Many businesses are cutting capital spending due to uncertainty around Covid-19, but not RSD Properties. Its founder Robin Brena told us on the most recent episode of The Alaska Show Podcast that the company is continuing forward with its $2 million investment into energy efficiency and modifications. A significant portion of that spending is going into converting four floors at its 911 W 8th Ave building into flexible, high-end, and high-tech coworking space.
If you want to listen, the discussion about commercial real estate in Anchorage starts at 36:45. You can download, stream, and subscribe to The Alaska Show Podcast anywhere you listen to podcasts.
Coworking, a brief explainer
The concept of coworking has been around since at least the 90s, and arguably for centuries before that. But the first official coworking space in its modern form opened in 2005 in San Francisco. A programmer named Brad Neuberg was tired of unsocial business centers and anti-productive home offices and developed an open floorplan office where business people could become "members" rather than "tenants" and rent desks a couple days a week. He gave members access to free wifi and social activities like group lunches and meditation breaks that they couldn't get at home without the significant cost of traditional office space.
Since then the concept has exploded and entrepreneurs have opened almost 20,000 coworking spaces around the world. While the most famous coworking company has recently been exposed as an unprofitable travesty of irresponsibile investment and Silicon Valley hubris, at this point it's a tried and true business model.
RSD Properties, and its new venture Cowork by RSD, is a far cry from the gild of Silicon Valley. Robin Brena and his firm understand commercial real estate. It's not a flashy, high-growth business. They practice conservative business management while leading the way for the newest innovation of commercial real estate in Alaska.
The key benefit for members is in the flexibility.
"In a typical lease," Robin says, "you can only negotiate so many square feet for so long and your needs change. They ramp up or they ramp down or they change by project - particularly people starting out but also projects for established companies. The traditional market where you sign a 3 year, 5 year, or 10 year lease just doesn't work for some people."
Robin goes on to tell me "it's almost like a health club membership. You have a set rate and you can come in anytime and use the facilities. If you want to use the swimming pool, or the tennis courts, or get a massage that's an up charge." You only have to pay for the services you use.
People can rent a desk during the day and a conference room by the hour. They don't have to pay for a conference room 24/7 that they use once a week. They can rent an assemblage area that holds 65-75 people for classes or functions. It's office space a la carte.
The New Way of Working
Ryan Mae Lucas, the owner of Regal North Commercial, a commercial real estate boutique in Anchorage, is overseeing the management of this space.
She says the "new way of working" is driving investment in coworking spaces across the globe.
The office environment is more fluid and active than before. People are no longer sitting at their desks 40 hours a week. They're more active, they're using technology heavily, and they desire to collaborate, innovate, and participate in a community that is broader than just their company.
The magic in coworking, she says, is in the networking. A real estate broker might work one office away from a developer. In a traditional office space they would be in separate units and would have to make that connection through research, calling and emailing. In this working model those people can meet holistically at the proverbial water cooler and develop a professional relationship.
What's Good for the Goose is Good for the Gander
Robin says the flexibility is this new coworking environment is good for members and good for his company - and at no time has that been more obvious than during Covid-19.
Right now a lot of businesses are stuck in multi-year commercial real estate contracts on the cost side with little-to-no revenue. The month-to-month flexibility has obvious benefits for entrepreneurs or businesses because they can scale operational costs down almost instantly the same way they could reduce an electricity bill.
And that flexibility works for RSD Properties as well. Commercial real estate, according to Robin, is historically a "feast or famine" business. A space is either totally rented or totally empty. This flexibility allows them to maintain baseline levels of membership fees during harder times and capture more upside during boom times with full membership and extra services. With no "tenants" you have no "vacancies," just fewer "members."
Cowork by RSD
Cowork by RSD is taking over four floors at 911 W 8th Ave in Anchorage. While the company isn't ready to disclose pricing to the public, we know the space is going to be high-quality and reflect the upper-end of the coworking market.
"Members" of the space have common areas where they can network, classrooms or gathering spaces where they can host events or classes, and a pay-as-you-go model for desk and office space that can ramp up or down each month. All of this is tied together by advanced technology infrastructure and the fastest possible internet money can buy in Anchorage.
Each floor has an elemental theme and a function.
First Floor. Fire. The first floor's element is fire, and it's based around the same fireplace that Google installed at its Boulder office. It's largely devoted to common space where people can hang out, use the kitchen and lockerspace, and network. It's also where the classroom is located for ease of access for people visiting.
Second Floor. Earth. The second floor has common desk space and small offices.
Third Floor. Water. The third floor has more a of traditional office layout with larger spaces.
Fourth Floor. Air. Similar to the third floor with added restricted access.
How can you get in on the ground floor?
Cowork by RSD is opening "end of summer" has room for 250 members.
The team is currently running a "founders program" where they are strategically identifying people and businesses who would find the most value in this model and fit the ideal member profile. They are currently getting these folks signed up.
Soon, Ryan says, there will be an early-bird opportunity for anyone to visit the space and inquire about membership before they throw the doors open.
The Future of Work in Alaska?
On coworking, Robin says, "we think it has a future in Alaska."
I, for one, wonder if the growing opportunity of remote work won't benefit this state. It's been well-documented in publications like the Wall Street Journal, The NY Times, and USA Today that big cities are losing their luster for workers. Extremely high costs-of-living and risks around crime and disease (one in particular) are motivating people to look to work remotely in smaller towns and cities.
Alaska has always drawn adventurous people. And historically those people have had to do adventurous jobs to make a living here. But with developments like Cowork by RSD and the trend of some professionals leaving mega-cities, we might see a surge in newcomers who want to live the Alaska lifestyle and still work for a tech company in San Francisco or New York.
I told Robin on the podcast that investing in nine commercial properties in Anchorage is a significant bet on its future, and I asked him if he saw something in Anchorage and Alaska that made it a good bet in the long-term.
Robin's response: "That remains to be seen, Alex, whether the future makes us smarter or makes us dumber. It's hard to say which it's gonna do at any particular time, but Alaska's my home and I'm invested heavily in it. I'm going to continue to invest in it."