Putting People First: Why it’s Essential to Build Environments where Clients and Employees can Prosper | Jonathan Weinbrenn
March 12, 2020
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Jonathan Weinbrenn, Managing Director at BESpoke, discusses how space-as-a-service is shaking things up for the better. He takes the focus off flexible space by talking about people, and why workspace operators must have a hospitality-first mindset to give their clients — and their employees — the environments they need to thrive.
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Jo [00:00:17] Welcome to the Future of Work podcast from Allwork.Space. I’m Jo Meunier, and today I’m really looking forward to speaking with Jonathan Weinbrenn, managing director of BESpoke, to learn his thoughts on the future of work and what’s in the pipeline for one of the UK’s most successful flexible workspace companies. So welcome, Jonathan, and thank you for joining us today.
Jonathan [00:00:36] Jo, it’s a great pleasure. Thank you firstly for having me. And also, I’m a massive fan of Allwork. It’s really great to be with you today. Thanks.
Jo [00:00:45] Oh, that’s brilliant. Well, this is a great start. Okay. So first of all, I just want to learn a little bit more about your career leading up to BESpoke. I understand you’ve been there for about two and a half years now. But just to rewind a little bit, can you tell us how you first got involved in flexible space in your journey prior to joining the BE Group?
[00:01:06] So you’re, taking me back quite a way, probably 15 years ago. I have to put my mind back to… my entry into the marketplace, which was via the brokerage segment of the market and I joined Richard Smith’s company, which was at the time Search Office Space (SOS). He subsequently rebranded, I think a couple of years ago as Office Freedom. I knew Richard personally really well and he invited me to join the business, which is quite trusting of him because I had no experience whatsoever in regards to property, commercial or residential or otherwise. But I was just immediately taken with this segment of the market. I found it fascinating and it was great — so I really threw myself into it. There was a steep learning curve and I spent 10 or 11 years, I think, with Richard, actually some of it in Asia and Hong Kong and the rest of it in London. But I did a lot of business around the world. We were broking deals globally. And even back then I could see that there was a huge opportunity — particularly, we were working with larger multinationals and corporates at the time — and I could see that they had a need for a different kind of solution that was on the market as opposed to the sort of conventional market. And that was exciting. So that’s how I entered the space. And then I ended up for a couple of years at the Instant Group, which was really interesting for me because it gave me a hybrid opening into the operator world as well, which I’ve ended up in.
Jo [00:02:42] And working with two of the largest brokers in the UK, and working closely with them on some of the companies that you must have dealt with and advising them on workspace solutions — how did those experiences help set you up for your current role at BESpoke?
[00:02:57] It’s really important to understand how customers engage in our segment and what their perception of our marketplaces is. We just view it from an operator perspective. I think we’re too close-minded to what’s going on in the wider market. So I think when you’re a broker and you’re interacting with the end user and then showing them a multiple range of options across a wide range of different styles of operator, it gives you a wider insight. So I think it opens your mind first of all. And it takes you into the mindset of the consumer, which I think is really, really important. And that’s helped me in a huge amount of stead, I think going forwards, because if I would have just started provisioning space from the operator side, I wouldn’t have had that unique insight.
Jonathan [00:03:55] I think the partial broker being able to access the whole market is really interesting. So I valued my time and I still do. I look back on it with fond memories. It also introduced me to an array of people in the sector that I would never have met otherwise. And again, this was globally. So I met some amazing people who run or own workspaces from Americas to Asia to Africa, right across Europe. And there’s some really interesting characters in our business and people who actually become friends over time. So it’s been great.
Jo [00:04:31] And speaking of some of the multiple range of options when you were on the broker side and the clients you work with, you’re now working for the BE Group, which has the full spectrum of workspace, doesn’t it? It has coworking, service office, managed offices… Can you explain a little bit about what you do with BESpoke and how that works? And also the link between BESpoke and your coworking brand Headspace?
