Venture X CEO David Diamond is surer than ever he saw the future correctly in a visit to San Francisco 10 years ago.
There and then, the Naples builder and serial entrepreneur concluded co-working spaces, suites and common areas with aesthetic appeal and sizable doses of collaboration and socializing could play big in other office markets.
Jones Lang LaSalle recently said the same, projecting in a spring 2016 report that co-working and flexible work space will grow from today's 1.7% of the U.S. office market to 30% in 2030. “It’s not hard to see why this model has become wildly popular not only in major urban markets but growing secondary markets as well,” the national commercial real estate firm says in the report. The firm further predicts coworking space will be in one third of office buildings by 2030.
Diamond's contribution is 100,000 square feet opened in slightly more than 20 locations, mostly secondary markets in Texas, since 2012. But this is Venture X's big year – and big test. Diamond and business partner — his son Brett Diamond — figure to add 30 locations totaling 520,000 square feet. “We set some goals early in the year we thought were pretty aggressive,” says Brett Diamond, COO. “We're very pleased” so far.”
For starters, Texas will have 15 locations after four new ones this year, David Diamond says. And in Florida, look for an additional Venture X locations in Naples and openings in Orlando, West Palm Beach, North Palm Beach and Miami. “Sarasota is on our radar,” David Diamond adds.
“We set some goals early in the year we thought were pretty aggressive. Brett Diamond, COO, Venture X
Locations are also planned for underserved markets in Colorado, Virginia, Indiana, Ohio, Wisconsin, Massachusetts and New Jersey. Expected international openings in 2018 include Sydney, Dubai, Johannesburg and Cape Town. A key selling point: Venture X Members can use these and U.S. locations while traveling.
The Diamonds trace the lofty growth projection to West Palm Beach's United Franchise Group, an organization Venture X joined in 2015. UFG is central to the Diamonds’ planning: Build the “Venture X” brand starting in Naples and ensure everything a franchisee puts in a new location meets guidelines for concierge services, Herman Miller-designed modern furnishings and an interior prototype designed by Gensler, a top-earning global architecture and design firm. Franchisees then follow an operating agreement that specifies how to acquire customers, treat customers and set up memberships.
In return, Venture X and UFG lend training support and branding.
Diamond, co-founder and president of Naples-based DeAngelis Diamond Construction, which had $366.4 million in revenue in 2017, preferred franchising over raising capital and opening Venture X-owned locations. This way and with UFG's help, “we could scale faster,” he says.
UFG has done this for eight other U.S. brands that are now in eight countries, Diamond says. “They have 45 people helping us sell in-country and internationally.”
A franchise goes for $79,500 and gives the holder rights to the location’s entire market. “Our locations are owned by a franchisee that lives in that city,” Brett Diamond says. “They know the market very well. They know the competition. We think that is a better method.”
Franchisees can either rent or own the space and can expect to spend from $300,000 to $1.5 million on buildout, says Tom Weber, a former banker and investment group owner who joined Venture X as brand president just as the franchising model came together. “We borrowed from everybody who has been successful in these kinds of things,” including hospitality, entertainment, fast food franchising and the like, Weber says.
The Diamonds involvement with startup companies helped them recognize the potential for co-work spaces. A few years later Fortune 500 companies are showing interest in the trend. “The big companies have had a lot to do with the growth,” David Diamond says, and notes Venture X suites have waiting lists in all markets.
More market opportunity validation: The pros have bought into it. Says David Diamond: “JLL is telling their building owners if you have three floors, lease two of them out as co-working space and you keep the first floor.”