The members’ lounge at Uncommon’s Liverpool Street office is busy. Not packed wall-to-wall exactly, but crowded enough that an interview with the flexible workspace group’s new chief executive might need somewhere a little quieter, away from the hum of conversation and music. A colleague on a laptop takes a few moments to work out which meeting rooms are yet to be booked for the afternoon.
Chris Davies, that new chief executive, is likely to be happy with the impression this gives – that of a business in a sector in a city which are all emerging from the events of the pandemic. A year ago, that couldn’t have been taken for granted. Debate over what a post-pandemic workplace should look like, how it should operate and what role flexible space will have has been constant since lockdowns necessitated homeworking.
Taking over the chief executive post from Tania Adir – who founded Carlyle-backed Uncommon with husband Gal in 2014 but is stepping away from the business to focus on other ventures – Davies is now tasked with leading the company into whatever the future holds for flexible offices. As a partner at Uncommon since its early days, he is used to banging the drum for flex. But this is a fresh test.
“I’m relishing the challenge,” he says. “I’m marginally scared of it – but you need to be. If I felt like this was going to be easy, I wouldn’t do it.”
Deliberate steps
Davies entered the property industry via Landsec, joining its retail asset management team in 2012. From there he moved to Cushman & Wakefield’s residential development and investment division, before joining Uncommon in 2015.
At that time, the company had one location, in Islington, N1. Davies helped drive a fundraise that brought Carlyle Group on board as an equity investor with £150m in backing, and Blackstone as a debt provider. As the fundraise was closing in late 2016 the company was also buying buildings in Fulham, SW6, and Borough, SE1, and since then has picked up its Liverpool Street site, EC2. Its impending fifth location, in Holborn, WC1, will be its largest yet.
Davies knows that five buildings in a little over five years might seem tame in comparison with the break-neck pace of expansion that some other flexible workspace operators have achieved. But he also knows that many of the company’s rivals have overextended and pushed their business models to breaking point.
“Buying a building a year has been slower in getting to our five,” he says. “But it also means we’re not exposed in the same way. We made a very deliberate choice about every single asset.”
That means not chasing “growth for growth’s sake”, he adds. “We need to protect the brand and the quality, making sure we offer our members the experience we need to. This is a relatively new business. Within a market that’s growing massively, it’s very deliberate step after very deliberate step after very deliberate step. That’s why we’ve gone from a building of 20,000 sq ft to 25,000, then 35,000. We’ve then done [Liverpool Street], which is 45,000, and now we’ve got [Holborn] at 100,000 sq ft.”
What does Davies think the industry has learned from the ups and downs at WeWork, the troubles of companies such as The Argyll Group or Knotel, or decisions made by some operators to step away from their businesses – such as CBRE selling Hana to Industrious?
“What’s been learnt is that it’s really not easy,” he says. “You cannot just turn up and go: ‘Right. I’m going to put a coffee shop or some meeting rooms in and say that’s an amenity and a serviced office’. It doesn’t work like that. You need to be fully managing your teams in the building, your client relationships.”
He continues: “People think there are low barriers to entry to starting a serviced office. There are low barriers to entry to starting an office, yes. And you can fit one out as a kind of serviced office. But then to really get the DNA into it and have it running as one, they’re worlds apart. You’ve got to spend a lot of capital, but also a lot of time, resource and know-how – as well as have a big team to get this going. That’s probably where a lot of landlords that are trying to do it have struggled. You’re committing to have a full sales team, a tech team, all of these bits that if you don’t get right, you’ll be behind the market again and won’t be appealing.”
Green shoots
Davies is confident Uncommon’s sites are appealing. The pandemic was tough on lettings and enquiries, he says, but the team is hopeful that a corner is being turned.
“The measure I had of it was talking to brokers because I was watching how many of them were still on furlough,” the chief executive says. “The moment they start bringing people back off furlough is the moment they’re getting loads of leads. It was my way of monitoring how well we are going with this [market recovery].”
Now, Davies notes, almost all agency staff are back at work and, sure enough, business is picking up. In April, Uncommon had a landmark month for website hits and enquiries about taking space. “We’ve got to see it converting to actual deals,” Davies acknowledges. “People are being very deliberate about it and wanting to get it right. But there are some very good green shoots there.”
Uncommon made it through the events of 2020 by scaling back costs so that despite falling revenue, the business’s EBITDA margin was maintained, Davies says. Not jobs were cut and furlough payments were topped up. That, Davies says, proves the validity of a business model that has only been truly tested in a downturn so far by IWG.
“It’s proven that we can survive in a recession-type environment – not only survive, but do well and maintain margins,” he adds. “That was always the question that was out there.”
Uncommon has tended to focus more on private offices for companies than co-working space for individuals. The smallest such office across the portfolio is for three people, while some occupiers take entire floors at larger buildings such as Liverpool Street. For Davies, the important selling point is that tenants can direct Uncommon’s design of the space.
“If you think about the old, serviced office 1.0, they went into a space and said ‘sell it as 10s, eights, sixes’,” he says of the pre-planned desk layouts. “You’re guessing [what tenants will want], which for the new world is not the way to do it.”
In Liverpool Street, by comparison, almost every floor was left open plan and then fitted for individual tenants.
“We’ll have open floor plates and say: ‘What do you want in here? Where do you want that meeting room? How do you want that to look?’” Davies says. “From an operational point, we have those in-house capabilities to be able to make those changes and deliver. And we own freehold, so I don’t have to go and get a license to alter. We just get on and do it because it’s the right thing to do for that client and the right thing to do for the building.”
It goes without saying that Davies is adamant remote working is less of a threat to offices than some industry figures would suggest. And he goes so far as to suggest that a “new normal” for the office will eventually prove remarkably similar to what came before. Individuals who say they might come into the workplace for just two days a week will see their time in the office creep up to three or even four days, he argues. “We can survive, but we can’t thrive by being at home,” he says.
Another evolution
Uncommon will continue to focus on its freehold model, but Davies says there will be new routes to market for the company too – he is looking at managing other parties’ space, either through management contracts with landlords for Uncommon space or running unbranded space directly for asset owners: “This is another evolution that I want to take the business into.”
New buildings will still be in London, where the chief executive notes “there’s more than enough to be doing”. “And I want to get the right flags in the right places,” he adds. “It’s very important to me that we get the right locations, the right buildings.”
For now, that means targeting more locations along the South Bank, as well as Soho – “There’s always huge demand but there isn’t the building stock there” – Midtown and perhaps another City site in the Liverpool Street vicinity. In short, he adds, “anything down the Central Line”.
Davies now has his hands full steering Uncommon through the next stage of the pandemic, at the same time as finishing his own MBA. But he stresses the importance of the team around him in helping with that mission, including finance director Magda Maria Jedrychowska-Stein and operations director Devrim Kahramanoglu.
“It’s taking ownership, really falling in love with it,” Davies says of taking the chief executive post. “It comes with huge stresses – making sure my team is happy and making sure we get all the cultural bits right is super important to me. This is their business as well. So many of the staff have been so involved for so long, and have come on this journey. We’re just now going to the next phase of the journey – Uncommon 2.0.”
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