Jonathan [00:04:56] I think that’s a good question, because going back many years to when I started, the platform was quite one dimensional. So it was around service offices, which was great, but that’s all it was. Now, if I was a broker, I think I’d be dumbfounded by the range of options — it’s almost too many. It’s so rich and deep in terms of its offering, but it’s great for the consumer because the consumer didn’t have that range of options available to them 10 or 15 years ago. I knew BE Offices, I knew David Saul and Simon Rusk very well because when I was a broker, I was introducing businesses to them, particularly larger corporate businesses; BE was able to handle that kind of opportunity because they had invested heavily, firstly in their people in terms of the service delivery that was going on around them, and BE is unusual, in respect that it owns its own vertical delivery lines. So we own, for example, our own cleaning company, we own our own I.T. company, we own our own F.M. business. And that’s around having control of delivery. It’s not just about leveraging savings and efficiencies through commercial models. It’s more importantly about actually controlling the service delivery, which is really important to me. And when I was introducing that business, I trusted BE that they’d look after those clients — the connectivity, the infrastructure, the quality of the office space, the cleanliness of the offices. These things are really important to corporates because they’re trusting the operator to look after this, their teams and their staff. And if something goes wrong, it falls on them, typically on the real estate division of that corporate. So BE was operating very successfully, but I think David, Simon and I saw an opportunity to widen our functions that we could offer to clients and really then we were able to say, what else could we do apart from the pro-working that BE was doing and the serviced office offering, and they were also acquiring a successful coworking business called Headspace, which had three existing sites. And we knew then that we had the opportunity to create more of a multi brand product by adding in another dimension to this model. So there was the serviced office through BE, the coworking through Headspace, and then we created BESpoke, which was to really plug the gap in terms of that hybrid model for users who wanted the benefits of serviced offices or coworking, but they wanted something totally customized in their brand and image and it felt like the right thing to do. So we developed, through discussions, the concept… and it’s always difficult, because you’re building a concept, you’re not exactly sure how things are going to pan out, but we went into this very optimistically, and it turned out to be much better, I think, than we ever anticipated, which is lovely.
Jo [00:07:55] Fantastic. And you’ve just opened a couple of new locations with Headspace, is that right?
[00:07:59] Yeah. One of the things we found is that many of the large organizations that I’m working closely with are now actually looking at space in a very different way. So, even if they are looking to acquire space through conventional means, they’re quite keen to see within the building they’re looking at, some kind of space-as-a-service amenity. And in fact, in some cases, many of these companies will discount a building totally if it doesn’t have that flex space amenity built into it already, which is fascinating. This is a huge paradigm shift in the market we’d never seen, say, five or 10 years ago as I was indicating earlier. So we saw the opportunity, I think, to blend our brands — BE Offices, BESpoke and Headspace — and really try to develop for the consumer the most customer centric model that exists. We don’t think anyone else can deliver these three tiers in one building, for example. And we see this as fundamental because we want to really try and provide to clients, big or small, something that’s not around currently, and we’re starting to see that. So, yeah, we’ve taken some new sites through BESpoke, so we’ve had requirements led by large corporates in places in London and across the UK where we might have acquired, say, twenty thousand square feet where our anchor corporate client takes half or three quarters of that space. And then we create in the rest of it a coworking amenity or serviced office provision.
Jonathan [00:09:43] It’s really interesting to see that work, and it’s really interesting to see the reaction from our customers who are occupying the space. And I think that you’ll see more of this actually in the market. I think it’ll become more commonplace.
Jo [00:09:55] That’s really interesting. And when you say that clients really want that flexible space as part of their workspace, that, as you say, that’s a huge difference from how the industry was just a decade or so ago. And I think that really points to the growth and opportunities that exist for flexible space.
Jonathan [00:10:11] I hope one day we won’t be using the term “flexible space”. I think how we use it now, I use it a bit like you I suppose, as an umbrella term encompassing coworking or serviced offices or incubator space or manage space. It’s a general kind of all-in term for these offerings, anything different to conventional space. But we’ve already seen that the market is blurring and the lines are crossing over more and more. Every day there’s a new opening where we’re seeing competition or offerings from different elements of the market, not from incumbent operators in the flex space world. And I think what that demonstrates is, firstly, the supply side is changing quite radically. But secondly, demand for our solutions, for our space-as-service solutions are just increasing substantially to the point that entrants from the hospitality world, from hotels, from developers and builders and asset owners is becoming really fundamental to the growth of our sector. So I think in the future we won’t be using terms such as traditional space or flexible space or coworking. I think we’ll be talking about workspaces in general for where the customer is at the heart of the provision, and there’s a range of services driven around the customer, whether it be wellness amenities or the provision of cinemas or food and beverage units; a combination of facilities and amenities that create a kind of ecosystem for the customer, which is really what we want to go to. I was listening to Antony Slumbers the other day and he said something that really resonated with me, which was, companies and — forgive me, I’m paraphrasing, so Antony if you’re listening I apologise in advance — but along the lines of companies aren’t looking for an office, what they’re really looking for is a productive workforce. I think that actually really sums up quite succinctly… the more I spoke to customers when I was a broker and even now when I’m working with them to develop customized solutions, they’re not really interested in the terminology. To them, that’s not important. What’s important is are they creating an exciting and dynamic and safe environment for their workforce and will it help them to recruit more talent into their business? Would it help them retain that talent within the business? And I think that’s the shift we’re seeing, which is, again, really positive for the employees who work in these businesses.
