Charlie Green - Co-CEO of The Office Group (TOG)

Posted on 31 January 2019 by Susan Freeman

Susan Freeman
Hi, I’m Susan Freeman, welcome back to our Propertyshe Podcast Series where I get to interview some of the key influences in the amazing world of real estate. One of trends has been the rise and rise of flexible workspace and today I am absolutely delighted to welcome Charlie Green, the Co-CEO of The Office Group, also known as TOG which he co-founded in 2003 with his partner, Olly Olsen. TOG were one of the pioneers of the shared workspace revolution in this country; when they launched in 2003, the global economy was just beginning to be radically reshaped by new technology and new ideas. Their aim was to re-configure the modern British workplace to bring it into line with a very fast-changing world. Their brand of social workspace was a great success and in 2010 Sir Lloyd Dorfman, the Founder of Travelex, funded a management buyout. Seven years later, Blackstone, the largest real estate private equity firm in the world, acquired a majority stake in The Office Group for £500 million. Today, TOG has almost 20,000 members, working across more than 40 buildings, mostly in London, and it has funding to grow the business.  Now, we get a chance to hear from Charlie Green about the exciting TOG journey to date and how he sees the workplace evolving.  

Charlie, thank you for joining me today. You trained as a surveyor, I believe. You worked in a property company before you started The Office Group. When you started the company in 2003, did you see yourself as a disruptor because, you know, the plan was to create a different type of work environment?

Charlie Green
I don’t think I saw myself as a disruptor because, and it’s a word that’s sort of used quite heavily today as we see lots of new entrants into various markets. For me disruption has more of a negative connotation so we didn’t see, and I started coming out with Olly Olsen and we very much had a shared vision of what it was that we wanted to create, and we did want a challenge. It was very important to us to be doing something very different to what was on offer in the market at the time and we both worked for a serviced office business, it was a property company that had a serviced office arm so we both worked on that, I was on the sort of the growth of that business on the acquisitions, Olly was on the revenue and operations side and we both looked at it and really it was a very corporate, very dry, very vanilla offer that was expensive, so by its very nature it was short-term because people did not want to stay and there was this sort of philosophy, and I think it was shared with some other operators, you know who were prevalent at the time and still around so maybe names are probably not appropriate, but the philosophy was, we’ve let an office to somebody for nine months, now that we have them, let’s make as much money as we can out of them because they are going to move out in nine months’ time. And Olly and I looked at it and we thought that’s a sort of really daft way to approach business. What if you created a product that was actually so good because you had really considered the design and you priced it right so that, actually, it was a value.  What if you did that, our philosophy was, we’ve let an office for nine months, what do we do to make someone stay and I think that attitude was a challenging attitude in the market at the time. And, you know, a lot of it was saying, you know, we’re in it for the long-term, we’re not about greed, we’re not trying to chase a quick buck, and could we create something that was standout from everybody else in terms of its execution, how it looked, how it felt and what that experience was. Yeah, I mean, it was really important to us to be different and not follow what other people were doing.  That was just a sort of a gut driver for the two of us and I think it is still very much what drives today, we still, we’ve obviously grown the business but we still want to be that challenger brand in the market.

Susan Freeman
Now it is interesting because if you think back to 2003, the concept of customer service just didn’t really exist in the real estate sector so if you were thinking about, you know, a customer, what might encourage them to stay, you were quite ahead of your time.  

Charlie Green
Well, I think we drew inspiration, I remember sort of going to, so the company I worked for had actually whilst it had a very dry serviced office brand it had the Malmaison Hotel chain as well which was really quite ahead of its time. And I remember going to one of the hotels and instead of ‘Do not disturb’ on the door, it had a notice which said ‘Leave me alone’ and I just thought that kind of said an awful lot about brand to me and experience and so we took inspiration from private members clubs, hotels, restaurants and really, we didn’t take any inspiration from the real estate world whatsoever. The only developer that we thought was incredible, and we still do, is Derwent because they were so driven by design and every building that they really consider what they were creating when they were, and they still do, when they are building their office spaces, that was kind of setting a tone for us in terms of what we wanted to achieve and how we approach every building and every building being different and being design led.  

