The Office is Back!! But What Will It Be Like? Jason Lemkin & Justin Bedecarre of Raise.Work

Hey everyone, it's Saster. We are back with some good friends. Justin Baticore from the CEO of Raise and Jamie Catcher who runs their New York office to talk again about the office of the future. And I've known Justin since the very beginning of Saster. We used to have a great co working space. He found us the co working space. I invested in this company after he did. And Raise is very interesting. It is a hybrid technology and brokerage for commercial real estate. For some of the best. For some of the best. For the notion and many of the better top leaders. Why Combinator? Give me a few other great fun brands, Justin.

Throw a few in.

Oh my gosh. Envoy, Airtable.

Airtable. I've heard of that one. That's a good one. Like many of the best, most iconic tech companies.

You know Palantir.

Palantir, I've heard of that one. Have you especially. And what we're going to talk about is the new world. They have both pretty pre and post all of this use Raise to previously fine but now design and manage these hybrid offices. And now that we're coming to the end of this, at least the end of this version, we're all rethinking the office. And personally I even think this idea and we'll debate this now for a minute, I think the hybrid office even is a dead idea now we're all distributed teams going to the office, like in many cases going to the office. Even little team Saster. We went from one to two offices. Now we have SF and Palo Alto. More and more startups I talked to have radically changed to what a headquarters is, but actually have more offices and more needs to meet up in different fashions than they did before all of this. And you know Raise was on an incredible tear with the best tech names we had. We had a few hits when in 2020, but now are back stronger and stronger and expanding across the country. Right. And Jamie and Justin have worked together at least informally in the past and has now jo to run New York. So I want to use this for a couple things but to peer behind the scenes with different tech centers with New York, with San Francisco, maybe with Austin, Miami and others from these guys. And also they have data. Everyone on Twitter I think talks out of their rear on this. They talk about how beautiful the park is in San Francisco on the two nice days. They talk about crime. They talk about how great Miami is. They talk about how Miami is all dudes and retirees like I just can't. The Twitter is not helpful to this debate in my. Do you guys agree?

Yes.

Okay, so first let's slow down. Let's talk about geographies. The first one, because it's probably the only thing that just and I have slightly in good sense disagreed with over the last 24 months is Soma and I walk the Bay Area I think is great. I mean we have a little office in Palo Alto. You have one too. And it's so fun and dynamic and I think it's better than when I was running Echo Sign, Adobe Sign there.

But I remember that office that you guys were in.

It was cool. But it's tumbleweeds in soma. Slack just left, right? Salesforce may not go back. Is Soma going to come back? Is SOMA really going to come back for tech? What are you seeing?

So let's unpack that a little bit. Slack is coming back and Salesforce is coming back in a big way. They actually did something super interesting recently in Scotts Valley. They have that retreat center for a lot of their distributed team to go to in that same story. I think it was their head of people or our CMO had mentioned that most of their employees will be back to the office about three days a week. And so we definitely disagree on soma. Let me hit you.

But you have the data so I'm not saying I'm right. I just know what I see. I've never seen anything like soma.

Today is reality, right. Like the occupancy level in San Francisco is the lowest of any major city. But let me, let me throw some data at you. So yes, in, you know, we would all say that 2019 was the peak of the office market.

Couldn't find anything. Couldn't find anything.

Right.

It was impossible. Right.

You know, like every company was trying to lease everything.

Right.

It was like buying a used car today. It went over a lose. Used cars were going over list price for real, commercial real estate.

Right.

And, and in Soma as we define it, apples to apples to what I'm about to share. 8.2 million square feet of office was leased in 2020. That sunk down below 6 in 2021. It was 9.6 million square feet. A huge jump from the peak. And over the last 10 years has averaged around 10. So we're almost to the top average of some of the most, you know, active markets in one of the most important markets in the world. And that's just in soma. So.

Okay, so, so let me make sure I understand that there's obviously a lot of. There's Record vacancy because it's the lowest. It has the lowest occupancy of any major city in the US but the amount of new space that was leased by new tech, probably primarily tech, right?

Yep.

Primarily 2021 is running at as high a rate as it was in 2019 or approaching it.

It. Well over.

Well over.

