The Real Market With Chris Rising – Ep. 62 Caleb Parker
The Real Market With Chris Rising – Ep. 62 Caleb Parker
Chris Rising (00:49): Welcome to The Real Market with Chris Rising. I’m really pleased today to have Caleb Parker with me today. Caleb is the founder of Bold, one of the very first spaces of service businesses. And given all that’s going on in this COVID world, I can’t quite say post-COVID world, space as a service has taken on new meaning. When we look at how the world is evolving, this is certainly going to be an area that’s going to have some impact. So Caleb, I’m really pleased that you’re here. As I mentioned in our pre-call, this is to me just the wonder of Twitter, that we could meet on Twitter, have some interaction, and then it takes a few months but we actually meet in person but it’s over zoom. So that’s the COVID piece, I guess. But welcome to The Real Market.
Caleb Parker (01:33): Thank you, Chris. It’s really a pleasure to be here talking to you today, I’m a fan of your podcast. I remember the first episode I listened to speaking with Dror Poleg. I was walking through Greenwich Park here in London, just had to sit down at a tree and sit back and just listen. Dror was amazing, so it was great that you had him on and just been a fan ever since.
Chris Rising (01:57): I appreciate that. The interesting thing about the Dror podcast is that I had devoured his book, and I think he’d been interviewed so many times by people who had never read it. I feel like I’ve heard that one got him really engaged because I was like, “In this chapter, you’re talking about this.” So really that was a good one, so I appreciate you saying that.
Chris Rising (02:21): One of the thesis in his book is that the idea of 100 years of office real estate, where someone does a long-term lease and builds out their own TIs and owns that space, even though it’s a lease, is going to be a thing of the past, and his book pushes into that. But you 10 years ago saw this coming long before Dror’s book and long before, similar to WeWork, but I would say you guys were probably before WeWork. So how did that happen? What did you see that was the inspiration to start your company Bold and what were just the base? We’ll get into the history and how you got into real estate, but you stumbled onto or had prescient notions about where space was going for offices, how that happen?
Caleb Parker (03:14): Well, really in 2011-ish is when all that came up in my mind. I had just come out of Regis working on their management team in Washington DC for a couple of years. I was talking to my customers that were Regis customers and understanding why they were becoming customers of Regis, then the global financial crisis hit, of course. A lot of the reasons that people were becoming Regis customers then started accelerating, I want to use that word we’re using today. I ended up setting up my own flex space brokerage back then to help a lot of these customers navigate and figure out who the right operator and who the right brand for their business was as a broker.
Caleb Parker (04:02): As a broker, I remember one day I had this one guy from Alexandria, Virginia called me up and then he started talking about his problem. And the problem was since the GFC, since the financial crisis they downsized their offices massively, they downsized their team pretty significantly as well. And it turned out they were paying about three grand a month for this tiny office but they all worked from home and they only used the office to come in to meet with each other occasionally or clients. He was asking me, “How can we save money?” I’m thinking to myself, “You’ve already saved a lot of money by what you’ve already done. The only way to go now is to get rid of that office and book it on demand.” Which was a bit of a novel concept. Back then the serviced office companies or the executive suites of the time allowed their own customers to book on demand in a day office.
Caleb Parker (05:05): I remember at Regis, we had just launched the business world program where you can get a card and have access to any Regis anywhere. So that concept I helped this customer do within DC with car workplaces, I believe and we ended up saving him 90%. So I started thinking about, “Gosh, he’s using Skype at the time, Google Drive to communicate with his team and his clients. He’s only meeting in this place occasionally, he’s saving all this money, is this the future? And if it is the future, how much of an impact is going to have on people’s lives.” And I mean positive impact particularly for entrepreneurs like this particular gentlemen. So that got me excited about thinking like, “Okay, he saves 90%, is he going to grow his company faster because he can hire a sales team or is he going to put his kids through college or is he going to take more vacation time? What is he going to do with his savings? If we can roll this out across on a mass scale, what positive impact can we have on people’s lives?” That’s where I got excited about this.
Chris Rising (06:13): I very much remember that period of time because in 2007 my father and I started our company, we started in a Regis. I remember I was also a broker and they were offering $10 broker bonuses on a one-year deal, it wasn’t a ton of money but I remember that. Then I remember that we only wanted to sign a three month deal, ultimately I think it was cheaper when we signed the one year deal. But I remember how aggressive Regis was.
Chris Rising (06:40): But at the time, quite honestly, it was just some old law firm space that they redid the kitchen and I was battling with the fact I’d go to the kitchen area and somebody had an office that was doing, Los Angeles, so doing casting and there’d be 20 people in there because they had one office. Regis hadn’t quite figured out how to deal with the new world economy. They were very good for the lawyers and the accountants who just wanted a couple of offices. That’s changed dramatically, in the last 10 years that has dramatically changed, but it wasn’t overnight. So when you went from going from brokerage on small term, short-term rentals to saying, “I know I can do it better than Regis,” can you talk a little bit about that?