Susan Freeman
So, actually, keeping the design concept going, making sure that every building is different, which in fact you do, must be quite challenging because you are thinking the whole time, you know, how can this building be different from the other one. How do you do that?  

Charlie Green
Yeah, it’s really challenging. I mean, it’s really hard and you have to, you know, it’s a creative process and we dive into it and, you know, in that design process Olly and I remain very, very involved in it. Look, your starting point is the bricks and mortar, so we consider ourselves to be a real estate business. We may own a chunk of our portfolio and we lease a chunk of our portfolio and we manage some in JV but, you know, the realities are that our approach to real estate is from a real estate background; Olly also comes from a real estate kind of family growing up and working in the industry and that I think allows us to understand what we are trying to deliver and, you know, real estate really means understanding, yeah of course location but it’s also understanding architecture and it’s understanding context and neighbourhoods and audiences and people, and I think that’s what makes up all of the elements that start to inform how we approach buildings, but it’s really, yeah it’s really hard, and when you are scaling up and growing, and we are growing now quicker than we have done before, not at a ridiculous pace, it’s controlled and it’s disciplined and it’s, that’s important for us but nevertheless, you know, you have to be fresh and we work with some brilliant architects, that’s really important to come up with a, kind of work with us on concept but, you know, it’s also part of the fun of it too, it’s a fun process to start with a blank sheet of paper every time and come up with something that we believe is going to work.  

Susan Freeman
I saw that TOG had recently designed an office chair, obviously very well designed, designed I think with an architect and I wondered whether this was the beginning of a TOG lifestyle or whether this is a one off?

Charlie Green
Yeah well I mean it is tempting, the chair came about because we couldn’t find a really good looking meeting chair that was stackable.  It was really frustrating. The chairs you do get are just pretty horrible to look at and not particularly comfortable but you can stack them fifteen high so we collaborated with Menu and NORR Architects, when you are manufacturing NORR Architects who are a Danish firm and brilliant, brilliant practice and we are working with them on one of our buildings and it was led by our head of interior design and we’ve come up with this chair that you know, it’s not ours, it’s not exclusively for us, it’s available for everyone to purchase but we are very proud of it. Are we going to go into that kind of you know, show house, show home, yeah that’s not on the radar for us. We are focussed on what we are doing.

Susan Freeman
Okay, okay so.

Charlie Green
It solved a problem for us but it’s not going to be… I don’t think it’s going to take us down…

Susan Freeman
Okay. So I shouldn’t wait for a TOG clothing line?

Charlie Green
No, no, there are TOG hats if you want one, I can get you one.

Susan Freeman
Ah okay. Okay that would be, that would be good. So, Blackstone bought into the business in 2017 and they are very large, they have $120 billion of assets under management globally, so with that fire power behind you presumably there are expansion plans, what’s on the horizon?

Charlie Green
Yeah, I think the decision to, so we started the business with private equity and then in 2010 we had a high net worth individual buy out the private equity, that’s Lloyd Dorfman, Sir Lloyd Dorman, and really it was Olly’s call and he said to Lloyd and I, Lloyd and me, that the market is changing, we all knew this, and new entrants are coming and well-funded operators are going to break into this market, we should be positioning ourselves to make sure that we are well set for the future. That is a defensive proposition and it’s a plan for growth as well. We were very lucky, you know, we went on the market, we went through a bid process and we ended up with Blackstone and they are just an extraordinary organisation to be a part of. They are very much aware that we are good at what we do and they leave us to get on with our business but they are incredibly supportive on many levels and I think having that backing and that capacity for growth puts us in a really strong position. The one thing about them is that, you know, Olly and I have always been very disciplined and focussed on making sure we get the right buildings. We won’t take a building just for the sake of growing and, you know, fortunately Blackstone share that approach. It would be a difficult relationship, I think, if they were forcing us to take buildings that we didn’t believe in and we didn’t believe would work and we’re not trying to chase, there are some very rapid growth from some of our competition, if you look at, you know, WeWork’s global expansion but also, you know, extraordinary growth in London, Spaces as well who I think are in 37 or 38 different countries, they opened a hundred buildings last year, that’s incredible but it’s not what we are after, we are not chasing that, we are doing our thing, we are trying to create our business and grow our business. But in the face of extreme competition in a sector that is, has, is enjoying rapid growth and one of the reasons it is enjoying growth is because the demand for what we do and others do is significantly growing and so there’s a natural meeting of supply and demand, as you examine the economics of that, and we need to be well-positioned to be able to grow in the way we want to and to be able to make sure that we are not, you know, there are some aggressive pricing by some of the competition out there and we can weather those storms and that’s absolutely fine. And I think it also, you know, depending on where we see this year and next year, the direction of kind of, or the impact of macro-political economic effects is going to be very interesting. You know, how do we position ourselves as a business to deal with those challenges? And I think with Blackstone behind us we are very fortunate, we are well set.   