Yeah. And so, but, but occupancy is still, you know, around 20 to 25%. And so I think that there's a lot of factors that go into that. Right. I mean San Francisco is a special snowflake in many ways but you know, it's had the most stringent mask policies that, that went away a couple days ago.

Yeah.

And you know we could tell you in the raise office, which is kind of near Jackson Square, you know, a really nice area. I mean finding building, managing office spaces is our life's work. And when mask policies were in place, like no one wanted to go in and spend 8 hours, 10 hours with a mask that went off and our office just exploded with energy and everyone rushed back. And so I think we're going to see that big tech, you know, that Apple, Salesforce, Facebook meta, you know, Slack, all of these companies are kind of targeting over the next couple months but by April they will all be back and the energy and the activity is going to just be night and day, you know, for Slack, you saw in the headline they gave up that big, you know, 200,000 square feet. Well, the story didn't say that like that was spillover space to their normal headquarters at 500 Howard which they are keeping. And they just got. Yeah. And so they have 500 hours.

That really pretty building they have. Right, right at the.

Yeah, yeah. And have redesigned it to make it, you know, community based and whatnot. And then they also in that corner, as you know, it's like Salesforce, you know, park and Salesforce Corner. Like yeah, they have so much space. So you know, the headlines are not really telling the whole story. You know Sales, Salesforce themselves put up one of their half their building at 3:50 Mission. Sephora took a huge chunk of that. So like all of this space is like kind of. There's so many opportunities to like take really amazing space, fully furnished out. But yeah, like the data tells a different story. Not on the occupancy. Like what you see is reality. Like there's not that many people around. Um, but that's why these next few months are going to be so big as we like enter the new phase of this and we kind of look at what Happened, you know, in the rearview mirror. Um, there's just going to be a lot of energy, there's not a lot of fear. Um, you can actually like really walk around and see each other's faces and emotions and energy and that makes a big difference.

Let me ask one related question and then, and then let's get, let's talk a little bit about other geographies and Jamie can help but yeah, sure, what you just said, Facebook, Salesforce, those are great. Those are iconic names but they're also my dad's startup, right? I mean, I don't mean that literally, but what, I don't know. Two things that are interesting. One is like during like the peak of all this, I think you closed a big lease for notion. I remember that right. When things were like the worst, they were right. But notion, which I think of as the most classic example of a company that could be truly remote least a massive super slick classic brick, probably brick and timber kind of thing we all dreamed about right from the movies. Is that happening though? And related to that are one thing that I'm not sure is happening. Certainly when I started investing is so many founders from the rest of the world coming to San Francisco because Salesforce and Facebook are here and that's enough to fill up the offices. But I don't know if the folks from Belgium and France and Mexico are going to come to San Francisco the way they used to.

I mean there, there's two very distinct issues to talk about there. So like immigration and attracting the world's best talent. I think that like, that. I think that if, if thinking about positive sum, like more places are going to attract, you know, international talent and I think Bay Area will still be one of them. But like, you know, I mentioned a lot of big tech, right? But let's look at like you know, like iconic, high growth, really revered brands like Figma took down a massive.

Figma is a great example. So Figma, hold on, let's just stop there because that's a great one because for every, for every company that leaves the Bay Area, there's a thousand unicorns, right? So if just enough unicorns stay in San Francisco, they could actually absorb all the real estate because we're only building so much, right? So like why does a Figma, Although Figma was. Figma is such a great company, it wasn't founded yesterday, right? It's probably 10 years old. But why, what was in Figma's mind? Why did they decide to lease a massive office in the middle of all midst of all of this.

Yeah. I mean because they know that connect, you know, the connectivity, like the importance of bringing people together. They publish publicly, like an amazing, you know, new kind of look on, on how we work, you know Chime. Right. Like high growth fintech company.

Yeah.

They had a huge lease, right? Huge. Right.

Over 200,000 square feet.

Yeah.

And like, and then you look at like the companies like Loom that are, or you know, one of our clients Brex that are creating these amazing cafe spaces that are like, you know, perks rather than like, you know, hubs that you have to go into. And so you know, Thumbtack is actually designing like a library. So they're going opposite. They're like you only do focus work here, you know, so it like a lot of companies, a lot of really amazing creative companies, a lot of unicorns are going to be experimenting. But what they do know is that it is just so important to create that connectivity whether it's every day, a few times a day, a few times a week or even a few times a year where like off sites or on sites become the new off sites.