Caleb Parker (07:23): Yeah. There was a bit of a bridge before we got to where we are now in that thinking. When I first started seeing this come together, it was a cost benefit focus. It was helping people improve their lives by saving all this money and be able to access space when they need to. Because the idea was, if you’re a small business, if you’re an entrepreneur it’s expensive to take on a lease. And if you don’t need to be in the office because you can work from home, why would you do that? But then occasionally you still need to collaborate with people, whether it’s your client or your team, whatever. So you still need that office environment somehow. I remember at the time Uber had just launched in DC as one of their first markets. When they launched, they had this tagline, “Everyone’s private driver on demand.” I thought, “Gosh, everyone’s private office on demand, hmm”
Caleb Parker (08:20): So when I started doing and we’ve moved on from just the cost, and I’ll get to in a bit about the service aspect of it. But just from a cost aspect, we thought we could save people money and give them this private office on demand, there needs to be a platform that enables this. So I raised a little bit of capital, we invested in a booking platform and launched an app, at the time called TouchdownSpace, doesn’t exist anymore. But we thought, “Wow, we’ll just grow this across the country and help everybody be remote first and have an office when they needed it.” Well, what I didn’t know was Mark Gilbreath was on the West Coast with a similar plan and he raised a lot more money faster than we did. I’ve learned a lot from him over the years, in fact, he’s on my podcast this season. But Mark and LiquidSpace they went off to the races. But that’s where we started.
Caleb Parker (09:19): Then one day when I was the CEO of TouchdownSpace, I was at a conference down in Florida and I was on a panel with the founder and CEO of then Search Office Space. And Search Office Space is now called Office Freedom, but they’re instant offices but based in the UK and really strong globally. We’re on this panel talking and at the end Richard leans over to me and says, “Hey, let’s have a chat.” So we started talking. Long story short, six months later, I’m moving to London to take this idea and roll it into meetingrooms.com and grow that globally, where I was the CEO. So I was still in the broker mindset world then and I did that for three years. We grew the platform and then I exited and then came over and started Bold. That’s when I became more service-minded because of what I learned at meetingrooms.com.
Chris Rising (10:21): There’s a few layers of that onion to peel, so let’s go back a little bit. Number one on the technology, I think one of the biggest fallacies about WeWork, and it was what we had heard all the time, is they had this unbelievable technology that united the WeWork world, but when you really got into it they didn’t. There were stories about the 16 year old programmer they had hired who build some software that didn’t work. So that that’s been a struggle for WeWork when they were trying to go public. But you identified early on that that ability was in software to just very quickly give people that they want. What they want was going to be a driver for office on demand. How did it go from when you sold your business and the software? Was it where you wanted it to be to where you are today? Does this software meet the promise that WeWork had talked about and others had talked about?
Caleb Parker (11:21): I think we have to think about technology in a couple of different ways. Technology is an absolute must. And when you start a company as a entrepreneur and as a startup founder, you have to make a decision, are you a tech company or are you a tech enabled company? If you’re a tech enabled company, maybe it’s best you you’ve taken that decision to go out and buy the best in class technology and then design a fantastic user experience built on top of it. It’s like think about all the car dealerships. You have a nice Corvette but the parts that are underneath the hood, Corvette didn’t make all those. Or GM or Ford, they’re not necessarily making all the parts, they’re getting those parts from different suppliers, best in class suppliers. And I think that’s what the difference is between being tech enabled and being a tech company. A tech company is developing the technology.
Caleb Parker (12:26): So we thought back in those early days that we were a tech company, we went out and built an app, we went out and we invested in that. One of the biggest mistakes I made at the time was hire an engineer programmer that was very expensive, which we ran out of money a lot. We should’ve probably outsource some of that development to a tech company. But he’s become good friends of mine now, so benefits down the road. But I think now we are a tech enabled company. And to be fair to WeWork, they were tech enabled but they had a big vision. In my opinion, they probably should have went more on the outsourcing of the tech to some of the best in class versus trying to own the IP. But the story is still being written there, so we could all be proven wrong later.
Chris Rising (13:20): Well, I have him as a tenant so I’ll keep quiet, but it’s been ride. Another piece of that onion that I want on unpeel, I had a woman early on in my podcast that I was impressed with. It was an attorney who had built an eight woman law firm. I had her on because I was interested to see what the experiences are for a woman building a law firm, and it quickly turned to the fact that she mentioned early on that she didn’t have any office space, and that she had attorneys from around the country that worked focused on employment law. At the time, this was three or four years ago, she said, “We have a Regis membership, so if we ever need to use a conference room. But what we found is our clients don’t ever want to come in to see us and we don’t.” We spent the whole time talking about trying to build a law firm remotely and culture and things like that.
