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Examining Growing Companies’ Decisions to Locate in WeWork Spaces

Seattle, Buildingi, WeWork, Matillion, coworking, Puget Sound region, Bellevue, Denny Triangle, Stewart Street, build-out
Image courtesy of WeWork

By Jack Stubbs

As companies throughout the Puget Sound region plan for their future growth in an expanding marketplace, decisions are continually impacted not only by companies’ operating strategies, but also by where said organizations choose to locate—and WeWork in particular continues to play a significant role in the provision of shared office space.

Some companies are opting to occupy WeWork spaces in the region rather than renew their leases, a decision that necessitates a consideration of various competing factors such what size of footprint the company hopes to occupy, affiliated costs associated with the co-working space, and the future potential growth trajectory of the company.

Buildingi, a workplace, technology and business consultant located in Bellevue, decided to move to a WeWork space in late 2017 rather than renewing its lease, a decision that has since allowed the company to broaden its scope.

“As many of our clients are leaders in corporate real estate, we saw more opportunity in aligning with the emerging option of leveraging co-working space,” said Don Barnes, managing director of Buildingi’s Pacific Northwest division. “This has allowed us as a collaboration and productivity consultancy to understand the dynamics of working between this type of environment and traditional leased space and to develop the appropriate methods for measurement, reporting and planning for this highly dynamic component of the supply/demand balance that our clients must solve for.”

As the company continued to grow and as the end of its lease neared, the company gave greater consideration to how it could expand effectively over. The company’s previous office was a 3,800 square foot space was at Bellevue Pacific Center (188 106th Ave. NE) with a 5-year lease that started in December 2010, and the company has since moved to a 760 square foot space in one of WeWork’s Bellevue locations in Lincoln Square, located at 10400 NE 4th St. As is the case with many companies, the decision facing Buildingi was to commit a long-term lease at their current location or opt to move elsewhere, according to Barnes. “In the fall of 2017 as the final term of our lease approached, we knew that we either needed to commit to another multi-year lease for an uncertain amount of space or consider other options. Some consultancies embrace a fully remote workforce design where there really is no ‘office’ to go to,” he said. Beginning in fall of 2017 and through summer 2018, the company worked out of a combination of Bellevue Pacific Place and the WeWork office at Lincoln Square, and plans to be completely transitioned to the WeWork location by August 2018.

The company began its exploration of WeWork by renting two four-person spaces for a few months to evaluate the environment, amenities and impact to the team’s work pattern, and then began occupying the 760 square foot space—which accommodates between 10-15 employees on a typical day—on an 18-month term, an arrangement that worked particularly well for a company like Buildingi. There are about 40 employees that cycle through using the Bellevue WeWork space and some of the employees work through the company’s remote work program. “As a business that has both seasonal and client-driven peaks and valleys, this works well as we can flex into new space for a few months (availability permitting) and then shrink back into the core space as the project ends,” Barnes said.

And even though the move from Bellevue Pacific Place to Lincoln Square required a transition into a smaller space, this decreased footprint was compensated for by the greater flexibility—in the short- and long-term—that the WeWork space allows. “This is a portion of the value proposition in moving to a space with shared amenities, as we aren’t directly paying by the square foot for the common and collaboration spaces on the three floors in the WeWork location nor for that space in any other WeWork location,” he said. “The convenience of the WeWork model is that we no longer need to obsess on how long we will stay there for, as we can expand and contract where we are or engage in other geographies as the business evolves—all through the WeWork portfolio. We no longer have to shoulder the operation cost of extra space that will let us grow for the next 5-7 years, nor be forced to fragment our organization if we don’t see value in it.”

As was the case with Buildingi’s evolution and subsequent decision to locate in a WeWork space, WeWork strives to meet the needs of a wide variety of companies at various stages of their growth patterns to account for short- and long-term growth, according to Gina Philips, WeWork’s general manager for the Northwest. “WeWork offers space and community that meets businesses where they are today, but also helps them grow to where they want to be next month, next quarter or the next decade. Whether you’re a one person startup or a Fortune 500 Company, WeWork can meet your needs while at the same time housing a diversity of members all under the same roof and woven into the same community cloth,” she said. One of WeWork’s primary objectives is to foster increased collaboration and interaction between team members. “People are no longer siloed away from each other. That’s extremely powerful at the human-to-human level, but also at the growth and innovation level as individuals build new networks and relationships that drive creativity and success,” Phillips added.

And while Buildingi in particular has since come to thrive at the WeWork location in Bellevue, it was not initially smooth sailing for the company as it looked to successfully transition, according to Barnes. “The pilot spaces didn’t work out very well, because they were very noisy…I worked out of client spaces as a consultant for years, but coming into this I was shocked at how noisy and distracting it was—the glass is great for getting daylight in, but it’s also very distracting. [But] when we moved into the bigger space, and it made all the difference; all the noise was toned down and it really worked very well for us,” he said.

WeWork estimates that a four-person company averages $18,000 in savings for a comparable 600 square foot office in rent, fit-out costs and broker and agent fees. Although in Buildingi’s case, the cost of an office that is 80 percent smaller equated to roughly the same as what the company was paying originally.

Barnes figures that the price point for the older space in Bellevue is about the same as what the company is paying for the current WeWork space. However, the flexibility and amenities that the WeWork space provided also necessitated an 80 percent reduction in the overall footprint of the space (from 3,800 square feet to 760 square feet). “When we look at our loaded cost comparison between Bellevue Pacific Center and the WeWork space, they are nearly the same or slightly less at WeWork, which factors in triple-net rent costs, parking, equipment maintenance, etc.,” he said. “On top of this, [the space] provides us access to the WeWork portfolio of locations and has allowed us to eliminate our monthly space rental costs.”