So let's. I want to talk about New York, but you had a couple iconic brands there. I want to press in. Sorry Jamie.

We'll get there next is all good.

This is great but like Brex is a fun one. Enrique and Sam do a lot with Saster. Right. So when all of this hit, the co founders of Brex moved to Southern California. Right. And the sales team that Sam runs, which was the largest area, they're all distributed. Sam lives in Miami, he's coming to our Miami meetup shortly. But they're having a huge in person presence. So what does that like? I think that's maybe one of the more radical ones. More radical than Figma. Right. How are, what have you learned? How are they thinking about using this space when they went from overnight to massively in person to very distributed. Like what's they trying to get out of this?

So you know, like, you know, Hybrid actually is starting to kind of get a almost like feel like a negative word or something. It's just a spectrum of how people want to run their companies.

Yeah.

With Brax they're remote first kind of like Coinbase and others where like everything that it takes to run the company, how they communicate, everything is done digitally, right? Yes, you know, through, through all the different channels, whether it's Async, sync, whatever. And so the places that they're creating are to bring people together when they want to come have like a Very like, you know, collaborative, kind of just in person, fun experience. They're not there to kind of do heads down work similar to Dropbox that like you only go into these spaces to like meet up with other people or clients or whatever.

Yep.

So there's like certain people that like want that often but like they see it as when we have a higher concentration, a higher density of employees, like we want to be able to bring together and like really kind of fun, you know, collaborative spaces. But we, we don't want there to be this kind of feeling of like, you know, first and second class citizens depending on like whether you're in office or remote.

And so that's a big topic maybe we can get to in a minute. The citizen thing is something we've all had to figure out now, right?

Totally. So yeah, So I think it's like they're all. We're going to experiment like crazy over the next few years, which is going to be unbelievably fascinating and exciting and then you know, learning like what, you know, companies like Airtable or Figma or Loom, which are also doing those kind of creative like, you know, hubs, but like they're not designed to just kind of go heads down work and you know, there's not going to be a one size fits all. But I think we're going to learn such amazing things coming out of this, you know, but from the headlines to like the reality, you know, even companies as big as, you know, Google and Meta are expecting the vast majority of their employees to come at least a few days a week.

Yep.

Okay, one last question on Soma and then Jimmy, I do want to talk about New York and maybe if we can, Atlanta, Miami, Austin, because they all have different experiences. Right. But okay, a mistake we all make. And Justin, I know you're biased, but be unbiased. Speak from data. Let's say I'm a CEO and I've raised a couple million, 10 million, 100 million, whatever dollars. And I'm not, I want, I want an office in San Francisco, but I'm in no rush. Okay. Like I'm at home. When, when is it all going to be go? Because it always happens like capacity. You think there's all this capacity and then you cross a line and there's nothing.

Right.

This is both residential, commercial, used cars. Like we could pick a lot of assets that have this. The elasticity is very strange, isn't it? And it hits you like whiplash. Right. Realistically, when would you say you should be getting an office before everyone figures out they want an office. Don't tell me it's too late because that doesn't help. When is that date? When you're going to be. When you sat on the sidelines too.

Long, as objectively as possible over. Over the next three months. And I say that because like, you know, it's a little bit before a lot of other. A lot of the big tech and big offices are going to be repopulated. There's a good amount of subleases and you have to bet that like, you know, you can't get away with like, you know, locking things down again. And so like this is like the most confidence you can have about things staying open and us moving on. But there's still good opportunities. People are going to start getting more and more FOMO as like, you know, walk around the streets and there's like, you know, the shops and the sandwich spots are, the coffee shops are open. I'm really, really bullish that, you know, it's going to get really exciting towards the second half of this year.

Yeah.

So leave something by this, by the summer at the latest. If you want a cool spot and have choices in soma. Right. Get it done by the summer. Right.

Getting them. And that means you're starting now, right? In essence, you have to.

Yeah, I know, I know. But if you got too much people listening or watching that they want to get an office. I just, I want to know that people, if they start by the summer, they take a little bit of time to make up their mind and they get going before the summer that they're getting ahead. They're still getting ahead enough that they don't have to panic. Right?

Yeah.

And like, you know, parents are settled in, schools are opening back up. So like, it's just a really good time that like people are like kind of locked in on where they want to be for the next year.