Chris Rising (14:15): You saw that in a way I didn’t see it, and I still have some views on whether that really worked for the high price law firms. But you saw entrepreneurs building a non-office base work from anywhere business. Was it a light that went on that you were right or did you say we still got ways to go before most businesses will do this?
Caleb Parker (14:43): Honestly back then, I was doing that myself. When I set up my flex space brokerage, we were 100% home office, digitally based, meeting clients on tours. I think the light switch for me was that call that I got from the guy in Alexandria, Virginia. I thought to myself, “I’m sitting here advising him on what I’m doing versus advising him to get an office, which is the opposite of what I’m doing. So this is what I need to be doing.” That helped drive my… I’ve always tried to be pretty transparent and honest in general, it’s part of my ethos, but really being authentic with what I sell and the advice I give. If I wouldn’t do it, why would I tell somebody to do it?
Caleb Parker (15:28): So I’m quite surprised that it’s taken a global pandemic in 10 years to get to where everybody’s thinking this way now. I thought it would have happened earlier, which is one of the things that I’ve been pushing for the last 10 years to try to make this happen. I think the biggest challenge is not to look at it just as a cost benefit, which it is, it’s a massive cost benefit. But if we know that people can work from home, if you’re an entrepreneur, why would you go through that cost?
Caleb Parker (16:00): But still the biggest benefit is having it there for you when you need it. Because I think we get in this conversation between working from home, working from the office and this is across the board, whether you’re an entrepreneur, an employee of a company, an enterprise. People in the headlines are saying, “Work from anywhere, work from home.” Or people on the other side saying, “No, you need offices.” The truth is both. So the more that we work from home, the more value there is in going into the office. So for me I’m just surprised it’s taken this long to get here.
Chris Rising (16:37): Well, going back to this theme of peeling the onion, there’s a third piece to what you were saying in that you are in London. There are several markets around the globe where space as a service screams is making sense, London being one of them, because the cost of real estate is so expensive. So if you can provide real estate with a shorter term commitment, with more flexibility, that rent number is probably easier to absorb knowing it’s not going to be on your balance sheet for 10 years. Am I wrong about that or are places like London, Hong Kong, Moscow, New York City, really prime markets for this as opposed to lower rent suburban markets?
Caleb Parker (17:20): It is a good question. Certainly the CBDs, the bigger markets, there’s a massive benefit in the cost. And yes, you are going to pay a higher price for the flexibility in the short term. But in aggregate you’re not stuck in a 10 year lease, so you’re coming out with a massive savings. Is the savings as massive in suburban or tertiary markets? Possibly not. Is the overall benefit of having a space that you know is there for you when you need it and you’re going to get great service, friendly people smiling and catering to your needs just like when you go to a hotel, I think I use the hotel analogy a lot.
Caleb Parker (18:05): The thing is a lot of us don’t have vacation homes but we go to hotels and check in when we need to. It’s cheaper even though the hotel rate’s high, it’s cheaper to go to a hotel than to go… And that doesn’t matter if you go to a city center or you go to…. Because look, you can probably go to the countryside somewhere and buy a cheap home and that can be your vacation home. But I’d rather save the money and keep the money in my bank and then just book a hotel when I go.
Chris Rising (18:34): So talking about WeWork in the sense of their model has been to take long-term leases, chop up the space as much as possible, lots of money, big security deposits, all that, that hasn’t worked so well. I have friends like Chris Kelly and Ryan Simonetti who started Convene, that’s not their model, Industrious, it’s not their model. Do you think that the model that was Regis and WeWork, is that model gone? Is it going to move towards like the hotel operating companies where a company like yourself, the landlord’s, just going to say, “Hey, I’ve got X amount of empty space, some of them are floors, you do it for me.” Or is that landlord just going to insist you do a long-term lease and that’s really the only option?
Caleb Parker (19:26): Well, if anybody has ever read my LinkedIn or Twitter posts, they’ll know that I’m not a big fan of lease arbitrage. We had a decision with Bold back in 2016 to go down that route, we decided not to just in case the worst happens, and obviously the worst has happened with the pandemic and lease arbitrage isn’t very good now. In general, I’m a big fan of partnership and collaboration and management agreements, that’s service model. That’s not to say that there’s not a deal out there on a lease tat makes sense. So if the market and the rent and everything lines up, then maybe the lease. There’s some great operators on lease arbitrage, I’ll give a shout out to my friend Jonathan Weinbrenn BE.Spoke and the BE companies. They operate a lease arbitrage model very successfully. But it’s not for us, and we prefer to be in partnerships with our landlord partners and that’s what’s been working for us.
Caleb Parker (20:32): I do think the future is going to go in that direction. I think that it’s a benefit to the landlord to have everything aligned. Because if you’re an asset owner and you lease to someone like WeWork or Regis, you’re in an SPV, they pop that SPV in a worst case scenario, then you’ve got that big risk. But then on the best case scenario, they’re massively successful, you limited to your income to your lease. So it’s a bit of a ying and a yang there. Whereas in a management agreement model, you share on the upside but you share in the downside, so it’s fully aligned.
