SVET Reports
Business Memorandum - Micro Offices Space
We are now confronted by new economic and political realities, which will drastically affect people's ability to travel and to cluster into big corporate unites. Moreover, organizing large communal / business events or, even, a simple face to face meeting of more than a dozen people suddenly become very expensive and, potentially, not feasible at all.
Some might argue that we'll promptly get to normal after vaccinating all world's population but only people without real-life administrative or business experiences can believe in that fairy tale. For the rest of us it's clear that the world has been irrevocably changed for the foreseeable future.
Among other changes the disruption of business processes, facing the co-working spaces' industry is no short of to be revolutionary. We-work going from $47 billion valuation to a complete wreckage in just six weeks clearly illustrates that actuality. Moreover, the fact that it happened five months prior to the world's major economic collapse shows that this industry's issues are fundamental and they are here to stay:
- social distancing ritual must be observed in both office and communal areas;
- the strict hygiene regime must be maintained 24/7;
- the basic functionality of the personal working area must be drastically extended to include telecommuting capacities and protective screening;
- this area must be enlarged in size to include some recreational and storage capacities including for cloths, food and other personal items; additionally, some resting space must be available for each individual worker to avoid large gatherings in communal spaces;
- on top of that costs must be drastically reduced due to a sudden decrease in individual clients incomes not to mention that this facility must be able to withstand the close scrutiny of health officials.
All of those facts point us into direction of complete revamping of traditional hot-desk / dedicated desk / individual offices model and converting a whole co-working area into the uniformed micro-offices space supplemented by drastically increased number of personal hygiene spots (like showers, lavatories and cloth washing machines) added by regulated indoor and outdoor meetings zones.
From the marketing / sales stand points the implementation of this new model is possible only if customers will realize its costs / benefits value and will be willing / able to adjust to the new working schedule, which requires them to stay at the facility 24 / 7 if necessary.
For that we have already had all required exogenous implements including heavily restricted international / interstate travels and most peoples' inability to stay at home for an effective work (it includes inadequate living conditions for most people stationed in high-priced residential areas like Silicon Valley as well as changes in many big companies internal policies, which require most of its employees to work remotely).
It's very likely that under those new external conditions the demand for low prices micro-offices, which meets both hygiene and new working standards will drastically increase (specially in geographical locations with high density of IT corporations, individual contractors and high tech private businesses).
The feasible cost structure of this model requires to deploy 20-30 micro offices (10x6 feets) into the 2400 square feet building (with all required infrastructure) and have a leasing price under $5000.
Current prices for such type of buildings in the Bay Area start from $20k but many owners are actively renegotiating those terms demonstrating the willingness to drastically lower their monthly payments demands for the sake of contracts longevity.
Given the present price situation on the market those micro-offices can be rented to customers for the price stating from $500, which provides us (30 M-offices and 70% average occupancy rate) with $10.5k monthly revenue.
Consequently, our monthly profits before taxes for 2400 sq/f will be $10.5k - $5k - $1.5k (additional expenses, like Internet, cleaning and supplements) = $4k, which amounts to $48k a year.
Our project team includes 4 people with waste practical experiences in real estate, sale as well as co-working communities organization and management. Our current list of potential clients exceeds 500 people (with 20 which have already expressed their interest in those spaces).
We are currently looking for a partner, which has 2400 sq/f areas available for lease (under mentioned terms) as well as to provide $60k capital (50% yearly return rate) to cover one year lease price in advance.
SVET