So Jamie, tell us about New York. I remember watching Million Dollar Listing and this started happening and you could get like a beautiful 11 room penthouse in the meatpacking district for half the price of today. Right. You'd walk around. What's it called north of the meatpacking? What's that area called?

You go in like West Village?

No, no, north of it. What's the whole new area? The whole new area where the office.

Hudson Yards.

Yeah, Hudson Yards was like cricket. It was like soma for a while. Right. It was like soma there. But now everything's back, folks went home and let's talk about Atlanta, Austin and Miami. Where folks actually kept working in the office. But what's. Is it true? What's the tech scene like? Who. And you work a lot with tech, tech focused media. It sounds like they're back at the office with a passion, right?

They are I think for sure. For sure. I think the, the, the, the level of activity I know you want to talk about it's called the household names but in reality we have to because they're the ones that drive growth and they're the ones that the mid markets then follow. So when you see the big tech companies further committing to New York as over this period of time for the past 2020 plus months and then in addition they are continuing to grow in this respective market has a full on trickle down effect to the mid market growth companies. So you, so I like the Roku's TikTok. All these companies have kind of established themselves and are further growing in this market and then you know, taking it one step further then you go to the next level level of growth that they're you know planning that, that you know, 300 to 500 seats in full growth mode.

Right.

So in New York it's such a unique market. I'm biased because this is the market I live in. Breathe. And I'll put this market against many other markets. But the diversity of the market, it helps us because of the industry specific from the legal sector to the financial sector and the tech sector, all they support one another. Right. So you're seeing this continued growth and.

What'S the data saying? Like what if I again if I'm on the side, if I've been on the sidelines during all this. Right. What does the data say?

Well, there's good things for you to understand. Right? Right. Like the. Unlike when we try to. The way you have to look at the market is that new leases. Okay. In this market period of time over a hundred thousand feet which is of significant size.

Yeah, I know. Yeah.

These, these are, you know we're looking at like almost like 4 to 5x as many transactions closed in this period of time since last year.

Okay, let's slow down for folks that haven't read in an office yet. So a hundred thousand is what I call super unicorn phase or big company. Right. You, you're not, you don't need a. Even if you raise it a billion, you may not have enough employees to need a hundred thousand square feet. Right. You're pre ipo. You're probably pre ipo. You're probably pre IPO at that point. Right.

It's an important factor because you know, as these companies are established they are looking past the forest. Right. They're looking at opportunity being opportunistic and also being, and being in a. It's, you know, the drive is this flight to quality, Jason, right now like the better, better opportunities, better assets are being leased faster at a very high rent and you know, so all of a sudden that space becomes taken off the market pretty quickly.

Yeah.

And granted, you know, there's obviously product that is being built and being uncovered, but the market that when you start to look at core concentration of tech, which we define as Midtown south, right. Let's call it 34th Street, Canal, river to River is the core market. SoHo, Chelsea, Union Square, Flatiron. In that market, from over year to year there's 500, it's called 500,000 square feet of leases which is about, it's up 65%, approximately 65% from a year ago. And that's broken out. When you break that out. Those are, those are 5, 10, 15, 20,000 square foot tenants. So those are tenants that are from 20 people to 150 people.

Well that was the offices most of us want. Right. The 5-20K square feet. Right. That's what we want.

Right. So, so that market, right is, is still the most competitive market for, for, for, for called high growth tech. As you start to establish yourself in that market, it just gets more difficult to find opportunities given the lack of product. So you then have to kind of push boundaries. Hudson Yards downtown, you kind of have to kind of spread your wings a little bit.

But like every other startup's doing. But yes, I hear it. Okay, so let me just for folks that listening and watching, let's say I want 5 to 10,000 square feet. Like as you're growing, Series A if you can afford it, that's what you want. How hard is it today to get to find a, for you to find a couple spaces I might like is it. How hard is it on a scale.

Of 1 to 10, it's you still, there's, there's still plenty of space.

There is plenty. There is plenty of inventory.

Okay.

And when will, when will the answer be like pulling out my hair type like 2019. What will be there in the summer, in the fall?

When will we be there? Yeah, let's go summer, fall. I'll follow Justin on that. Let's take the same, same path. So I think what we're going to see is once this, once the schools get, you know, once the turn for the schools happens Again, you start to sell that, you start to see that acceleration happen because people know where they're going to be in September.