Chris Rising (21:11): Well, if you think about why I buy a hotel and I’m looking do I want Marriott, do I want Hilton, do I want to a boutique brand, you’re doing it because you think you’re going to rent the most hotel rooms at the highest average daily rate and you’re going to pick a horse. It would seem to me that’s what most independent landlords are going to do as well. Pretty big news this week about CBRE deciding that building their Hana brand wasn’t what they wanted to do and buying Industrious, what’s your take on that?
Caleb Parker (21:45): Well, I think we don’t know enough about the details to really have, well, we have opinions, but to form a really solid opinion yet. I’d love to understand all the details of that deal. But Anthony Slumbers, our friend, had a really good article this week in the States because of that NEG about this. I tend to lean in his direction. I think there’s some really… I’ve got some friends at CBRE that do a great job. I don’t think CBRE was fully committed to the flex business. In my opinion I don’t think they were fully committed like they are at their core business. If I was an executive at CBRE, every single CBRE representative around the world will be promoting Hana. I’ve spoken to some folks that Hana was like a red headed step child in some cases. I know some of the folks at Hana, they’re fantastic.
Caleb Parker (22:50): So my opinion is the deal with Industrious was a great move, I think it validates a few things. It validates partnership and management agreements because that’s Industrious’ model, it validates the growth flex. I think there was a quote from someone at CBRE that said, it was in their report, 68% of their corporate occupiers want flex across their portfolio in any building they go into, so it validates the need for flex. What it also validates in my opinion is that were going to see, I predicted this in a blog post back in 2012, that we would see partnerships between agents and operators, landlords and operators. That’s happening and I’m excited about.
Caleb Parker (23:42): But what’s happening now is that a lot of the landlords, a lot of the agents are saying flex is important, let’s do something about it. And they run to create their own platform, their own brand, and in many cases their own platform without a brand. So I think that’s a mistake. I think that unless they go all in, which CBRE seemed to be all in but they weren’t. So the reason I think it’s a good move is because CBRE now has a trusted operator that’s best in class, I have big respect to Industrious. Now they’ve given that Hana over to Industrious to run, CBRE can do what they do well, Industrious can do what they do well. And to me, that’s a great partnership. I think every agency, every brokerage, every landlord should be taking a clue from that.
Chris Rising (24:33): I think I liked it or I said something very similar on Twitter a couple of weeks ago. I as an owner of real estate, 5 million square feet, there is no doubt there is a demand for this, for flex, for easy. I think we’re where this is really your business and Industrious, the demands of technology and what basically a hotel worker, because no matter what happened, and I really want to get into your view of the future of work. But you’re going to want to provide better broadband, faster broadband, better technology in order to get people to leave their home but come and collaborate. And that’s a huge lane that I think space as a service area is going to go into. The demand is increasing and I think CB has an important advantage against a JLL and a CNW when picking a landlord leasing broker. At this point, if I can go to CB and say, I like your leasing team and you can bring Industrious and we can work out the right split, I think that’s a huge competitive advantage.
Chris Rising (25:40): I think what will happen, just like it has in the hotel business, there’ll be the bespoke, the smaller flex operator that we want for our billing because we think it’s hipper and cooler if we do it that way. Then the other ones we want the more global reach so that the global companies will want to be there. It’s hard not to see a world where that doesn’t happen.
Caleb Parker (26:00): I agree it’s the future. We’ll have a few dominant players across the globe, like in the hotel industry, and then we’ll have loads of successful brands that are either boutique or smaller groups, I think that’s the future. But I do want to say while the CBRE Industrious deal is definitely smart. If I’m a landlord, do I say I’m going to go to CBRE and get Industrious? Is that a competitive advantage for CBRE? My opinion, and I’m not saying this because there’s some competitive element here, but my opinion is CBRE could have bought Industrious before. So there’s no difference in what they were doing before and what they’re doing now from that perspective as a landlord. The difference is now CBRE is going to benefit if you choose them over someone else.
Chris Rising (26:55): I also think the conflicts are real. When you hire a leasing brokerage team, if they’re on three of your competitive buildings, that’s probably not a smart move because they have then four options to make their commission. And yeah, they say there’s Chinese walls or not. So if Industrious is in five buildings and I only own one of them, am I going to get that advantage? Does it dilute it? But I think the bigger landlords the Blackstone’s of the world, the Brookfield’s of the world, hey, this makes a lot of sense.
Chris Rising (27:27): But I think at the root of it though, what we’re talking about is that work has fundamentally changed. I can tell by the lack of gray and your beard and your hair we’re a little bit a different age, but I’m a Gen X, man, I grew up on a tare and I grew up with pong and I remember the day MTV started screening, but I was always into tech. But the fact is the day I started working as a young lawyer, I had a desktop on my computer with really no email, the law firm had some internal email. Everything was paper, everything was that. I was judged by the time I got into the office and was I one of those ones who was wanting to stay until 10, 11 o’clock at night. The work product was not as important as the presenteeism. I think your generation, I’m guessing you’re more millennial, got a little bit of that.
