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by Schiendelman 7 days ago
I actually think there's a business to be had here.

As described, the landlord can't offer a traditional lease for the actual value of the space.

However, the landlord could offer essentially day rentals without creating a lease. There are systems for this already, such as Peerspace and their ilk, which I've used for small events. I believe these don't trigger the foreclosure clauses.

I think that a property management company managing deeply underwater buildings could play in this, reducing their cost structure by offering day rates. They've often already got a solid NFC entry system. Most of what you need is automated pricing, onboarding and offboarding, and figuring out how you avoid needing physical cleaning/setup/teardown overhead.

4 comments

I can't comment on that specific structure, but pop-up shops are one method that in the UK councils will often help vacant buildings with for exactly this reason, with the upside that they may convert into permanent tenants.
Yup....

And the downside is loads of reasonably successful decent small shops in the UK now have to close after 12-24 months when the rents get jacked-up from sensible to astronomical levels. None of them become permeant tenants unless they are a front for money laundering (hence the explosion of nail bars and barbers on the UK high street) or illegal goods (dodgy vape shops).

https://www.bbc.co.uk/news/articles/cqj1rkqqrgro

Your local press (if yours still exists) will also be full of such stories.

Anything over 30 days is likely not to be a pop-up shop. There's no way to give a tenant 12+ months without triggering the foreclosure clauses, AFAIK.
The UK is different old boy.
Of course it is! But I don't think it's different in this way. Did you have a specific data point about a 12-24 month rental getting kicked out in order to prevent foreclosure?
Isn't that through council subsidy rather than avoiding a foreclosure-trigger tenant agreement?
I own a commercial property, I wouldn’t want to have day to day rentals.

I don’t enjoy dealing with property management or the fees they charge.

Tell me more - is your commercial property vacant? I'm a landlord myself, and the calculus gets very different when you have a long term vacancy.
Tenanted.

I know regardless of the vacancy I would not consider day rates, I’d eat the loss and deal with the cashflow via other means. Consider what sort of fit out would be necessary for what’s lets be honest is being suggested - hot desking - compared to a standard office: lots of IT systems necessary, lots of additional security, lots more cleaning, and likely lots more repairs for wear & tear which probably isn’t recoverable easily.

I'm not suggesting hotdesking at all; you may have seen someone else's comments suggesting they thought that! My best example (provided in my original comment) was Peerspace, but there are many others like that. Zero infrastructural investment past giving someone a key (or setting up an HID reader and such).
What sort of property do you own and do you utilise this service?

I can’t fathom just putting some dinky reader on the front door and letting absolutely anyone in.

The current tenants of mine started a lithium battery fire, almost burnt my property down.

I own both commercial and residential property. I have used the company I mentioned, but I'm not trying to advertise for them, I just know other examples exist.

I didn't install a reader, I provided a physical key copy. Readers make it slicker.

I haven't had any problems, most of my rentals have been for small events. They brought their own supplies, minus a few tables I provided.

Generally people renting space have no incentive to create a problem. They pay, I get paid, they want to take some pictures or get some people together.

So, wework? :o)
Ha, cute, but no, very different. Wework is a tenant, and does significant buildouts. This would be "you can use the space for a few days or weeks".

I've seen companies provide some moveable furniture in a space like this - some desks, some extension cords - but it has to be up to the temporary user to configure and put things away when they're done.

Gosh... someone finally explained the WeWork business model that is more reasonable than "walk barefoot and expect money to rain from the sky".
Came here to say the same thing... A "building-sized financial product that incentivises extend and pretend" is fertile ground for an organised player like wework to "lease and sublet, except on a subscription basis".

viz. wework could apply the "single-use low-priced shampoo sachet" model [0] to SaaS-style rent-seeking of long-lived infrastructure. Infra. that is guaranteed to be always under-utilised... even in boom markets, because nothing functions at 100% capacity.

Adobe, as another example of (software) infrastructure --- i.e. traditionally, lifetime licence and ownership desktop software --- figured out their own "shampoo sachet" pricing. viz. how to make and ship desktop software product but kill-switch them with metered SaaS subscriptions.

The monthly price is just high enough to make gobs of cash for Adobe, while causing the typically-feast-and-famine freelancer to take the capitalist shellacking because it's just convenient enough. They can align software spends with active projects, and avoid the anxiety of cracked software doing nefarious things to their computers and data.

But over a long enough time, they pay Adobe a (presumably) huge premium over up-front priced software. And they stay locked into a planned obsolescence cycle controlled by Adobe... "The new version of your beloved editing software will only work with the latest Windoze which means hardware upgrade and oh, you have to do it because well we are soon kill-switching the current version you are dependent on."

Wework like operators can do exactly similar shenanigans with access to commercial infrastructure. Crowd out competition by aggressive long-term leasing on their buy-side, and on their sell-side build daily-subscription-dependency (buying ease, google-ish facilities which feeds into cult-and-status-signalling games), and convert a percentage of that into routine-subscription-dependency. Meanwhile also run rent-seeking games inside the main rent-seeking game... now you have a captive wallets who will buy the add-ons and extras because it's easier than walking two blocks for some cheaper and better alternative (e.g. food, coffee, lovely meeting space etc.).

edit: add reference for "daily sachet pricing".

[0] Buying less, more often: An evaluation of sachet marketing strategy in an emerging market

https://www.researchgate.net/publication/233676293_Buying_le...

well, isn't the rent estimated as the daily rate * 30 then?
By whom, for what purpose?