So Jamie brought up a good point. So, you know, a lot of the last two years have been big tech doing more leasing in a period of time than they have ever in history. Our data shows 18.4 million square feet of leases by big tech, Amazon, you know, Facebook, Google, Microsoft, Microsoft, etc. That's 312 football fields of office in the US for office. And it's because they can look two, three, four years beyond. And that's why, you know, a lot of the folks in the Sasser community, you know, some are in that category, but a lot of them are like, okay, well I, I can't look, you know, two years, I can't lease a space two years down the line. You know, like that, that doesn't make any sense. And that's why we're saying that like over the next kind of six to nine months are going to be really critical, you know, because the world is opening up. But there's still a lot of good opportunities for really amazing spaces, you know, you know, raises 100 people, right? We have 7,000 square feet in San Francisco and it's, you know, gorgeous space, ground level on a park that we got for a great deal. Um, there's, there's definitely a good amount of those and still built out and like you don't have to invest a ton in the space. Um, but that's what's going to be accelerated now that we're like through this because you know, CEOs and you know, people building companies can see three, six months in advance.

And I think to touch upon, I know we talked about before like the distributed workforce where I think you mentioned like you starting to see people spread out like where they're working and you know, in different parts of the country out of that. That's called 18 million square feet. 15% is in New York. So it's still a big concentration of stat that is not going away. And there's more. As we're seeing more of these high growth tech companies, we're seeing firsthand, fully committing now and looking at this opportunity as maybe these are, this is where we want to bring the talent because we're, we're, we're, we need to start mentorships. We need to start like building a company together. And that's why you start to see this significant growth.

It sounds like maybe one thing on Twitter that may be actually real is that folks in New York tech and media may be more aggressive in getting back faster than in the Bay Area.

Right. And it's. Yeah, I think you're right. And I think. Sorry, Jessica.

I mean, almost by twofold. Right. I mean, like, Jamie, would you say kind of around 60% occupancy is like pre, pre, you know, pandemic. And you know, we just heard the CEO of Google talk about their over 50% capacity and they're.

I did not know that. Wow.

And so, you know, you are seeing that and I think that like, again, I do think that the Bay Area is just slower. It's not like not going to happen. And so like New York and then, you know, you were mentioning like other markets around the country that had less mandates over time or got rid of them sooner.

Yeah. Atlanta, Miami, stuff like that. What are you seeing in Atlanta, Miami, Austin? Like, what's you seeing there?

Like huge growth. You know, Facebook just did the biggest office lease in history in Austin. It like, you know, residential numbers are crazy. The growth of, of of rental rates in Miami is insane. And they're, you know, trying to build buildings, you know, as fast as possible. You know, I'll be spending some time there soon as well. Hopefully I can make your event, but you know, like the office. So we were looking at studies from companies that badge, you know, companies so like that they like, you know, you.

Have the real data.

They have the real data. So on average about 30%, 33% across the country are, are. Are back in regularly according to like, you know, the badge data. But, but definitely in kind of like, you know, southern states. It's. It's much higher. Right. It brings up, brings up the average and you know, like places like Houston I think is, is. Is across or you know, almost to 50%. And so that's where the fascinating data is. Is, you know, where, where the pandemic has kind of been over and people are. There's been no restrictions. Like, you know, you do see folks that like, want to get back.

Yeah. Just to give you. Just to kind of level set that. Right. So we're in the, we're in the single digits in New York, right. Through single duties of occupancy at the.

Peak or nadir, however we look at it. Yeah. Single dates.

Yeah. Right. And now. And as Justin said, you know, at what's called peak of occupancy, it was like 60 or so. Right. And now if New York is hovering on 30, that's 50% back.

Yeah, that's a good way to. Let's wrap this point up, if New York's 50% back. Right. For folks trying to get their arms around it, that's a really great way to see it.

Right.

That's. And accelerating. Right. So it took me. That was my thesis. It took me a while to figure this out. We were trying to figure out what to do with our little SF office, which we've been into four times in the last two years. But then I realized it's not New York, but like, we just should just keep it because in six months we won't be able to find it. There's just.

That's right.

We just won't. We're not paying much for it. It's so pretty, it's built.

I love that office.

