Goldman Sachs estimates that $1.07 trillion worth of commercial real estate mortgage loans are set to mature in 2024. In an April Fortune.com article, the firm noted high interest rates and tightening lending standards will make it difficult to borrow money, even if there is an appetite for taking on debt. No commercial real estate sector will be more affected by this trifecta of turbulence than office and retail, they projected.
Partner these projections with the increased office vacancies due to the post-pandemic shift to remote and hybrid work and you’ve got a perfect storm for commercial real estate disruption.
Enter Destinite Steven Franco. Franco’s flexible real estate/co-working concept, Beachworx started as a solution to his own challenges as landlord. What Beachworx has become is a successful beta test for a flexible space franchise model that could be a life raft for similarly situated landlords.
Franco purchased Destin Commerce Center, a 25,000 square-foot, four-story office building on Highway 98 in 2015. The space had long-term financial industry tenants on the first, second and fourth floors. When a tenant scheduled to move into the third floor defaulted, it left Franco with a partially built-out space and no prospective tenants.
Despite more than 30 years of commercial real estate experience as a leasing agent, principal and investor, his response wasn’t to find another tenant.
“I’d read about Hines and how they were leveraging their experience in real estate and property management to create workplace-as-a-service,” Franco said.
Franco, a lifelong Atlantan, was also familiar with other co-working concepts in national markets and was inspired by the opportunity to create his own concept as a solution to this vacancy.
According to Franco, co-working is a flexible alternative to long-term real estate commitments.
“Co-working accommodates your business as it grows through the business life cycle. The flexibility to scale up or down with 30 days notice is critical to helping businesses realize cost savings,” he added.
Franco opened Beachworx in May 2018 and Vice President of Operations, Melissa Fertitta joined in May 2021. The concept has gained traction with locals and tourists alike. It features 20 private offices with flexible monthly rental terms, a podcast room and a boardroom which can both be rented by the hour. There are 24 hot desks that can be rented with day passes. The Beachworx community is a great networking resource for business-to-business referrals and the support programming Beachworx provides is helpful for businesses at any stage.
“Our experience as owner/operators over the last five years has uniquely prepared us for franchising our model. We’ve learned how to control and monetize our space, which is the best solution any landlord can ask for,” Franco said.
Some unique ways in which Beachworx monetizes its space include selling advertising on the digital pylon facing Highway 98.
“Department Of Transportation estimates the average daily traffic count is 52,000 drivers, that’s 52,000 people who could be learning about your business, whether you office in the space or you’re a virtual address member,” said Fertitta.
“We recommend our virtual address membership for any business, whether breaking into a new market or wanting to look bigger than it is by showing up in multiple locations. It’s also a valuable tool for identity protection of work-from-home business owners,” she said.
With the introduction of the WORX franchise, virtual members will be able to expand their reach to all parts of the country, be it at a Cityworx, Lakeworx or Mountainworx.
“We’re sitting on a rocket ship,” Franco said, growing excited about the potential of the model. “Everyone is a potential franchisee. Whether you have a traditional office building or a retail storefront/big box, we have the resources to convert your space into flexible, affordable, professional office space for rent."
“There are very few co-working franchises and the ones that exist require a large franchise fee and have significant cash reserve requirements. We can show a landlord how to convert his space with a conservative investment in FF&E and software and likely they’ll see positive cash flow within 12 months,” Franco said.
WORX just executed a master service agreement with global real estate firm Cushman Wakefield, who will refer potential landlords and tenants to the franchise.
“Landlords are likely to be the first to sign up, but there may be tenants who can’t default on long-term leases. They could convert their tenancy to a WORX and turn what would otherwise be a loss into a revenue producing operation,” Franco said.
Beachworx is open Monday - Friday, 8 a.m. - 5 p.m. Purchase day passes at thebeachworx.com
Contact info@thebeachworx.com for information on the brand and touring the space.
“We have the resources to convert your space into flexible, affordable, professional office space for rent,” - Franco
