Interviews Rick Feld, Owner of Bevmax Office Centers.

0:00 Speaker 1 Good morning. This is Mike Stolar for the Solar Real Estate’d reporting on the CATS round Table this morning. I have my friend Rick Feld, who is the CEO and founder of Bevmac Office Centers, a leader in the flexible office space. Happy year here.

0:17 Speaker 2 It’s very good to be here, Mike. Thank you.

0:19 Speaker 1 So explain to my audience what is the flexible office space business because people here of we work and the industrious and they’re not familiar with it.

0:29 Speaker 2 Flex, the flex this is the new nom de guer as of the last five years or so, coworking was really more of the we work model with long picnic tables and people sitting side by side, you know, working maybe opposite a stranger. The flex business, the flex business centers are more of the traditional office space but with

1:01 very flexible terms. We provide intranet, we provide telephone, conference rooms, et cetera.

1:08 Speaker 1 Now under the concept do you have an office, do you have a table, do you have a acquired area?

1:15 Speaker 2 Well, we in Bevmax. We’re the more traditional brand, similar to Regis, and we are primarily private offices with some cubicles, but the majority of our clients are much more mature businesses who you know who want they come to the office to work. They need conference rooms, they need some common areas for them to gather and to mingle, cafes,

1:47 et cetera. But at the end of the day, they need an office and they need to be able to work.

1:54 Speaker 1 Has COVID had an effect on the business?

1:58 Speaker 2 Yeah, so I COVID in a in an odd way, was very good for our business and not so good for the coworking business. With COVID, people you know don’t so much want to work with strangers at picnic tables.

2:19 They want to be in you know, their own private space and with the ability to close the door.

2:29 Speaker 1 The company actually US recently came out with a report saying that the future is relatively bright for the flexible office workspace actor as a whole and for coworking like IWG and Industrious who have strong balance sheets and see business on the upswing. Enormous number of customers are moving out of long term space into flexible office arrangements. So

2:53 even though Industrious is a flexible coworking situation, they’re they’re changing their model also, right.

3:02 Speaker 2 Well, Industrious, I want to give them, you know, they started the management agreement. So what Industrious does primarily is they go into a management agreement with the owner of the building. So it’s not the it’s not the old model of signing a tenure release and fitting it out and then leasing space. They’re actually partners with the landlords

3:34 in their buildings.

3:36 Speaker 1 Okay, so so they financial partners with the landlords.

3:40 Speaker 2 Well, financial partners to the extent that they they pay either a much reduced rent or they’re they’re splitting the profits from the center in a you know, in a certain manner.

3:54 Speaker 1 Has that been a mantra of the industry in the past when you went into the business.

3:59 Speaker 2 It wasn’t as much a mantra because landlords, I think we’re in a different position, you know, give or take five years ago post COVID and with the work from home you know phenomenon, landlords are much more amicable to that kind of relationship.

4:21 Speaker 1 Now with regard to that, wouldn’t you say that people are not working five days a week from the office, So are they utilizing less space that they would have on a flex space or a co working.

4:34 Speaker 2 You know, that’s the that’s the million dollar question, and I don’t think anybody has actually truly figured that out. Tuesday Wednesday and Thursday are our office centers are absolutely packed. Mondays and Fridays. I would say it’s maybe fifty percent of the other of Tuesday, Wednesday and Thursday. And and yet and you as a New Yorker know this as well.

5:03 The city is packed. People are here, and I think it’s the work from whom phenomenon is not disappearing. You know, the genie is out of the bottle. I’m staying. Yeah.

5:21 Speaker 1 Also, there was another study which shows that major coworking space owners and managers are consciously moving away from the original notion of neutral space occupied by freelance workers who seek the benefits of community and collaboration. The expansion of large commercial flex providers has been driven by decline in commercial clients taking traditional leases on office space.

5:46 Speaker 2 You agree, we’re about as busy as we’ve ever been. I think a lot of it has to do with when my children were young, and I would go to a nursery school party and I would tell the other parents what I did. You know, they’d kind of, you know, they’d scratch their heads and say, oh, you know, I

6:12 think I have a cousin who was in one of those places. There’s nobody who doesn’t know about our model now and it’s not looked down upon. In fact, I think you know, the majority of people think it’s it’s a smart move to have flexibility, especially in these kind of economic times, right.

6:35 Speaker 1 I think the flexibility allows both the landlord and the tenant options over there.

6:42 Speaker 2 Yeah, yeah, it’s why would you sign a ten year lease if you can get the same amount of office space and have flexibility. When your business is going very well, you expand. If your business is going through a rough time time, you contract. And it makes a lot of sense for most businesses.

7:06 Speaker 1 With regard to the economic times. You know, in the world we’re in today, do you see owners of buildings coming to you and say, we’d like to do a management agreement or participation arrangement with you.

7:20 Speaker 2 I mean, coincidentally, I’m literally from this from this radio show. I’m going to meet a landlord, one of the largest in the country, and we’re going to be looking at some space. And I’ve we’ve gotten calls from four different major landlords in the city.

7:43 Speaker 1 With regard to your major competition would be the IWG and the HQ and regis.

7:50 Speaker 2 Yeah, definitely. But having said that, there at least another twelve independent operators similar to myself, and we’ve been you know, the business has been around, give or take around thirty years.

8:06 Speaker 1 Now. What about companies like Tishman Speire Uh, Newmark Uh, you know, Cushman and Wakefield going into this.

8:14 Speaker 2 Well, I don’t think Newmark is interested in the business. GF Well, no, no, I’m sorry, I’m referring to GFP. Newmark purchased Hotel. I’m not quite sure how they’re doing. Cushman and Wakefield invested. I believe in I w G, who I think is on an upswing, and CBR I think is a major investor in industries, in industrious.

8:47 Speaker 1 So, in conclusion, it looks like the business that you started twenty three years ago, is it going to continue and even grow in the future based on the way people are working from home and other mantras and I and I really would like to thank Rick Philip for being here today on the Soul of Real Estate Report.

9:04 Speaker 2 See you next week, Mike, thanks a lot, it was a pleasure.