Caleb Parker (28:21): Millennial at heart.
Chris Rising (28:23): By the time he came into the workforce email was religion, things were not quite, certainly not in the cloud, but there was different forms of communication. Then the Gen Z-ers coming in have grown up on things like Snapchat and things like that. It’s a long-winded way to say is I question everybody when someone says I have to work and I need to work in an office or I have to work I need to work from home. What is your job? What do you do? I’m flummoxed, I have a tough time. I get what a lawyer does but they don’t need a law library. But I also know as a young lawyer I need mentorship. And that was wordsmith, that was a mechanic with words, you need someone to tell you, that’s pretty hard to do at home, it’s really hard to do it when everybody’s at home. What’s your take? What’s the future of work? What does a job mean? And how is space as a service or fixed long-term leases, how is it going to meet those demands? What are you seeing of what a job is today in white collar global economy?
Caleb Parker (29:32): Well, there’s a lot that we can talk about there and a lot of nuances. But first I’m going to say I played Atari in my childhood as well. I don’t think we’re that far off, and when I entered the workforce, we were still faxing. So I do know what a fax machine is even though I pretend not to sometimes. I think we’re seeing at a high level in macro level we’re seeing a culture shift. People want to make an impact on the world today and they want to do things that’s going to enable them to do that. You see more volunteerism going on than we’ve ever seen before because people want to do good. That’s not to say it is not all about people doing bad, but people want to do good. So if they have a choice, particularly in the knowledge based economy, in the knowledge based jobs, some might call a white collar in the past, but we’re becoming more of a technology-driven knowledge-based economy now. I don’t think that’s in anything new.
Caleb Parker (30:47): But the combination of that, people are wanting to align their work with doing good. So they want to know that people with the work they’re doing and the companies that they’re working for have missions that are doing good. So as a result the work-life balance line that we’ve had in the past, I’m going to go to the office at nine o’clock, be at my desk, log in, I’m going to go home at 5:00, PM and I’m going to do my life, that’s gone away or is going away as a culture shift. So for me personally, I’ll give you an example, I am on a podcast tonight at 7:00 PM. Yes, maybe this isn’t considered work, but this is work, right?
Chris Rising (31:32): This is work.
Caleb Parker (31:35): But I don’t mind because I’m doing something I’m passionate about. I think when we do things we’re passionate about, it’s not considered work. If we’re forced to do things we’re not passionate about, that’s considered work and it’s stressful. So there’s this culture shift of doing things that we’re passionate about. And if we are, then this whole blend between work and life, the line goes away, it becomes more of a blend. Now, if as an employee I’m willing to give my all anytime because I just want to do good and I believe in my mission of my company, then should my employer dictate when and where I do that? Should they not trust me that I’m going to go out and give my all because I’m passionate about what I do, if that alignment is there. So I think we’re seeing this culture shift.
Caleb Parker (32:25): And as we see the culture shift and the fact that we’re, going back to 2011, we have online communication tools, we can connect with people, if we can go to a physical place when we need to, why do we have to be chained to that desk all the time? So if we see all this happening and people can start choosing. Especially like last year, it’s proof we can stay productive. Now, granted not everybody can, some people are introverts some people are extroverts, some people have circumstances at home that make it distracting, some people love working from home. So the question though isn’t whether people can work from home or not, it’s whether they can be empowered to choose. I think if we move to this culture of empowering people, having trust and empowering and giving choice, then it will have major implications on commercial real estate in my opinion, and that’s the future of work. And the future of work will equal the future of commercial real estate.
Chris Rising (33:34): I’ve been reading some studies lately, Gensler has a new line, there’s a lot of them, everybody is talking about this clubhouse model. Interesting that Drew Hudson, I think is his name, from Dropbox said, “All of our office space will become clubhouses.” And part of me was like, “Isn’t that what they were anyway? But okay, you can use a new term.” But I hear you, I think for the first time in 100 years there is a trust going from the employer to the employee about getting work done that never existed. I think this pandemic has… I see people. I know just because like our company, you’re using a company computer, we know when you’re on, we know what you’re doing, we don’t really track or anything but we know. I can tell you the biggest thing I’ve seen is how hard some people work, their hours are just eight o’clock at night to 1:00 in the morning and they’re working hard, you can tell that. So I think it’s been a freedom.
Chris Rising (34:35): I do think that when we get outside of the pandemic there are things that are pretty glaring that people are missing and I’m not so sure they happened at seven in the morning when someone was there tired with a cup of coffee, I think they happened through the day. So I do really believe strongly that office has a role and will come back. I think it’s going to be a nightmare for office owners because saying that your office hours are nine to five and you’ve paid for after hours air before and after, that’s not going to fly. So there’s going to be some winners and losers from the ownership side.
