hit Record Levels. Here’s How African Americans Can Pay It Off
The nation’s credit card debt reached.
Rihanna Is The Wealthiest Female Musician
Robyn Rihanna Fenty has surpassed many.
Police Try ‘Spider-Man’ Device To Replace Tasers
By Omar Younis LOS ANGELES (Reuters).
Kent Olden: Media Pro Challenges Himself And Others To Be Better
BE Modern Man: Kent Olden Public relations.