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Where Should You Be Running Your Startup?

When it comes to creating your own startup, there’s obviously a lot to consider and a lot of risk involved. Venture capitalists in the United States invest up to $100 billion in startup companies annually, however, 70% of all tech startups will eventually fail. Risk and reward are obviously key here, and while that large percentage only covers one type of new business, it doesn’t take a genius to know that creating a business and maintaining success, is quite difficult. 

A major factor to all new startups that most don’t think about too intensely is the real estate component. Even if your business isn’t a retail environment that depends upon customers coming into your space everyday, the location still matters and there’s a lot of factors in regards to that, that one must consider before choosing the right spot to jump start your company. 

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Obviously the specific location of your business is important, but outside the realm of the most ideal cities and states to work in for your particular startup, there are some general things that every new business owner should keep in mind before signing that new lease. Accessibility to prime employee’s who have either been in your same position, have the experience for the specific type of employment you’re looking for, or have networked connections within the area your business will reside in, is important. 

You want employee’s that don’t only check-off all the logistical aspects of what it takes to run a startup, but are also creative enough to take new ideas and turn them into successful business ventures. Obviously, choosing a location doesn’t seem like it would coordinate with finding an individual whose creative and smart in terms of business. However, you need to think to yourself, are you about to rent a space in an area that’s relatively suburban and therefore most of the young entry level employees are likely still away at school or pursuing other endeavors in the more metropolitan area a few miles down the road, where older more experienced employees also likely reside? You need access to a pool of talented, creative, and young individuals who are ready to learn, but also thrive and help you. 

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Along with access to a pool of talent, you need access to other businesses as well. Every business owner knows that any social outing you endure is an opportunity for networking and making new connections to help advance/grow your startup. Are you in an area where networking events or meetups might occur? Are you in a business ecosystem in which there’s an overall sense of community amongst each owner and company? Or does it feel more competitive? If that’s the case, you might want to avoid planting roots there and find a location that seems it’s built on comradery and connection. 

Regarding being located near a pool of young and creative entrepreneurs, consider moving in the proximity of any learning institution that offers programs regarding business and entrepreneurship. While entry-level workers never seem like the ideal for new companies especially, think of it this way; hiring someone who freshly graduated from an established business program means that they have all of the new-age information still fresh in their minds. Running a startup is a completely different ball game compared to what it was even five years ago, so hiring those young and creative minds while they still have all the knowledge from school at the forefront of their minds, just makes sense. 

The last real estate thought you should keep in mind when it comes to where you should open your business is an obvious one; the cost. Location and spatial logistics will determine how much you’re paying monthly for running your business. Luckily, since it’s 2020, there’s a ton of office rental companies that offer affordable solutions for startups especially. Do your research and contact local agents who have experience with finding offices for startup companies specifically, as they know more than anyone the best places in your given area to succeed.

WeWork

How the Collapse of WeWork Could Impact NYC Real Estate

WeWork, a company responsible for leasing up to 1 million square feet of office space in cities around the world every day, has recently run into serious financial difficulties have raised concerns about the impact on New York City’s real estate market. In large part as a result of then-CEO Adam Neumann’s questionable and irresponsible antics, WeWork’s parent operation, the We Company, saw its valuation cut in half overnight right as the company was preparing to go public. As such, the We Company lost $1.3 billion in the first half of this year alone, which works out to a loss of $5,200 per customer. Several thousand layoffs at the company are planned, and the We Company’s more ambitious projects, such as the WeGrow academy, an entrepreneurial school, have been canceled

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WeWork happens to be the largest office tenant in New York City, as it owns over 100 locations in Manhattan, occupying 8.9 million square feet of office space. WeWork operates by maintaining office space and renting it out to professionals; however, in the aftermath of the company’s rapid decline, exactly what will happen to this tremendous amount of space WeWork is leasing is unclear. WeWork rose to prominence by offering flexible opportunities for urban professionals, and while the company is currently in decline with a low probability of recovery, the philosophy of flexibility in working environments is likely to stick around. 

That’s because, while the business itself is failing, the business model WeWork popularized has taken off both among rival companies that lease office space and landlords themselves. While it remains the most notable example, WeWork did not invent the industry it occupies, and there exist a plethora of companies that are primed to take WeWork’s place in providing so-called coworking spaces, many of which pre-date the founding of WeWork. And according to industry reports, demand for spaces of this sort remains strong, as consumers appreciate the sort of freedom that flexible office space provides. As such, when WeWork’s leases expire, there’s nothing stopping landlords from adopting their business model with the office space they own, increasing revenues for corporate landlords and potentially reducing costs for clients.

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As WeWork generally doesn’t run entire buildings, instead leasing a small percentage of them, the fallout from WeWork’s likely collapse is predicted to be relatively minor. In fact, landlords are already developing contingency plans for WeWork’s anticipated demise. That being said, not every company is abandoning WeWork, as they continue to generate new clients such as Rudin Management Company, which will soon open a six-story glass building in Brooklyn Navy Yard, with WeWork as its primary tenant. What’s more, large multinational corporations like Verizon and IBM have taken advantage of WeWork’s coworking spaces, as have Microsoft and Airbnb. That being said, these large companies would also likely be able to handle WeWork’s collapse, as they have the resources to maintain usage of office space currently leased to WeWork.

Though WeWork brands itself as a disruptive technology startup like Uber and Postmates, the reality is that WeWork is more like a glorified property-management company. Although the hype associated with WeWork’s tech-centered approach is responsible for much of its early success, technology turned out not to be a major factor in the company’s operation. While the future of WeWork as a whole remains uncertain but looks fairly dire, the future of coworking spaces is likely as bright as it’s ever been, as companies seek to take advantage of the flexibility such arrangements can provide.