“We don’t get tenants who join our coworking environment to obtain more contacts. They join our coworking environment because it allows them to accelerate the development of their business — bring their team together, meet with potential clients and conduct themselves with a degree of professionalism that might not otherwise be available.”
Insightive.tv: How would you classify your business — do you consider yourself a coworking space?
David: Coworking is not the central focus of our business. We are a portfolio company that buys midrise and highrise office buildings. We have developed a portion of these buildings into coworking spaces. But this is just one facet of what we do aimed at accommodating the specific needs of those people who prefer a flexible dynamic. It is too limiting a term for our business.
I would consider our operation to be one of the more progressive business models in the property market. We offer coworking and private offices on more traditional contracts. We have also developed something called “Club Level” and “Penthouse Suites”, both of which are different office environments that we offer on a variety of contracts. We have scalable and flexible options available to our tenants that allow them to grow within a single property.
We are also an entirely self-contained business — we don’t contract out the management of our property centres or offices. Many more traditional coworking centres lease offices from a landlord and sublease operations. Taking out that middleman allows us to offer comparable services at lower prices by removing the need for extra revenue. It also creates a more streamlined environment for the customer — but doing so requires us to have a different business model more akin to a traditional office centre than many of the newer coworking centres have adopted.
We look at ourselves as weaving coworking into our buildings holistically. We are able to allow a company to start with a hot desk, grow within the coworking centre and then eventually lease private office space within a streamlined and consistent service — often within the same building.
Insightive.tv: Do you offer services within your office portfolio?
David: There are a tremendous number of services — that is a key facet of the environment that we strive to create. There is everything from WiFi to fully furnished offices, totally equipped kitchens, telephone rooms, conference rooms, data centres — we try and anticipate every possible need of our tenants. We also, unlike a lot of coworking spaces, allow our tenants to bring in guests at no additional cost. We feel that one of the main aspects of an office, particularly for a small business, is to have an environment to bring in clients or prospects for a meeting. All our clients can do that without having to buy a day pass, or get permission from anybody. The coworking space is there for the sole purpose of allowing our tenants to develop their businesses and make money. We aim to make that a flexible and serviced environment that they can use in the way that suits them best. We don’t want them to have to think about real-estate, office maintenance or regulations so that they can focus on their business — so that they can focus on what they are there to do.
Insightive.tv: Some coworking centres place a premium on the community aspect of their service — have you taken measures to increase community engagement within your coworking centres?
David: I think that the jury is still out on that. I see different priorities in our tenants — primarily a need for an environment that people enjoy and is conducive to productivity, but I find that everybody has the friends that they need. We don’t get tenants who join our coworking environment to obtain more contacts. They join our coworking environment because it allows them to accelerate the development of their business — bring their team together, meet with potential clients and conduct themselves with a degree of professionalism that might not otherwise be available. I think companies benefit from their own community — being able to bring their teams together — but I have not yet seen coworking members gain tremendous economic benefits from being with each other. Coworking centres don’t sort their tenants by those that they think might benefit each other’s businesses — I think that there is a lot of hype on the utility of this subject. .
Insightive.tv: How do you expect the business to perform in 2017 as compared to last year, and what do you see as the key market forces affecting your business?
David: We are seeing occupancy continuing to rise. I think there is optimism now that the election is over. Optimism and the availability of banking to mid-sized business owners tops the list in regards to the key market forces I see affecting the company. Every day there are challenges — production challenges, financing challenges, employment and regulatory challenges — but dealing with those hurdles is why I got into business.
I see business expanding and an uptick in hiring. As an operating portfolio company, we focus heavily on operating performance — how much each property costs us to run — as a measure of performance. We also focus more on the revenue we are generating, rather than the occupancy rate. That may sound counterintuitive, but we place more value on signing a lease at a reasonable rent than we would on simply driving occupancy at unsustainably low rents. This, in a sense, is a slow growth strategy. But it is one that continually grows on itself. The work we have done in past years, building a sustainable pool of tenants will continue to pay off and expand.
The development of coworking is a relatively fresh market for us, but I do not view it as a tremendous shift in the market. It is simply a need that has arisen and is being filled. We watched it for several years to see if it was a fad or a trend and came to the conclusion that it was a trend. It was an option that we decided to add to our other office environments and weave into the fabric of the buildings that we own and operate.
Our property is focused across the midwest, and we have actually just made a large purchase in Cincinnati that we are in the process of developing. So, I think that 2017 is going to be a good year. We like to keep ourselves in a position of being able to capitalise on opportunities when they arise — 2017 will be no different.
David Bishoff is President of E.V. Bishoff Company [EVBCO]. He took over this position after graduating with a degree in finance in 1982. Under his leadership, the company found its niche of renovating turn-of-the-century office buildings and began the process of acquisition and expansion that has brought the company to the position it is in today. We spoke with David to gain his insight on changes in real-estate and understand how he sees EVBCO’s development of coworking spaces and their place in the future of the industry.
E.V. Bishoff Company [EVBCO] is a family owned real estate Portfolio Owner/Operator. Founded in 1966, EVBCO purchases distressed property with the aim of long-term ownership and development. As a leader in flexibility, EVBCO offers a range of office environments and services within their buildings. Operating and managing all of its properties within a vertically integrated system geared for the long-term interests of their clients — EVBCO boasts a nearly 100% retention rate across its locations in Cleveland, Columbus, Cincinnati and Pittsburgh.
Part of THE FUTURE OF COMMERCIAL PROPERTY series
Trends, Challenges, and Opportunities An Inside View