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Real estate agents: friends or foes?

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Most coworking spaces have a negative opinion of real estate agents. They represent the old way of managing workspace, with their contracts, commissions and preconceptions. Next week the Austin coworking conference will host a panel about how some real estate agents are changing the way they do business to embrace collaborative workspaces. “We love coworking, not for the money it generates for us, but for the potential upheaval that it represents,” one agent said.

In the founding years of coworking, many spaces had trouble getting other businesses to understand their concept. These problems are diminishing, but have not disappeared. 15% of space operators told the 2nd Global Coworking Survey they experienced problems with landlords, 17% said coworking was not understood, and 23% had problems securing a location to operate.

Real estate agents have been known to ignore rental requests from space founders out of fear that the coworking model – short-term, low-cost sub-leased workspace – represented a threat to the traditional office rental business. Some real estate agents, however, have a more open-minded attitude. And as the Global Coworking Unconference Conference in Austin will hear, some are even embracing the new workspace movement. They remain the minority, but these clued-in agents see how the real estate business itself is facing an upheaval.

“Our companies can no longer be satisfied with five-year leases for 100% of their employees,” said Brian MacMahon, a Santa Monica-based agent. MacMahon’s company is Your Office Agent. They have begun referring individuals and businesses to coworking spaces, and have commission deals with some spaces to host clients.

“Our company specializes in finding agile working solutions for our clients… that means flexibility and outsourcing of space trumps everything. We love how coworking has taken a fixed liability (space) and turned it into a marketing cost. The old way of working was to acquire a collection of square feet for staff to sit in. Our whole mission is to create the ideal office where maximum staff efficiency meets perfect work life balance. The world of business has changed with the evolution of technology and new working practices.

So why has it taken so long for traditional agents to catch on?

“I don’t believe that traditional agents have caught on yet,” MacMahon said. “There is still too much money in traditional leases and too little in referring coworking business.  We love the work style, not for the money it generates for us, but for the potential upheaval that it represents.  The industry is still very young and the only agents we have seen embrace this way of working are agents who wish to represent the new coworking buildings and their younger agents, just out of school who can see the writing on the wall. This transition will be extremely difficult for traditional square feet agencies.”

Mixing traditional leases with coworking memberships

Some coworking enthusiasts might be uncomfortable with the corporate language used by agents. For those who can parse it, there’s the opportunity to work with agents to bring in more members. That’s what Bill Jacobson of WorkBar in Boston does. Jacobson, who will also speak on the GCUC panel, said:

“Space managers will need to be creative in how the agent and the coworking space can benefit from each other because the traditional, commission based model doesn't apply well to coworking spaces flexible monthly membership arrangement,”

“A more progressive agent will see that coworking spaces can help them by providing a potential entry point for new companies looking for their own space, and that by adding coworking spaces into the mix they may close more deals.  Meanwhile, the coworking space manager can gain a valuable real estate ally, one that has their finger on the pulse of local real estate which will be helpful when it comes time to expand or re-negotiate the coworking space lease.”

Jacobson said WorkBar has connections with agents who use the venue for events. He tries to convince them to encourage their clients to maintain a coworking membership, as well as a traditional lease, which allows them to be flexible and expand.

“This could enable a company to save some money on a smaller long term lease while using the coworking space to connect with the community, have additional conference rooms and even have some larger event space.”

Small companies adopt coworking practices

As well as agents placing clients in coworking spaces, some are helping small companies incorporate coworking concepts inside their own offices.

“We are working with a company in Santa Monica who have successfully integrated coworking into their own space and are convinced that it keeps them in touch with changes outside their office and in so doing makes them stronger as an organization,” said MacMahon from Your Office Agent, “ For us this is a new breed of company, as most organizations do not realize how insular they become until their competitors have passed them by.”

Some space operators are inclined to be wary of accepting coworkers referred by agents. What does MacMahon say to spaces who might be worried about the impact of agent-placed users in their communities?

“I say that this attitude is the same closed mind attitude that corporations have when they don’t embrace it or that traditional brokers have when they dismiss it. Our differences are the very virtue which makes this practice work. Start prescreening and we are back to where we started.”


Brian MacMahon and Bill Jacobson will take part in the panel “Why Real Estate Agents Can Make Or Break You”, which takes place at 11.30am on March 8 at GCUC.


Deskmag is a media partner of the Austin coworking conference, and our sister site Deskwanted is a main supporter of the event. Don’t forget to also sign up for our Coworking Treasure Hunt and After-Party, which takes place on Day Two of GCUC on March 9.

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