And it's like, you know, we don't use it, but like one of our guys is there today. It's like we'll never, like if we'll never go back and it will ever will never go back to SF if we let it go. But that's a good number. We're halfway back and accelerating. So that kind of ties to find your office in six months. If you want to do it in a low drama way.

That's what we're saying. The data supports it.

The data supports it, I think. And we saw it. You kind of saw it when you're following the residential side of the market of the activity level and pricing was changing in favor of the owner or the landlord quickly. Yep. So once you start to see people coming back and wanting to be back to live in the city, that then kind of, you know, start to move the needle on occupancy.

So let me just hit two more things before we run out of time. One, one's, One's a little bit nerdy. But back in the day when I was briefly a VP at Adobe, Adobe was the last tech company to go from offices to shared workspaces. Right. And I moved in there and I'm like, offices, like, they're so quiet.

They suck.

It's just such an old company. Then I realized, man, it's great for. It was a mistake. And I was a VP or the most junior svp and I sat with the finance team. They said the reason we're doing this is we can increase density. 40%.

That's right.

Okay. That had nothing to do.

It was a cost issue.

40%. They could jam more into the two towers at Adobe as Adobe. So related question. How does load work on spaces? How many square feet do I need for how many employees that are there? How Many are we jamming? Are we going to jam even more people into our office? Is it less? How does this load and head count per square foot math work in this new world? Because I don't know what the formula is anymore.

So. Oh man, a lot to unpack here. So what's fascinating, the U.S. bureau of Labor Statistics just, just published some really incredible numbers. And you know, Harvard Business Review, Business Insider, Bloomberg all covered it. Only 5.5% of businesses have reduced their, their square feet relative to how many employees they have in the country. And there's a lot of reasons for that. But what we're seeing is that like, and by the way, love it or hate it, the vast majority of companies are going hybrid. Right. Like, you know, we did a study of the top 160 YC most valuable YC companies published last year. 81% of them are going hybrid in some form or fashion.

But let's be clear that. And I think some of this is sad. Just like offices were sad. That means you're not going to get a dedicated desk.

Okay. That's not true.

To me, that's the pro. That's the one. As an old timer, I'm not willing to go to non dedicated.

Trust me.

We have that plummet in productivity to do a hoteling. Right.

We definitely go back and forth on this at raise too. And sometimes it just kind of happens that way that you kind of just go to the same one every day.

Well, the finance folks are going to tell you you'll save a lot of money hoteling. Right. And with hot desks. Right, right.

So what, what, what a lot of our clients are doing is like basically you ha. Like every employee has to kind of put a stake in the ground for six months or nine months or 12 months sometimes and say like I'm in office, which means three or more days a week.

Yep.

Or hybrid flex. And then like you get a hot desk and then remote first means that like, you know, you, you can pop in and out when you want. But like, you know, and there's some really cool tools. Like one of our clients, Envoy, does a lot of this stuff. But like, and so that's how a lot of companies are doing really depends on how often you're going to be in there.

60% more time you get a dedicated desk. This is becoming a pseudo standard, right?

Yeah.

Right. And that makes sense. That way you can plan around it. Right. That doesn't mean you're going to cram more poor, poor employees into the same amount of space.

So we're not seeing a drop. We're not square feet per person. It's still, I think, what, 200 in New York, 150 square feet in San Francisco. It varies market to market, but we're not seeing a huge drop. And like, I think, you know, like, a lot of people ask us, like, are we actually going to be able to do better work or, you know, in hybrid offices. Right. Well, like, I would argue that hybrid offices are maybe a move into being able to do our best work because, you know, they're going to have dedicated, quiet times. They're going to have, like, communal space that are like, separate. They're going to be designed that way. Like, you know, some folks are just going to have you do focus, work outside of the office, and then come in for like, you know, the serendipity and the fun. And so I think that there's going to be an amazing improvements to design to like, kind of really figure out that balance. But that has been a surprising thing. I, like, I think we did something early in the, in the pandemic and I had predicted that, like, it was actually going to be a little bit more per square foot, per person, because it just takes a lot to.

I thought the same.

Yeah, you might need, you might, you might need more office space to handle the ebb and flow and flotsam and jetsam, the collaboration.

Per person, Right?

Yeah, per person.