Susan Freeman
You mention the supply and demand question. I read something a couple of days ago about China, apparently the flexible workspace market, that 40 companies have mysteriously disappeared over the last eight months and they seem to have oversupplied so I don’t know if you have looked at the Chinese market but it sounded a little bit strange.  

Charlie Green
We haven’t looked at it, fortunately then by the sounds of things. I think, you know, where our strengths and how we set up as a business and certainly we are continuing to grow in London, that’s a city that, you know, this city is incredible, you know, again we think that, you know, it has real longevity and real scope for growth and we are going to grow in other regions in the UK as well know. We have two outside of London but we are going to add to those, and then we are going to start to grow in a meaningful way in Europe. I think beyond that we probably, it’s sort of one step at a time. And we have, we have looked at New York thoroughly, we’ve researched a market and we, I think we have a good understanding of it, it’s an exceptional opportunity that market, the, really is 450 million square feet compared to something like 230 million square feet in London of office space and the flexible shared sector is a smaller percentage in New York than it is London so the opportunity for growth in New York is really significant. But it’s an expensive market to enter and I think you have to be very careful, you have to time these right. If we start taking leases, paying rents that are just too heavy that may actually, in a market that may soften, that’s going to be very challenging moving forward and we have to be careful, we don’t want to be the fools who’ve sort of entered the market at the wrong time. And we are also seeing newcomers coming to London and doing exactly that actually, taking, you know, what we believe to be buildings that they shouldn’t necessarily be taking. We might be wrong, and they have their reasons for taking them but, you know, at top rents, this is a hot market right now and in some ways, you know, our sector is propping the market in its own way because, you know, we are experiencing real competitive tension when we are bidding for buildings on a leasehold basis, so we don’t want to be taking the wrong buildings at the wrong rents, we’d rather wait, watch and see how these markets play out. But, you know, we have such knowledge of London and the UK that we are confident with that and Europe is geographically the obvious and most straight forward market to tackle.  
 
Susan Freeman
In addition to the new entrants, we now have the property rates are the landlords actually developing their own flexible workspace. What do you make of that? Do you see yourself partnering with property companies or will you each go your own way?