Jo [00:12:46] That’s really interesting, actually, and what you were saying about terminology that’s been quite a lot of talk over the years about what the industry is going to be called. It used to be serviced offices — or it still is serviced offices — and then business centers and in the States, it was executive suites. And we’re moving more, more towards the term coworking. And you mentioned “proworking” a moment ago as well. What are, for those who aren’t quite sure, what are the differences there, with “proworking”?
Jonathan [00:13:14] Well, this is where it gets interesting. I think people have different definitions for the same category. So it’s all in the eye of the beholder. For example, WeWork is well known in terms of the consumer perception as a kind of coworking brand, but many would argue actually that it’s serviced offices with very sexy collaboration space.
[00:13:38] Proworking, I think was really developed to differentiate between a kind of fratboy environment where say, free beer was on tap and it was quite a loud and boisterous community environment, to something where you still benefit from the advantages of being in that community led workspace provision. But the environment perhaps is more focused on a place of work, where events happen, and the provision of those extra amenities I mentioned earlier are available, but where perhaps it’s slightly more mature in its outlook. And I think that’s, well, that’s my definition of the difference between proworking and coworking. But I think everyone will have their own definitions. And in a way, that’s why it’s a bit dangerous to focus on these segment titles. But they’re important, and I think the reason they’re important was because we’re an evolving industry. We’re relatively young still and I suppose, immature. And if you take this in context of traditional real estate, which has really been in existence for hundreds of years now, we’re an emerging segment of that market. And I think as a result, it’s only natural to give our market segments, category titles. There is nothing wrong with that. I just feel that over time that will disseminate and we’ll just say workspace. So this is the space that we’ll be delivering and it’s built around you. I think these titles will become as important as they are currently.
Jo [00:15:09] And you keep a very close eye on the market and data and trends that are emerging. Broadly speaking, what or where do you think the next growth surge will come from in our industry? For example, would it be more growth in out-of-town locations or is there a specific area that you think we’re going to see a lot of growth in the flexible space industry?
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Jonathan [00:15:33] I really believe passionately that if we fundamentally believe that our solutions, our spaces, our space-as-a-service solutions are better than the existing model, which is, in my view, antiquated and unfit for purpose — if we believe that it should be available everywhere and to everyone, I don’t see why we should limit the opportunity to access this kind of space based on geography or location. Now, there are obviously limiting factors when it comes to commercial models around those of us who are delivering this kind of space. So, for example, you need to weigh up how much you spend on fit outs if the return on your investment is going to be lower because basic rental levels and income levels, costs of living standards, etc., are lower in a particular region. But fundamentally, I believe the growth will be everywhere. It’s just who’s going to be driving that growth. I read three fascinating pieces yesterday, three articles yesterday, which are really all very different in their own way. But they’ve really, I think, said something to me about how the market is changing, where the growth is going to come. One was, if I have time for this, one was the hotel chain Accor. They were talking about rolling out their flex space division. I think it used to be called… it’s now rebranded, it’s now WoJo and it used to be called, I think, NextDoor. That’s about twelve hundred locations across Europe. So there’s a big hotelier coming into our business. Then there was a London asset owner, Great Portland Estates. They’re a FTSE 250 company. They’ve got about two and a half billion pounds of commercial real estate assets in London. They released a deck that I was reading through about how they’re engaging with their customer base. Now this is a traditional landlord, you could argue. And for the first time, you’re seeing the use of the word customer instead of tenant. And they had a deck about their engagement in the flexible arena and how they’re transferring some of their existing traditional stock into flex space. At the moment, only eleven percent of the total portfolio is flex, but that’s going to grow to a much larger amount. It was fascinating to read that because it could have been a WeWork deck or a Regus deck or, you know, one of our decks. It was really much more forward thinking and progressive in its involvement with the end user and what they saw in the needs of their end user. And that’s a radical shift. And then the third article I saw was Cushman & Wakefield, they were announcing yesterday that they are opening their own service, oh sorry, flex space provision. INDEGO is not dissimilar to what CBRE has done with Hana. So this was in one day I read these three articles and what you’re seeing there is, I suppose an endorsement in a way of our market. But also you could argue a threat to incumbent operators because there is huge growth. And that’s because there’s huge demand. And because, again, in my view, the current method of delivery, that traditional method, is just not appropriate anymore for businesses and for individuals.
