The Yard Presents Itself as a Co-Working Alternative

In this era where real estate and technology intersect so frequently, some property firms now refer to themselves as technology companies.

Morris Levy, CEO and co-founder of the co-working operator The Yard, which has 14 locations on the East Coast, does not count his company among that group.

“We don’t claim to be a real estate or ‘technology” company,” Levy says. “This means our priority is not on acquisitions, developing new technology or offering ancillary business offerings outside of our primary service area. Our core focus is to create a great place to work that our members are proud to invite partners, customers and friends to visit.”

Levy says the co-working model works best when the focus is the members and the level of service. He emphasizes that The Yard is, above all else a hospitality business. It has opened 14 locations in New York City, Boston, Washington DC and Philadelphia.

“Our market selection is a careful intersection of demand, location, transit options and quality of the property,” Levy says. “We specifically choose centers that, while in major cities, are still in prime residential pockets of those markets.”

Levy says many co-working companies have been chasing inflated valuations and are taking on too much venture capital funding. By doing that he says they’re opening locations without maintaining the proper level of service. “This rapid growth leaves much to be desired from the member experience which cannot be maintained at such a scale without a great team behind it,” he says.

The Yard, on the other hand, took funding from our private board of investors and through bank loans. “This has allowed us to scale with realistic and goal-oriented expectations, rather than racking up debt,” Levy says.

With the WeWork’s recent woes, Levy says The Yard has been contacted by twice as many of the company’s members in the past three weeks.

“WeWork members shared with us they worry the company will go bankrupt, that the impending layoffs are affecting the level of service in the space and that their membership rates are steeply going up to account for the company’s financial deficit,” Levy says. “Unfortunately, many of their ‘enterprise’ and larger members are stuck in long term commitments they made to get deep discounts far below market rates and won’t have the flexibility to leave.”

Levy isn’t just getting inquiries from clients. He says that landlords who are concerned about the future of WeWork in their buildings have approached The Yard about stalled deals.

“Currently, more than five top property owners in our markets have contacted my cofounder Richard Beyda about stalled deals that were previously in negotiations with WeWork,” Levy says. “The landlords are concerned about the future of WeWork and looking to partner with a stable office provider for long-term success.”

Despite the woes of some of his competitors, Levy sees great opportunity in the co-working space. He says that less than 2% of the total US office inventory is dedicated to flexible office space. Additionally, he cites CBRE research saying there are only a handful of submarkets that have more than 5 million square feet of total office inventory with a flex-penetration rate of 5% or more.

“The opportunity is there,” Levy says.