Another of WeWork’s goals with the co-working spaces is to foster collaboration and inter-company integration in an effort to give companies of all sizes more flexibility in terms of their growth trajectories on the local and regional scale, a particularly important consideration in the current economic context. “WeWork has not only given people greater flexibility to live, play and work where they choose, but also provided a platform to physically bring people together again. You can have an empowered choice to work in Seattle or Bellevue, and have that local community, but then with WeWork’s global footprint you also have the reach you need to compete in the ever-more globalized 21st century economy. You can connect and grow locally while expanding and thriving globally,” she added.

And in the regional economic context, Buildingi’s decision about whether or not to renew their current lease was also heavily impacted by where the company was hoping to go in the future as a business consultant. “What we see our clients wrestling with is that their business is evolving very quickly, and [they] need new products and new teams, which develop over several months. And yet they’re signing these 5 to 7 year leases and have no idea what size they will be as a company in that time,” Barnes said. “As a microcosm of that, we had that same problem. I have no idea how big we’re going to be in five years; the economy, clients and business will all have bearing on that; [and] this [location] has always been attractive to us as an alternative to part of our portfolio.”

As well as allowing greater flexibility in terms of Buildingi’s longer-term strategies, another advantage of the current WeWork space is that it permitted the company—who also has a 30-person office in San Jose, Costa Rica—with more geographical flexibility in terms of necessarily committing to new leases as a way to expand. “It used to be that you would have to lease space somewhere to built a team [in another location], but now we don’t have to have that conversation…our new employee in North Carolina, we can now have a conversation in the Raleigh WeWork, which gives us a simple way to get into a market and develop that before we get into any sort of a commitment and even then, we can go month-to-month [here] for six, twelve or eighteen months ” he said. “This liberates us from having to build such critical mass before making a leap [geographically]. We can have a presence with a client somewhere whether in Boston, Raleigh or Portland and be able to walk in there and book a room, which is all part of being more productive.”

Along with the geographical flexibility, Barnes also thinks that broader changes in co-working, driven in large part by WeWork, have enacted shifts in the way that companies conceptualize productivity. “If we had been in the 1980s mentality of assigned seating where everyone nests in their little pod and tries to work that way, I don’t know that this would have worked. We’ve always tried to be flexible with our working location. Culturally, working at home wasn’t really aligned with what we did, because you really should be somewhere around your team,” he said.

And while the WeWork location allows Buildingi to broaden its scope on a national scale locally, across Lake Washington in Seattle, also, WeWork is helping other companies grow their footprints as well. Manchester, United Kingdom-based Matillion, a cloud data integration software company who has occupied a WeWork location at 1099 Stewart St. in Seattle’s Denny Triangle neighborhood since February 2018, has been able to leverage WeWork as a partner in its evolution over time. “WeWork has been a central partner in our ability to thrive and grow as a company. At a basic level, WeWork is a great product that is flexible and has very high standards that are consistent across the globe. More importantly, however, is our ability to use WeWork like a platform in the same way we do the cloud.” said Matthew Scullion, founder and CEO of Matillion.

According to Scullion, Matillion’s expansion from the U.K. and subsequently throughout the U.S. would not have been possible without the help of WeWork. “We started in Manchester, UK but knew we had to quickly grow our global footprint. We opened our first WeWork office in Seattle and liked it so much that we closed our traditional New York space and brought them into a WeWork, and we didn’t think twice about doing the same thing when coming to Denver,” Scullion added.

As companies are looking to expand through the increased flexibility that WeWork provides, more and more consideration is being given to how these physical workplace environments are impacting subsequent operating strategies. According to Barnes, this continues to be the case for Buildingi. “One of the things we’re trying to influence our clients to think about is the barrier between the corporate portfolio and this more malleable WeWork environment…it should be almost invisible to the end user, where pretty soon it becomes unclear whether I’m in an owned or leased portfolio or a WeWorkor co-working portfolio,” he said.

Increasingly for companies like Buildingi and Matillion—a company that helps its clients make the most of the data they collect by providing data integration software built for the cloud and making it ready for analytics—the implementation of technology in the workplace continues to play a role when it comes to understanding productivity in the workplace. This dynamic certainly played a role for Buildingi, according to Barnes. “We also have deployed occupancy sensor technology to help understand the use patterns and ensure that we anticipate any growth or contraction needs that may be forming,” he said.

The geographical flexibility that WeWork allows also means that further weight is given to a company’s growth as a result of tech-related considerations. “More and more in the knowledge worker arena, it seems like…things have shifted to video conferencing; it’s not just phone calls…the video connection allows the bond of the team with visual interaction,” Barnes said.

For companies of all sizes, the successful integration and implementation of technology in the workplace continues to shape the operating strategies of growing companies, especially in relation to more established firms in the market. “Some of these lessons [about technology] are what the big corporate giants tend to run right past, because these things maybe don’t seem as important…which leaves the remote people [in the office] out…[but]the intellectual leap that you make with the headset on is a constant reminder that there are other people, so it all becomes one conversation…having that mindfulness about inclusion makes the future work environment much more [dynamic],” he added. “What we aspire to is creating more of a collaboration framework rather than just solving that one [technology-related issue]; it’s about how to build an environment of inclusion and how to collect that information in a way that is discoverable and archivable as all this tool- and technology- and location-diversity starts to take effect.”