Chris Rising (35:12): But I just go back to the idea that I think we have to really focus on defining what work is because it’s not the same for everybody. Someone who’s a software engineer working for Dropbox is a lot different than the person who’s a 24 year old accountant at a big firm trying to learn the business. It’s not going to be one size fits all, it’s a long-winded way on my end. And I’m interviewing you, so I need to be quiet.
Caleb Parker (35:40): No, it’s a great question to ask, what is work? And maybe we should be asking, should we call it work anymore? How do we get this alignment? Simon Sinek, I’m a big fan of his ever since his Golden Circle days and Starting With Why.
Chris Rising (35:57): I still pay for the [inaudible 00:35:59].
Caleb Parker (36:02): I like it with scrambled eggs on top. But Simon has this thing, he believes that people should be able to make a living doing what they’re passionate about. I’m paraphrasing and I’m not doing it justice, but could we be asking the questions, how do we align people’s passions with the work they do? And maybe we don’t call it work, maybe what kind of value do we provide it to the world? What good are we creating in the world? Then if we create, I don’t want to sound eutopic, but if we create this world where people are not going to a job just to get a paycheck, but they’re going because there’s more things to it, then yeah, I think the office changes. And yes, there is value in the office.
Caleb Parker (36:48): If somebody is working from 8:00 PM to 1:00 AM because that’s when they’re most productive, they should be able to do that. They should be able to do that from an office environment if they need it or their home office if that’s better or wherever. So is there going to be massive changes? Yes. I think office buildings need to be repurposed. We need to be thinking about what is going to enable people to do work better to create better? And what can we provide as the commercial real estate world that they can’t get from home or wherever they decide to work? Why would they come into an office if they can do work at home? I can do a podcast from home, why would I do a podcast in the office? I can do my contracts at home, why do I need to come into the office? Well, there’s certain things… Oh, and by the way, collaboration, yes, you can collaborate online.
Caleb Parker (37:42): Yesterday I was on a call with Jordan Anthony with about 150 other people around the world for two hours and we had this amazing collaboration. But there is a certain feeling you get with face-to-face, there is a reason we want to go out to dinner with our friends versus just having a Zoom chat with them. I think that translates into the work world. But we need to be asking the commercial real estate, what do we need to do, how do we repurpose our spaces to enable that?
Chris Rising (38:18): I think you’re right on. I wrote articles 10 years about being paperless and moving everything to cloud. I remember just as the iPhone came out in 2007 like, “Won’t this be great? That my office can work with my personal.” We have all of that now. I’m very proud that I can run my whole business out of this because I’m not doing spreadsheets anymore. But there’s a tremendous amount of guilt sometimes I feel because it was so beaten into me that work meant you go to the office, you stare at a screen, and you input stuff. I agree with everything you’ve said, I think there’s a big pushback against that. I’ll believe we’re there when government workers get to have that same kind of freedom.
Caleb Parker (39:05): Well, they’re working on it. Someone from the UK government has been on Anthony and George course too, so fingers crossed there’s hope. But also to your point though, look, great, great grandparents aren’t around to talk about this. But if they were, work to them meant going out in the field. [crosstalk 00:39:24]. We evolve.
Chris Rising (39:26): Drew talks a lot about that in his book. Once you go from not needing to grow your own food, the world changes dramatically. One of the things I haven’t picked up on yet though is the fact that I’m talking to you, you’re sitting in London. But I’d love for you to do a little bit, you’re a guy from Georgia Southern, you grew up in the South. Talk a little bit about how you grew up. And then you’ve traveled the world, you’ve had a lot of experiences, tell me a little about that, a little bit about who you are.
Caleb Parker (39:58): Well, I’m from Savannah, Georgia. Technically I’m from Pembroke, Georgia. I was born in Savannah, spent most of my adult life there, but was raised in Pembroke. Is about halfway between Georgia Southern and Savannah, so when I decided to pick a university to go to, it was the home team, Georgia Southern football was big in the ’80s, big in the ’90s. I walked on, it was my dream to play in NFL one day. So I was a walk on at Georgia Southern, was standing there on the first day looking at the receiver line and the DB line and the DB line was shorter. So I thought I had a better opportunity so I went there. But in high school I was a receiver, played both ways but receiving, anyway. So long story short, did Georgia Southern for a little bit, played football one year, and got in the hotel industry.
Caleb Parker (40:47): My first job was working for a holiday inn on Interstate 95 and was in hotels for quite a few years. Started my own concierge business, we made a last minute hotel and dinner reservations people coming into the city. Had a little newspaper, it was a trade publication for the hospitality industry. My whole first half of my career was in hospitality. And when I moved to DC is when I got introduced to this industry. It was funny, I’ve said this before. But when I was moving to DC, I put my resume on monster and put an address in DC. And the recruiter out of Dallas for Regis called me up and started asking me to come in for an interview, was talking to me a little bit and I was a bit ignorant at the time and said, “I’ve never heard of your industry, much less your company. Can I come see a location first to see if there’s something I want to do?” I kick myself now for saying that because obviously at the time they were the largest in the world, still are.
