Mike McDougal, the founder of McDougal Coworking, shares his journey of converting a corporate headquarters into a successful coworking space that’s ready to scale. Here are three takeaways on his journey from corporate to coworking.

From Corporate Business to Coworking Space

After almost 30 years in the real estate business, our firm had outgrown our 10,000 square-foot headquarters building. We built a new 38,000 square-foot headquarters, combining four separate locations. So now what do we do with a large (for our market) office space organized primarily for a single tenant? We were lucky enough initially to find a couple of tenants to lease the entire space for a few years, but both ended up being short-term. We needed a longer term solution...Enter Coworking!

This concept was a complete unknown to us and to our market, so we embarked on a journey to other markets—exploring these unique spaces that we saw emerging elsewhere. After initially (and unsuccessfully) chasing a few Executive Office Suite operators, we decided to open and create a local branded coworking space. McDougal Coworking opened in April 2017 in Lubbock, Texas. We "borrowed" ideas from lots of other operators we met in larger markets, but ultimately customized our space to what we thought our market would accept.

‍

Here are the lessons we learned along the way.

1. Less furniture is better

We currently offer only a desk and a chair to each member. We bought (but rarely use) locking 2-drawer file cabinets. We have most of these now stuffed in a storage closet. Also, our desks came with what now seem like ridiculous accessories, such as a removable shelf to hold a computer tower. We haven't seen anyone with a computer tower maybe since 1999?

2. The money is in private offices

We were told this initially but didn't fully embrace it until the market confirmed it. We ended up doing a bit of remodeling about one year into our journey to provide more (if smaller) private spaces. We have since experienced 100% occupancy in those spaces.

3. Invest in a smart access control solution

The third lesson was one we borrowed from other spaces we visited—we installed Kisi for access control from the very start and haven't looked back. The app has transformed our space to a 24/7 operation with minimal staff. Just this morning, in fact, I used the app to open the door for a member that arrived a bit earlier than normal. We have the app embedded with our membership software, Cobot, so as members join, they automatically are invited to download Kisi and are given preset permissions with no further intervention from our staff. This also allows us to offer our meeting spaces after hours using Kisi’s scheduling system. We simply reserve a meeting room, add it to our Google Calendar, and the doors open and lock based on the meeting scheduled. We save 10 times the monthly cost of the system just in reduced staff hours. We are truly "powered by Kisi" as the logo on our website proclaims.

Through Kisi, individual spaces (i.e. the private offices) are leased at rates 60-70% higher (per square foot) than other office spaces in the market. After taking into account the common areas and additional overhead, our space nets a 25% premium over similar office buildings. So would we do it again? In fact, we are! We have since opened an international location (Sampa.works) in Sao Paulo, Brazil, and are actively seeking 1-2 additional locations in Texas. Our success has attracted a couple competitors to the market but we see that as a positive. We continue to educate our market about what coworking is—the competition is assisting us in getting our market accustomed to the concept. We expect to see more but they should expect to see more from us. Game On!