Co-working space provider naked Hub is monetizing its building management software and services by offering them to developers to turn their buildings into flexible, social workspaces. Three large property developers have already signed up for the “community-as-a-service” proposition which could increase yields and tenant retention rates. Speaking to TechNode at the TechCrunch Shanghai event, naked Group CEO Grant Horsfield also revealed that naked Hub is opening its first co-working space outside Asia, by London’s Victoria Station.
“This is never about anything else but money… If we are able to create more value for the tenant, the tenant will pay more money for the service, the landlord will make a higher yield,” said Horsfield, on developers’ interest in the management service.
“Everybody’s quoting 30%, i.e. 30% of the worlds’ commercial property will be co-working/flexible by 2030, that’s from [building management company] JLL,” said naked Hub CIO Dominic Penaloza. “London is the number one city in the world at 7%, New York might be 5%, Shanghai is mid 2, 3, 4, 5%.”
What developers need to be able to access this trend, and what they have tried to achieve themselves but have failed, naked Hub thinks it can supply, based on its co-working space experience.
“How do we make vertical communities? How do we connect all these people in our glass tower? … Through co-working, almost as an accident, we were building communities. We weren’t physically thinking about them being in a glass tower, we were just thinking of communities on a floor, how would that work? Our communities were laboratories for this software,” said Horsfield.
The software, an app with customizable front and back ends, was defined by Penaloza as a “building-based, online and offline business social network. It’s a private LinkedIn for occupants of a building that allows them to share space and solve each other’s business problems”. In short, it is a private label version of the system that naked Hub already uses in its own spaces to manage a building and allow co-workers to interact with each other as well as use the co-working space’s services.
The software allows workers to know who else is in their building and meet them and can also be embedded into a building to integrate with turnstiles, door locks, and meeting room access. Building owners can use the data generated to track individuals and companies and can monetize facilities provided by charging for services such as meeting rooms, using the cryptocurrency provided by naked Hub. Beyond the community and facilities aspects, it will also incorporate other services such as building maintenance in a way which Horsfield believes no one else is doing.
Take up of the software by workers in a managed buildings is expected to be high. “The key thing about an application is that it’s trying to drive a certain amount a traffic… Now we have the unique advantage of forcing you onto it–you’ve got to book a meeting room, do this, do that–to work in an office. It’d be too painful not to use it,” said Horsfield.
The current app used by naked Hub coworkers already has a daily active user rate of 30% and they expect it to increase now that they have added Connector, a Tinder-like service for finding other coworkers.
The community-as-a-service (CaaS) software is to be sold the same way as other Software as a Service (SaaS), per user (i.e. office worker), per month with an additional fee for initial customization. Naked Hub also plans to offer trained human community managers to work in developers’ buildings.
Of the three large developers already signed up, only one has gone public. Zhejiang Jiangong Group will implement its own version of the CaaS next June at two sites of its EAC development in Hangzhou, to be used by 50,000 workers. This will not actually be the first developer using it, but the other two, one of which is a certain large Hong Kong developer, are not ready to announce their launches planned for early next year.
Naked Hub has followed competitor WeWork into building management. In late April this year the US-based WeWork, which is expanding fast in China, announced its “Powered by WeWork” service where it will go into an existing office space of a client, typically the HQ, that is already using WeWork spaces elsewhere, and reconfigure the workplace and bring its social services.
Other competition in China, from local startup URwork, has provided a slightly different problem for naked Hub and the sector in general. As it has grown to be China’s first unicorn in the co-working sector, Horsfield believes URwork has gotten too much investment too quickly and has created the impression of a bubble in the sector. “There really are no fundamentals behind the business,” according to Horsfield, who said in that respect naked Hub had been lying low.
When asked whether the company plans to integrate its software into the all-consuming WeChat, Horsfield was ebullient about getting in via mini programs: “WeChat is, in my opinion, the best product the world’s ever seen from a pure user [perspective].” Penaloza explained that they had already built a WeChat product “for our learning.”
Horsfield said they were in talks with Tencent about their Dr Works clinics, and said the tech firm is hoping to put the clinics in all the naked Hub locations.
Horsfield acknowledged that despite the group’s healthy revenue (the co-working space division alone is expected to generate $100 million this year) naked Hub will need cash in the future for expanding the service. His only concern is that the company may have struck out in this direction too soon, before the message percolates through to the commercial real estate sector:
“I’ve never been more certain in my life that we are doing the right thing. The only thing is whether or not we can survive long enough to prove it and that our timing wasn’t too early. What I’m absolutely certain of is that every single office in the world is going to be better than today. Because, crying in a bucket, there’s something fundamentally flawed with the current office product.”
Naked Hub’s partnership with Hong Kong property developer GAW is helping it expand worldwide. Naked Hub is going to move into two properties in London, with the first–123 Buckingham Palace Road–expected to open in the first quarter of 2018. The GAW-owned building is currently occupied by Google.