Caleb Parker (41:55): So yeah, I did that for a couple of years and just really fell in love with the entrepreneurs that we support because I’m an entrepreneur at heart. And the fact that the space as a service world supports so many entrepreneurs, I got to see how inflexible commercial real estate is and how not so nice it is to entrepreneurs just starting out. That’s what got me passionate about this, I just wanted to help create a better world for entrepreneurs.
Chris Rising (42:26): It’s another podcast to get into, but people forget, I was going back and forth with Anthony Slumbers recently, that the business of commercial real estate is really built on the backbone of Wall Street and big banks. The reason they’re long-term leases is because at the end of the day, you’re taking a cashflow that needs to have credit behind it and you’re syndicated, either through a loan or through a securitization. That’s why we have these long leases because Wall Street created it. The question is, how does that evolve? But it has to because you can’t ignore the fact about how dramatically the world has changed.
Chris Rising (43:07): We met on Twitter, we never would have seen each other even though we have a lot of connection points. My wife’s from Esher, Surrey and we get to London a lot, you played football this side, I played football. There are all these connection points, but it became real because of Twitter. You can’t tell me that’s not replicating itself with connections all across the globe, the fact that you can have this basic familiarity through Zoom. So when we do go meet and have a beer together, it’s not going to be fresh, it’s not like we’ve never met before. That’s happening as we’re doing this over and over again. So there’s no doubt in my mind two areas are going to change one, commercial real estate and two, government. The demands of the world are going to force it. I think what you’ve hit on over the last 10 years is most certainly a piece of the puzzle for commercial real estate.
Caleb Parker (43:58): Well, I think you’ve… I would love to have a longer chat about this another time. But I’ve traveled now to 47 countries, didn’t even have a passport until I was 28 years old. And going around to different countries, meeting people, you see all these different cultures. But underneath everything, we’re all the same. We might have a different belief in religion, we might have a different belief in certain things here and there but we’re all the same, we all want to live a good life and our families to be healthy. So I think we’re in a decade of friction right now and friction happens when there’s change, so change is happening. And I think 10 years from now, I think we’re moving in a direction of a borderless, as much as we’re seeing a lot of nationalists talk right now, I think we’re going to move to a borderless society in the future. That doesn’t mean country lines they’re going to go away, but the taxation aspects of it is going to be so much easier in the future for people to be nomads and travel around if they want to.
Chris Rising (45:03): I think what we look for getting out of life is so much different. I was talking with a friend the other day and he said, “If you think about it, if you were born in 1940 or ’45, right after the war, your whole goal was to come back and go to college if you hadn’t done that, get married, raise a family, have a job you can count on, and live a life that really was like, come home, eat, drink, start again tomorrow, start again tomorrow.” Technology today, that’s not what people want. Being healthy, having more interactions. We’re still stuck in a commercial real estate world in a lot of ways that was designed post-World War II, and you’re going to see it over and over.
Chris Rising (45:47): Here in California, people aren’t going to put up with the DMV the way the DMV is much longer, it’s got to change, something’s going to come in. So having said all that, imagine a post COVID world, the vaccine’s out there, what do you think? If you had to zero in on your business, what do you think is going to be the most dramatic shift over the next five years in a world that’s open because we’re safe from the pandemic?
Caleb Parker (46:12): Well, I think initially we’re going to see a shift, people going back into live events, office world because there’s a lot of pent up demand because of all the lockdowns that we’ve seen around the world. I think whether it’s one month or three months into that, all of a sudden a few people are going to wake up one day at five in the morning and say, “Why am I getting up so early to go into the office when I don’t have to? Why am I commuting an hour or two when I don’t have to? I think there’s going to be a pushback from that, and that’s when what we’re talking about today, about work from anywhere, is going to start happening. Then you’re going to see the flood gates open, I think is it Drawer who talks about it as a tsunami? I’m not sure.
Caleb Parker (46:57): But we’ll see a tsunami happened as lease events happen. Because the big companies, it’s going to give them the opportunity to see, “Well, who’s actually coming in? How often are they coming in? What are they coming in for? How do we need to repurpose our space? How do we need to rationalize?” And as this events happen, they’re going to contract their footprint and they’re going to shrink their footprint.
Caleb Parker (47:21): Does that mean they’re going to get rid of their offices completely, but they’re going to shrink their footprint, they’re going to repurpose it for all the collaboration stuff we talked about earlier, and then they’re going to give people the ability to choose where they work. But people are going to have to come into the office sometimes, but it’s going to be about why am I going to the office? I’m going to the office to collaborate because I can’t do it anywhere better than the office. To me the massive shift is going to happen then, and the biggest impact it’s going to have on commercial real estate is the vacant space that comes up because of that. Why is it going to be a massive impact? Well, because of valuations.