Charlie Green
So, I think the traditional real estate market has understood that there is a shift in how people are working, what people want from their real estate and that learning has been happening over the last couple of years, so then the big question for them is how do they address that. They can do a lease to us or WeWork or Spaces or others and that’s one route to access the market but it doesn’t really give them an access to the market it’s just a straightforward arm’s length lease. But the real lessons that I think are being learned from real estate is that it’s no longer a landlord’s market.  I think we used to have landlord and tenant markets, I’ve talked about this before and sort of depending on the cycle you would be in one or the other. I do think that’s changed, I do think that those cycles are sort of really gone for the moment and we are looking at a shift in power from the landlord who traditionally has held most of the power in the relationship between owner and occupier, it’s now moved to the occupier. Technology has empowered the occupiers in a way where they are the ones who are so much better informed than they have ever been before, their access to knowledge and their ability to understand that they can work in a different way means their choice is much greater than they have ever had before. Therefore, if you are a provider of real estate, and this is actually affecting kind of retailers, affecting residential as well, but, you know, in our sector, if you’re are providing office space and you are not delivering on the needs and wants of the occupier then you will not be able to fill your buildings.  And those are about flexibility for sure. It’s about design, definitely. It’s a layer of service and the space as a service is such an important message for owners to understand and the range of facilities and all of those good things that come with it. And in many ways the co-working sector, which I, when I talk about co-working I view it as that sort of, that real extreme of the market where you, and we have co-working in our portfolio but it represents a very small part of what we do, but it’s a very important part and it’s about, kind of that open-plan working that fosters collaboration, that allows people to work in that open environment. And in many ways, you know, what co-working has done is, has really been the clearest expression of the change in how everybody wants to work. That has to affect every owner of an office building and they have to understand that now, they have to engage with an occupier, they have to have a relationship, they can no longer hide behind a managing agent or a broker, they have to have visibility, they can’t be absent. They have to understand that those tenants, those occupiers, need a level of flexibility, that might be in lease length, but you are still going to see of course, ten/fifteen year terms to larger corporates, but how those larger corporates use space, they will be more efficient with how they use that space so they will take perhaps less core space and they will bolt on this stretch element to what they do when they will dip into flex, they will dip into co-working, they will use other people’s meeting and conferencing, and so it starts to become this really interesting, much more fluid offer that’s available to every single occupier and if every single occupier is wanting to work in this way, so it is degrees right, we know that there are still going to be those long leases and then you are going to get the start-ups and the scale-ups who are more fluid so it’s degrees but every, if every occupier is changing how they see their space needs and what they need from that space and the experience they get and how they use it as a tool to attract talent and how they can collaborate and meet other people, all these incredible things that do happen and are very real, then every owner of an office asset has to start to address them. Now, they will do it in different ways so, you will see that some will create their own brand and British Land obviously have Storey and Landsec have just this week, or last week or a few weeks ago depending on when this podcast goes out, but they’ve just launched Myo, and that’s a response to the market.  

Susan Freeman
I have to say at this point that not many people remember this but in 2003 Land Securities actually launched something called Landflex which was one of the early serviced offices offering so, you could say that they were ahead, it was about the same time you were starting The Office Group.  

Charlie Green
Yeah, well, it was and I remember it actually and, you know, I remember they had a building, I think it was in Ealing and actually they ended up letting it to, I could be wrong, but the Metropolitan Police.  And it didn’t, the thing about this sector is you have to commit to it, that’s a financial commitment, that’s a resource commitment, it’s an emotional commitment in many ways. And Landflex I think probably at the time was a bit more of an experiment and it was probably ahead of its time so it didn’t endure but then perhaps market wasn’t ready and if you think about, you know, what’s been the biggest change since then, it’s technology and that’s shaping occupier needs and speed with which occupiers need to work. So, I think you know, Landsec with Myo is a very interesting move by them to break into this market. You are going to see all of the brokers are going to have some kind of offering that gives them exposure to this kind of flexible market. You know, sometimes I am asked if we, I think the stats at the moment depending on what you read is, the flexible sector is 4, 5, 6% of the traditional market right now and people say well where do you think it’s going to be in five years’ time? And I find it a very difficult question to answer because I think the whole market is going to change, I don’t think there is going to be a clear line between flexible sector and traditional that you can draw at 25%, I just think the line is going to be completely blurred and so, you know, it’s really interesting for us as a business because we are seeing new entrants, more competition coming to this market; Landsec, other landlords will follow, you’ve Tishman Speyer are doing it, the Crown Estate, Grosvenor are talking about it, so really traditional landlords are saying okay we need to have exposure to this. So, that increases competition but that’s okay because if demand is increasing that’s not a bad thing. I think the really interesting changes you are going to see in 2019 and into 2020 will be that, actually, many of the landlords who don’t have the capacity or the resource to invest in this sector and set up their own brand will look to partner with an existing operator for participation in the upside and I think the really interesting change now, and you can feel it in the market, it’s very interesting, is that the operators are saying yes, we want to do that as a route for growth and the landlords are saying yes, we want to do that as a route to accessing this market. And the two are going to come together and I think, you know we, TOG as a business, are putting together, you know, a formal launch of a partnership offer where we hope to partner with landlords and occupiers and it think it’s really exciting. Yes, you know, we still want to continue to buy freeholds where we can. Yes, we will still take leases on the best buildings at the right rents but we think that, you know, mixing the portfolio and having an element of managed partnership agreements which are akin to hotel agreements, would be a really sensible platform for growth.  