Jo [00:18:58] And yeah, all that competition, it does spell a huge opportunity but also that presents a lot of challenges for some of the existing operators in the industry. And recently, some really well-known brands have had to close their doors. And so in your view, what do you think workspaces need to do to thrive and become future-proof?
[00:19:18] Yeah, it’s really sad when you see people having to shut down. And the answer to that question is really, really complex, because there are many reasons why some just haven’t been able to survive. And they are going to be many, many other reasons why, and what they need to do to survive. I’m of the fundamental belief that there are probably three core ingredients to a kind of secret sauce, which isn’t secret, by the way, but it’s just how I refer to it. And I have been going on about this so forgive me if I’m repeating myself. But for me, there are three fundamental elements that anyone in the space-as-a-service world needs to be aware of. One is you need to understand — and in fact, more than understand — you need to be passionate about hospitality. And if you’re not passionate about hospitality delivery, you’re probably in the wrong game. It’s just not right for you. You need to understand property, which is a bit of a misnomer in the sense of I’ve just been telling you how negatively I feel about traditional property. But particularly in, say, the UK market, I can’t speak for all markets, but in the UK market, the traditional leasing model is extremely complex and onerous, and unless you totally understand that, and you understand the burdens and legal obligations and risks around that, you could get seriously burned. And that’s why people who aren’t in property should be outsourcing their real estate through space-as-a-service or flexible models. The property element is really important. And if you’re in our business and you don’t understand property, you don’t understand hospitality or you don’t love hospitality, you’ve got a problem. And then thirdly, I think you need to have a really good understanding of business. Just going back to the fundamentals of, can you run a business properly? Because we’ve been you know, we’ve seen instances where that’s clearly not the case. I think there’s a wider societal problem around that business element. We’ve seen so many, so much focus on growth as opposed to profits. And I think that’s really unhealthy. And it’s not just in our segment by the way, it’s in all segments of the market. When I read about the debacle about WeWork the first thing that occurred to me was, there is going to be significant layoffs around this and that affects people’s livelihoods and lives. These are people who’ve got children or responsibilities or mortgages and they want to continue and suddenly they’re affected in such a negative way. It’s really upsetting, and I think we all have a responsibility to our employees and our customers, obviously, to build sustainable businesses. So I think those three elements, you need to get a handle on. And if you can’t run a business and if you’re just focused on growth, that’s a dangerous strategy. I read the other day that Uber’s CEO finally made a sort of admission that, I think his quote was, that the era of growth at all cost is over. Well, it’s almost like, well, of course it is. And why didn’t anyone realize this earlier? You can’t just buy market share with no repercussions. You need to think about your bottom line. As I say, it’s really important not just to make a profit for your business, but for your customers and for your staff, which should really come first and foremost.
Jo [00:22:36] Absolutely. And talking of sustainable businesses, there is some talk of a potential downturn looming. What are your thoughts on that and what do you think workspace companies should be doing to protect themselves?
Jonathan [00:22:49] It’s interesting. I’ve been forecasting a downturn for ages and it hasn’t come yet fully. I mean, you could argue we’ve been in a very difficult economic climate in the U.K., for example, we’ve really struggled with the uncertainties around Brexit and other issues. But whether or not the downturn comes, our world is very unstable anyway. And I was thinking about the instability the other day, because recently the fires across Australia and the floods, well all over the world, in many, many regions as well, and then more importantly, I was thinking of this in the context of the Coronavirus and I was thinking how disruptive everything is, the socio economic, political and environmental impacts and how does that impact our world and our workspace world. So whether or not there is a downturn — and I’ll talk about the impacts of whether there is a downturn or not — I think we’re still in a very unstable world and we always will be. It’s interesting to monitor the Coronavirus and COVID-19 because apparently in China, now, their video conferencing and task management platforms are just exploding at the moment and in a way, there’s this unplanned experiment in remote working on a scale that no one could ever have imagined before. We’re literally talking about hundreds of millions of people working from home now. So I think the whole premise of a fixed office is being challenged on so many levels. That will be interesting to see how this pans out long term. In relation to, specifically your question around a downward spiral in the economy, I have mixed feelings on that from our point of view. I think, I’ve been — I’m afraid I’m old enough to have been through a few cycles — and what you tend to find is, actually inquiry levels for our space goes up because demand for more agile solutions, more flexible solutions obviously increases. People are less inclined to sign long term contracts of any kind, not just real estate.