I think that we're also going to see, you know, and I think you alluded to this, like, small, smaller concentration, but like, a really interesting result of all this is that, like, you know, companies are going to have more offices, not less.

Well, that was the penultimate point I wanted to put out is the rise of what we used to call satellite offices, but I don't even know if that's the right term anymore. Right.

Yeah, sure.

Hubs.

Satellite offices.

Hubs, right.

Everyone has groups of employees in multiple places now that we didn't used to have. Right.

I mean, you know, one of our, one of our clients, Mercury, which is like a really, really successful, you know, fintech company, and they published this so I can share it. Like, you know, around 100 employees. They had six off four, you know, five or six offices. And that would have never happened earlier. Like, you know, we have six offices. I mean, we're a little bit different as, you know, but like, smaller companies are having more offices sooner because, you know, they can have four or five folks together and like, you know, they want to spend some time together and, and like, you know, we're doing A lot of really cool stuff around our products to help with that.

And I think there's two, two layers. I think our clients are realizing that, you know, in terms of the war for talent, they have to accommodate this. Right. The talent is now they have an opportunity to take talent from any parts of the world or any parts of the country. So you're starting to create that as the, you know, they want to, you know, have that ability to retain that, that talent. The second thing, we're literally just on the phone with a high growth fintech company this week and we start to talk about workplace and understanding what their vision is. And they have some significant group, several hundred employees of growth in the next 24 months. And the head of, the head of workplace said I need to a dedicated seat per employee. Okay. And that, that, that has. Everyone has a physical space if they're not there, maybe they're there, maybe they're there four days a week, maybe they're there three days a week.

Right. But they're like me, they believe. So just to finish that point up does that and then I want to hit one last thing and then we'll break. But my intuition once we at the beginning of all this was startups would take more space as hybrid companies because if you kept your hq, you would need more offices to handle more of your team and that actually not only space, but cost would go up. Right? Because even no matter what happens, three times the offices cost more we're paid. Even our little team which doesn't get. I'm paying twice in rent what I did before all of this. So as founders, but there's a handful of startups I work with that pay no rent now. Right. But on average do you think this is going to drive costs up? Because we need more spaces and there's not less effective density in our headquarters.

It's hard to tell. I mean so many things are inflated in pricing and things like that. Construction costs, furniture, everything's taking longer, everything's more expensive. So, so like that stuff will level out. And then I think that like the other thing that we've seen is that if the strategy was just take as much space as possible concentrated in one place, like companies have been really effective at like subleasing, you know, floors to other companies. And so, you know, like Brian Armstrong had a great post. The CEO of Coinbase, he's like, I want, you know, one floor in 10 cities rather than 10 floors in one city. Right.

And so we want that. I think it costs more than 10x doesn't cost a little bit more to maintain 10 offices. I think it might cost 13x or 14x to achieve that vision. That's my guess.

It depends. I don't think it's that much because, you know, office space, the cost of office space in San Francisco and New York are so great and so meaningfully low.

But there's soft costs, right?

There's soft costs. You know, there's, there's people, there's, you know, it's, it's one of the things that I was most excited to kind of build through and I don't want to, you know, make this an advertisement raise, but like, like we bet on like the complexity. It's just more complex to manage 10 leases than it is more complex.

That's part of your software solution. But it. The full. I think the fully burdened cost of 10 offices is more than one. Okay. The complex. I'm not saying your lease costs are.

But you add.

It's complicated.

Right?

It's complicated.

Agree.

And you guys are helping to solve it. Okay, last, very last question related to that just for some fun on Raise as a startup. Okay. And Justin, you're a second time founder. You co founded 42 Floors before this. Which old timers listening to this may remember as an initial play trying to combine technology with brokerages. Right.

It was like Zillow for commercial real estate.

Yeah. And you own the brokerage side which did really well. The technology side competed with the brokerage. It was kind of a mess in the end. But you. So and Raise was kind of like a redo of that but, but be a lot. Align. Align with brokers rather than compete with them. Okay. But now since then Open door has gone ipo. The world's changing. What I don't think in commercial real estate we will get beyond brokers because I don't, I don't think Airbnb works for 100,000 square feet.

Right.