Susan Freeman
And talking about blurred lines, Airbnb have just announced that they bought this Danish company which does business space booking, so everybody is now talking about, you know, the operators moving across platforms. Do you see The Office Group moving across to co-living or other sectors?

Charlie Green
I think co-living is really interesting. We have looked at it, we’ve done our homework on the sector. I think it’s in its infancy right now and nobody has quite cracked actually the model to make it work. The premise of it is kind of beautifully simple and mirrors very much our business model which is, you know, if people can, if it delivers value for them to take slightly less space provided that it’s value and provided that they have shared spaces which are generous and the idea that you then use space outside of your small bedsit is a logical business model provided that the generous space is attractive and beautiful and generous. I think, for me, where I haven’t quite seen it work yet is it feels a bit too much like student accommodation and therefore its target audience is quite narrow, I think it’s young professionals and, you know, I think there is a model there that can work that targets a bigger audience but I don’t think we are going to, we’ve looked at it a number of times in some of our buildings, do we do a couple of floors as a shared living concept but we always come back to sort of staying, sticking to our guns.  

Susan Freeman
No, it’s interesting, well things keep changing, I mean you’ve been in this sector for over twenty years, you must have seen so much change and the change seems to be exponential now, you know, from year to year it’s difficult to predict where things are going to go, what people are going to want.  
 
Charlie Green
And then you look at Google with Sidewalk Labs and you think, you know, what’s really driving that development and how are they going to approach that without any traditional developer knowledge and how is the tech, that tech marrying with the traditional real estate approach? It’s going to be fascinating and I think, you know, lots of learnings will come out of it from both sides but, you know, we are seeing the importance of technology for us as a business is truly significant and our greatest challenge I think is understanding where, what technology is right for us, where are we investing that really will deliver a solution to making life a bit easier and solving an issue for us as opposed to, well we need to invest in tech because everybody is investing in tech and we’ve got to jump on that bandwagon, it’s hard and it’s expensive and it changes so fast.  

Susan Freeman
And it’s interesting, I think you’ve got about 15,000 members now across your…?

Charlie Green
We are up to I think 17,500…

Susan Freeman
17,500?

Charlie Green
…if we don’t do any more buildings we’ll be at 25,000.
  
Susan Freeman
Okay. And you’ve mentioned the collaboration word a few times which is one of my favourite words and I think a big part of the TOG working experience is people networking, the collaboration, encouraging people to do business together. I mean, do you see that happen in your buildings?

Charlie Green
For us, you know, the community element to what we provide is a benefit to being in our buildings, we don’t say to people, come to us because of the community. We are creating a place for business, a place that, you know, is there, it’s your livelihood and you want to carry out your business and it’s important and, but we orchestrate the community element because we think it’s a really happy consequence of being in the building and the data that we are collecting now on how people are collaborating is fascinating, you know, to see that these companies are actually generating business just by being in the building. Now, you can’t be in, we’ll never say to you, come to one of our buildings because you will be able to generate a business, that’s not it. But you will win business, you will do business, you will carry out and you will find people around you to support and help your business but it’s not going to be the sole life blood of your business and I think that’s an important distinction.  I also think that, you know, where we have the co-working in the buildings, that is where it’s most visible and as you start to see larger companies let space from us and our competition, it gets to a tipping point where they have their own community and they don’t want to, they are there for different reasons and they are not there to take advantage of the collaboration opportunities. So, that’s a really interesting dynamic to see how that’s changing.  

Susan Freeman
So, if you were rolling back to 2003, you were in your twenties thinking about starting your own business, what was, what would your advice be now to somebody of that age, you know, qualified as a surveyor thinking about what aspect of real estate to go into?

