Entrepreneur Dan Zakai co-founded global flex space provider, Mindspace, with Yotam Alroy in 2014. Their goal was to create a new generation of boutique-style flexible offices by moving away from traditional leases and long-term contracts, and instead offering high-end service and a thriving member community.
Below he discusses the trends in the flex office industry today, as well as the biggest challenges faced by the real estate market.
How did you first discover coworking?
After I sold my first company, I went traveling to look for inspiration. I ended up visiting a wide range of coworking spaces around the world and found the rapid proliferation of this new type of office space fascinating and saw great potential in it. I wanted to be a part of this new trend from the beginning and I wanted to create my own approach to it.
What do you see as the biggest differences between flex offices and conventional offices?
Although it’s changing, conventional offices tend to be quite utilitarian and uninspiring. Flex offices are essentially offices as a service. Companies are able to get the exact services they need from a single touch point.
At Mindspace, there’s also more of a hospitality driven approach; every single member is treated as a customer, so the quality of their experience is far superior to that of a conventional office.
That sounds more like a start-up culture to me. Does it also work for established companies?
When we first founded Mindspace, our target market was actually consisted more of freelancers and start-ups. This has changed in recent years, because companies from a wide variety of sectors are placing more and more emphasis on providing a creative work environment for their employees, and workplaces are becoming more competitive in order to retain staff.
There are also medium-sized companies, or departments within large organizations, that need a customized solution, sometimes a whole floor in a separate location, and this is something Mindspace can provide. We are also experts in hybrid working solutions and providing the right kind of environment for companies to thrive.
How is this reflected in the commercial real estate market?
There is a high demand for flex offices right now as the concept is widely understood and has become a mainstream option for many companies, even in the more traditional sectors.
Landlords are happy to include Mindspace in their buildings to satisfy this demand for flex space, as they do not have the capacity to provide these types of operationally intensive spaces. They also stand to improve their return on investment, with increasingly popular management agreements where the landlord receives a share of the revenues from the flex office space.
According to a recent study by Savills, market share for flex offices is expected to increase to 20-30 percent in the next few years. So there is still a way to go to provide sufficient supply for the demand we are experiencing globally.
Won’t quality suffer if you are growing so fast?
In the last 12 months, we have added 13 new locations to our portfolio, going from 31 to 44 sites around the world. We are very lucky to have talented and experienced teams on the ground in each of the seven countries we are active in. They always strive to provide the highest level of service and to make sure our members feel part of the community and get the exact solutions they need.
Each location has specific requirements and we are very mindful of local tastes and preferences. We like to add a local flavor to our office designs, for example by choosing objects and motifs. For example, in Washington D.C., we have a meeting room decorated with cherry blossom wallpaper and in many locations we collaborate with local artists to create the artwork.
Coming back to the trends, what’s in store for the industry this year?
2023 has brought quite a lot of uncertainty with inflation and soaring energy prices in many regions. In times like this, it is important to build flexibility into your business in order to manage potential risk.
One way to do this is to embrace flexible working practices, such as hybrid, which we have set-up successfully for many of our member companies, or to simply move your company to a flex office. In our research, we also found that flexibility is important for employees too, not just for employers, with 9 out of 10 people considering flexibility in the workplace to be important to them.
And what exactly do hotels have in common with office space? You can’t stay overnight at Mindspace, can you?
No, you can’t stay overnight, but as a member you can use any of our 40+ locations worldwide. Of course, that’s especially convenient if you travel a lot.
For me, the hospitality element of office space is more about integrating the many amenities and services guests receive in a hotel into the workplace. At Mindspace, our flex offices already offer many such services such as baristas, event spaces, gyms, wellness programmes, well-stocked kitchen areas, and a program of social events.
What amenities do you think an office should offer?
Let’s just take service as an example. Our community managers act similarly to a concierge service in a hotel, and support our members in all matters. Especially when it comes to work-life balance, flexible work locations make everyday life much easier. Whether it’s a busy event calendar, cleaning and maintenance, or providing coffee, we help our members with their issues every day.
We also offer a wide range of amenities at Mindspace, such as family rooms, gyms, wellness options and social events. It’s all about lowering stress levels and creating a feel-good atmosphere.
And what do you see as the specific advantages of these workspaces for employers?
Flexible rental contracts with a shorter term commitment are very important for companies navigating unpredictable economic conditions right now. Attention to employee wellbeing also contributes to higher employee retention rates, which is another key challenge in today’s shifting work environment.
What are the additional costs for flexibility and service?
There is a great efficiency in paying only for the space you need and in the savings garnered from the shared aspect of the amenities. One monthly payment incorporates everything, including service, which provides transparency for future planning, so there are no surprises.
And what about rising energy prices?
The all-inclusive price of membership includes energy costs, and because spaces are shared there are savings for all the members at a location. Also, the set monthly rental fee means there is greater visibility and fewer moving parts when it comes to costs. Instead of companies having to keep track of many payments and suppliers, there is just one monthly invoice.