But, but the world will change. So where is it like where is this going? Commercial real estate. You are one of the vanguards in making it easier, in presenting stuff, in managing offices, in making the process less. A process where I pulled out my hair as a founder, less frictionful. But what's the next level for technology here for founders and tech office space? Where does it go from here? Will there be. I don't think there'll be an open door. But is there an open door or what's going to happen?

I mean you could argue that the closest comparison to open door, um, you know, they're buying and Selling of homes. Right. But like on the leasing side we work. Right. Like we were kind of provides flexibility one click, you know, but niche.

But it's niche. Right, but yeah, yeah, yeah, it's a good point.

Yeah.

It's not as big as perhaps it was destined to be in 2019 but like they right size and like they provide flexibility and even liquidity, you know, like you're not having to do long term leases. And three out of the six markets we start with a wework and sometimes still in it sometimes. But you know, and even with all the open doors and everything, residential brokerages have withstood the test of time. You know, the vast majority of transactions happen happen with brokers, you know, on the residential side.

Yes, but it's always hard to tell the beginning of the curve. Right, right. So my question is what happens to open door type companies in 2027, not today? Because it's hard to see the slope of the curve. Right?

Yeah. I mean I think commercial is important in some very different way. In very important ways. Right. The deals are bigger and more complex. Yeah, exactly. Go ahead Jamie.

Yeah, I was going to say, I mean the levels of peer or individual we are dealing with in this type of transaction are CFOs, COOs, founders, sophisticated, you know, group of individuals that are driving that process. So the human interaction and being able to like look across the table or build that bond you can't replace. So agree.

But people are going to look, are going to try more. Kids at Y Combinator are going to look at brokerage fees and say look, if I can apply technology to that like, like, like a Brex does. Right. And other things so I can buy some technology to that and take a, and automate just even a half of that away. Right. I could build this. Why you guys are thinking about this too as startup, right?

I mean it's in your head.

I'm just asking five years from now, can someone grab some of these brokerage fees and flip them into software or is it not possible? Right. How much can you do it raise?

We think about it very similar, right. Like we're taking a lot of processes that like, you know, have been done the same way for decades and you know, provide a really strong level of automation and then now we get to build things that could not be done without the platform that it powers. There are a lot of things. What's an example of something you can.

Do now you couldn't do before with raise or otherwise? What's an example of something you can do for commercial Office space.

I mean, one example that we talked about, running your entire real estate portfolio from end to end on a platform.

Radically simplifying multi office management. Totally.

Like you're searching for different offices.

Radically simplifying. Simplifying it. Right.

All of your leases, you're collaborating with all of your different teams and vendors. It's really amazing. But like what, like I was saying, I think that because of the complexity and the size of deals and also we're talking about leasing. Right. And so, you know, there's just a lot of moving parts with leasing as opposed to like, you know, open door with buying and selling. It's like on either side. And you know, with broker fees, look like we never say it doesn't cost the company anything, but landlords pay the fees across the entire United States and like it's a rounding error for what they get and rent and the value that they provide. So I think that, I think that in commercial real estate things are uniquely suited for the best brokers. And I think that the innovation is going to happen around how the work is done. How the work exactly.

The transparency.

You know, and so that's the big bet we're making and it's going out pretty well.

Okay, since we're out of time, let me just summarize a couple of things. In markets like New York, we're already 50% back. We mean in Miami, it's off the charts. Other places. So if, certainly if you're in New York or north and you've. And you've not sure you want to go, but you think you might want to get an office again, get it now, like because we're already, we're 50% and worse, we're trending upwards. San Francisco, you still got a little time, but there's more going on than you think. We're leasing more space in 2021 than 2019. There's capacity and the offices are quiet. But get that office done by the.

Summer if you want.

And there's more technology here. Look at things like Raise and others to help you manage multiple offices. Because we're all figuring out this hybrid thing together now, right?

Awesome. Yeah.

If we want to learn more, we go to raise.com is that where we should go?

Raise.work raise.org raise.work right.

Raise.org r a I s e raise.work w o r K. Does that run on the blockchain? The.orgTLD it's just a regular. It's just a regular old URL.

We're bits and atoms, but we're not on the blockchain.

Raise that eth I will look at. But, Jamie, congrats on joining to run New York. Justin, thanks for the time.

Thank you. Appreciate it.

We'll use you guys. We'll check in every six months or so to check the barometer of where the future of work is going.

All right. Jason, always a pleasure, man.