Charlie Green
Well, you know, I always think that when we set up TOG we didn’t look for something that was brand new, we didn’t try and find something that nobody had ever done before. We looked at a model that worked and, you know, the Regis model was a successful model, people wanted the flexibility, they wanted short-term office space.  Now, it was inherently expensive and therefore that dictated that it was short-term but we just looked at that and said, well we can do it differently and we can do it better so that was our driver and I think that’s sound advice for somebody looking to go into business on their own and do their own thing, a lot of people are sort of driven by money and then look for the opportunity and the vehicle that’s going to make them that money, that didn’t happen with us and, you know, so I think if you can find the vehicle and in looking for that vehicle don’t try and reinvent the wheel, just take a wheel and just make it spin a bit more easily, that is, for me, you know, have the right focus, which is not money and then look to do just improve what already works.  

Susan Freeman
Has anybody been a role model? Is there anybody who sort of influenced the way that you’ve thought about how you go about running your business?

Charlie Green
Yeah, you know I had a great uncle who gave me a maxim once that sort of stayed with me which was ‘don’t be clever, be wise’. I had no idea what he meant for a really long time but it sort of stayed with me and then you realise that is about you don’t have to win the deal for the deal’s sake, you don’t have to get one up on somebody, you can actually be smarter about it and being smarter is about, I think you know, not being greedy and clever is being… that’s how I understood it. You know, that stayed with me and he was telling me that when he was 95 years old and still going into the office. You know, Olly is a mentor in many ways. It’s a partnership which is extraordinary and, you know, we are like brothers and it’s the complement of skills I think works very well, I think it’s a, this business is operationally very intensive and I think it needs both of these, our skill sets at the helm so, you know, I think we learn off each other tremendously. You know, and Lloyd was, and remains, you know, a strong mentor for us as well and guided us certainly in a really key period for the business.  

Susan Freeman
Brilliant. And if you, assuming you do get some time off, what, how do you spend your weekends when you are not working?

Charlie Green
Yeah, I mean, work is intense so, you know, it’s sort of a, if you are not actually at work, you are thinking about work. I do still like to box so I still do that but it is getting a bit harder and a bit more painful.  And my family are so young, I’ve got young kids still so they are 10 and 6 so that kind of takes up everything but, you know, passion is at work, it sort of drifts into your homelife so, you know, I love architecture and design and those are important things in my life.  

Susan Freeman
So, you go around looking at buildings…

Charlie Green
I take my kids to see all these buildings that they have no interest in whatsoever.  

Susan Freeman
Oh, I am sure they do. They do.  

Charlie Green
They will, they will.  

Susan Freeman
It’s been brilliant hearing from a successful real estate entrepreneur who has been instrumental in disrupting the way we view workspace in this country so look out for the next chapter of The Office Group’s journey. That’s it for now. In the meantime, make sure to check out our Propertyshe website at mishcon.com/propertyshe for all our interviews and programme notes. The podcasts are also available to download on your Apple podcast app and that’s the purple button on your iPhone. Do continue to let me have your feedback and reviews and most importantly your suggestions for future guests and of course you can also follow me on Twitter @Propertyshe for a regular commentary on real estate, prop tech and the world, with the occasional ponies thrown in for good luck.

Charlie is Co-CEO of The Office Group (TOG), which he founded in 2003 with Co-CEO Olly Olsen.

Charlie started his career in commercial agency, qualifying as a Chartered Surveyor at Colliers International, on the graduate rotation programme. He then left to join property company MWB Group Plc, working on office developments and their serviced office subsidiary.

In late 2003, Charlie and Olly had a shared vision to challenge the traditional serviced office market with a design led offering that addressed the changes that were emerging in how people were working.

Charlie is responsible for the growth and real estate side of the business, identifying and acquiring new buildings and leading the delivery of the schemes. Charlie and Olly continue to work closely together to ensure that the individuality and design, both form and function, remains paramount to the success of each building.

The culture, direction and strategy of the business is very much driven by the combination of both Olly and Charlie and their shared vision for TOG, the product and it’s ambitions to change the way we are all working.

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