Presented By: Industry Insights
[Video] Backstage Pass: Flexible Office Providers, Featuring Knotel
A Tour of the Most Popular Flexible Office Space Providers, October 15 Edition
Over the last two years, flexible office space has accounted for nearly 30 percent of new space leased in the U.S. From start-ups to Fortune 500 companies, occupiers of all sizes are drawn to shared and short-term office spaces for their flexible concepts, amenities and sense of community. But the options can be dizzying. Today, there are an estimated 7,600 flexible space operators worldwide.
This fall, Commercial Observer’s Industry Insights team will be touring the hottest shared/short-term office space providers to be featured in a new weekly special advertising section. Each week’s feature will go behind the scenes to review a different flexible office space provider, covering everything a successful CRE player needs.
This week, we are featuring Knotel. Making long-term leases a thing of the past, Knotel designs, builds, and operates custom spaces for established and growing brands so they can be free to grow their businesses at will. Founded in 2016, Knotel is already staking its claim in the market with more than 1.6 million square feet in less than three years.
- Company: Knotel
- Year founded: 2016
- Number of locations: 70
- Cities located: New York, San Francisco, London and Berlin
- Total funding to-date: $100MM
- Founder(s): Amol Sarva, Co-Founder and CEO; Edward Shenderovich, Co-Founder and Chairman
- Average tenant size: 40 employees
- Total number of tenants: 200
Commercial Observer Industry Insights: How do you think shared/short-term office space is changing the commercial real estate industry?
Knotel: The rise of the agile office movement is transforming the commercial real estate industry, reducing misalignment between company forecasting (1-2 years) and lease length (10-15 years), and allowing landlords to fill more space faster. Although approximately 5 percent of the commercial real estate market can be considered flexible today, JLL projects that number will grow to 30 percent of the total market globally in the next decade due to insatiable tenant demand.
What do you see as your competitive advantage against other flexible office space providers?
Knotel: At Knotel, we say, “Your terms, your office, your culture.” By that we mean that Knotel caters to real companies (50+ employees) that are seeking their own spaces, but with flexible terms so they can be more responsive to an unpredictable market. We’re also present with our customers every step of the way—we will manage their space and if they need to move, we will find them a new location without having to incur the costs of breaking a lease and looking for new space. We have a workplace strategy team that will optimize clients’ space for maximum productivity. We’ve been so successful that we hit a million square feet in under 3 years, outpacing both WeWork (~4.5 years) and Industrious (~6 years).
What amenities are available to occupiers?
Knotel: Knotel has an in-house design team and workplace strategists, including cultural anthropologists who will work to create the optimal space for your company’s culture. The ability to have your own, branded space with flexible terms (instead of being tethered to a 10-15 year lease) is the main amenity we offer. Other elements (design, furniture etc.) are included to make the process easier for our clients. We are currently testing catering services as well, offering, “third places” – or spaces that are neither work nor home – for members to meet up, and constantly innovating and rolling out new ideas from our workshop.
What incentives do you provide brokers who fill your spaces?
At Knotel, we provide the following broker incentives:
- • 10% new deal volume < $1M
- • 12% new deal volume $1-3M
- • 15% new deal volume > $3M
- • 2% upfront payment in perpetuity as long as customer stays on Knotel platform
What are your plans for growth in the next five years?
Knotel: We are expanding to many new markets around the world, and growing within the markets in which we already have a presence. We also are launching our blockchain-based platform, Baya.io, which will transform the real estate market, reducing transaction costs and creating a unified source of truth for the industry. We are continually rolling out new concepts—like Gather by Knotel, a space where our members can go to have a cup of coffee or take a meeting outside of their office—in our continued efforts to transform the ways in which people work.