Chris Rising (48:01): That’s for sure. We have a system that can absorb that, it’s going to be very painful and a lot of resets. I do agree with you, I think any CFO is going to say, “The first thing I got to do is reduce my amount of space because that’s what everyone else is doing, so I’ll be encouraged to do that. But the one area that I’m curious about is FOMO, the fear of missing out, when you’re 24 and start to make something of yourself, how are you going to feel if one of your compatriots decide, I’ll drive that hour to get in just so I can have a time with a boss even if it’s just in case he or she is there? I do think that’s going to be powerful, I don’t know how it’s going to play itself out.
Caleb Parker (48:43): I think there will be absolutely some of that for sure and it’s going to be interesting to see how that plays out almost in a supply and demand way. But I would also say that going, back to the culture shift, if we’re moving to a culture of trust and transparency, then we’re moving to a results-driven culture as well. If we move to a results driven culture, it’s not about time in the office in front of your boss, it’s about your output and what you’re delivering and the value you’re creating.
Chris Rising (49:13): I think you’ve spoken like a true optimist and an entrepreneur like myself. I saw yesterday or two days ago that the CEO of Goldman said that this is just an aberration, don’t get used to it, we’re going back full time. So it’ll be interesting to see if that will affect them from getting talent or if they’re going to drive something where the fear of missing out brings people back. I think the most important thing about all this though is where you’re focused, there is no doubt that space as a service and flexibility is going to be important. I think it’s going to explode exactly from what you said, CFOs they’re going to guess and they’re going to guess to smaller, and then they’re not going to want to take on additional long-term commitment, it’s going to go right to flex space. So I like where you’re positioned.
Caleb Parker (50:06): Well, thank you, I do too. I’m betting on it. I think the Goldman thing will be interesting to see how it plays out. The best thing about the future is we’re creating it today. I’m bullish on flex, but I’m bullish on flex with service. So it’s not just about reducing lease links, it’s about delivering a service to make sure people are productive and successful in that space.
Chris Rising (50:36): Well, this has been a great conversation. I got to ask you as a former football player whose is living in London, have you become a Premier League fan?
Caleb Parker (50:45): I’m not a Premier League fan, I couldn’t claim that. I have gone to a few Arsenal games in the past.
Chris Rising (50:51): What about rugby?
Caleb Parker (50:52): I like watching rugby. I’m not a fan, I’m still an NFL, NCAA fan, I stay up every year to watch the Super Bowl, I’m on nfl.com every single day, so still football at heart.
Chris Rising (51:07): Are you a Falcons fan? You got to be I would imagine.
Caleb Parker (51:09): Yeah, I’m a Falcons fan. Unfortunately, fortunately I suppose, we just need to have Tom Brady. This is a big test. If Tom Brady can come to the Falcons and win a Super Bowl, then we know he’s the greatest.
Chris Rising (51:23): That’s terrific. Well, I too share that love affair with the NFL. Then I will tell you that I have started to watch Premier League because of my addiction to Netflix and Prime, where they do these great series where you get to know all the players. So I’ve gotten-
Caleb Parker (51:38): Who’s is your team then?
Chris Rising (51:39): What’s that?
Caleb Parker (51:40): Who’s your team?
Chris Rising (51:41): I would say the Spurs, though my wife would say it had to be Chelsea because that’s her favorite team.
Caleb Parker (51:46): Okay, fair enough. Well, who’s your NFL team then?
Chris Rising (51:49): Oh, I’m a Rams fan, man. I go back to the Rams. I remember going to the Colosseum in the ’70s and my dad would wear a sport coat, and that’s how it used to be like, and we’d go to the Rams. Then when the Raiders moved there, we’d go to a few Raider games, but that was a whole different thing. So I’m a Rams fan and I’m glad to see we got a great quarterback.
Caleb Parker (52:09): Yeah, go Dogs, man. I went to Georgia Southern but I’m a Dogs fan.
Chris Rising (52:13): All right. Well, I went to Duke and played for Spurrier, but my defensive coordinator was from Georgia, and we had lots of bulldog stories over the years.
Caleb Parker (52:23): We’ll have to have another chat and talk football.
Chris Rising (52:26): Love it. Caleb, I really appreciate, this has been a great conversation. I know people can follow you on Twitter, we’ll put all that in the notes. But maybe just quickly, what’s your Twitter handle?
Caleb Parker (52:36): It’s @Caleb_Parker on social media and obviously we have the podcast, the WorkBold Podcast.
Chris Rising (52:42): Yeah, the WorkBold Podcast, which I highly recommend, everyone will get on that as well.
Caleb Parker (52:48): Thank you very much.
Chris Rising (52:49): All right, thanks so much. And please remember to subscribe to The Real Market Podcast, you can do it on any of the podcast platforms, Apple, Spotify. And don’t forget to follow us on Twitter @ChrisRising. Thanks so much.