Jonathan [00:25:00] So I think maybe you get peaks in demand. There are negative impacts and that’s around income and things like workstation values and price per square foot incomes, pressure can create very challenging environments, particularly where in some submarkets there could already be an oversupply. And it’s interesting, if you take markets like London, for example, we’ve seen WeWork acquire of the last four or five years, around three million square feet of space, making them only second to the government in terms of how much space their footprint takes up in London. And that changes the landscape dramatically. So I’m sure some of these other businesses you mentioned earlier were also under pressure. It wasn’t just the fact they didn’t understand hospitality or they weren’t good at business. They didn’t understand property. I think you also have to look at how much supply is in the market. And are you going into the right market at the right time. I think, though, we have a product that’s much more suited to economic cycles than a traditional model where you’ve seen a lot of big businesses who are sort of untouchable, go under.
Jo [00:26:18] Looking ahead and given where we are today and what we know, how do you think flexible space will fit into the future of work, broadly speaking?
Jonathan [00:26:27] What’s happening now with Coronavirus is interesting and it’s very sad, obviously, for those who are affected by the illness. But I think it’s going to challenge our perceptions about workspace even more. But even taking that aside, everything’s changed for the better. I think what we’re going to see is a much more customer focused approach to real estate. And I think you’ll see more and more companies who have sophisticated setups. They have real estate teams who are very experienced, very knowledgeable about real estate. They’re not short of cash. They can self deliver solutions. I think you’ll see them engaging more and more in an outsourcing model, looking to partners and operators who are really deep in this market, who understand hospitality and real estate and who can blend those two elements together. And I think they’ll be rushing more and more to our market. So as much as people, I think, see me as slightly pessimistic and I understand why, because I can be a bit pessimistic at times, I think there’s a great future ahead of us. It’s just we need to be aware of these other threats around us, some of which we don’t even know yet where they’re coming from because there’s so many people now interested in our market. We’ve almost created a market that didn’t exist anymore. And now we need to protect it. The fact that other entrants are coming in, is also supporting the case that this, this is the way forward.
Jo [00:27:59] Absolutely. And it’s a vote of confidence for the industry, isn’t it, when so many other the big brands come into the industry?
Jonathan [00:28:04] Yeah, I think it really endorses the fact that this is the way that people are going to be consuming real estate. And about time, too, because in England, for example, the current traditional model really sits under an act of parliament, and that was written in 1954. I mean, there’ve been so many changes since 1954. It has been amended slightly but generally it’s around the act. And when you look at even the technological advances of the last five years, say, and the impact of AI in the next five years, you can’t work in an antiquated system like that. It just doesn’t make any logical sense. So we need a change. And I think everyone who’s been in this industry should be really proud that they’ve actually been driving forward that change and disrupting a sector that was very traditional in its thinking and really averse to change. And I think you need to ask the question, why is it so averse to change? And this is shaking things up for the better. Certainly for consumers.
Jo [00:29:07] To wrap things up and just before we finish, do you have any final thoughts on the flexible space industry, or the future of work that you would like to share with us?
Jonathan [00:29:15] I think I’ve probably spoken too much Jo!
Jo [00:29:18] Not at all!
Jonathan [00:29:21] Thank you very much. I think it’s really important to focus on sustainability. And I mean, sustainability now from also the environmental impacts of businesses that we create. I think the built environment has a horrendous track record, its green impact or lack of green impact, and we really need to see that as a fundamental focus now. At BE, for example, 75 percent of all our energy is sourced through renewable sources and we’re going to try and increase that amount every quarter. It’s really, really a key focus for us. So I think we need to focus as a sector on creating sustainable environments, long term businesses, so that our clients can prosper and our employees can grow with us as well. And I think that’s really, really fundamental. It really is important for all of us.
Jo [00:30:13] Absolutely. Well said. Well, thank you very much for joining us today, Jonathan. I’ve definitely enjoyed hearing from you and your views on where we are today and the future of work. So thank you for joining us. And we hope to have you back on the Future of Work Podcast again soon.
Jonathan [00:30:29] Thanks Jo I really enjoyed talking to you.
Jo [00:30:31] Brilliant. Thank you. You can listen to us on Apple Podcast, Spotify, Google Play, Stitcher, TuneIn Radio and Podbean. And don’t forget to head over to Allwork.Space where you can sign up to the newsletter to receive new podcast alerts. Thanks for listening.
