Alley, powered by Verizon: an innovation wolf in real-estate sheep’s clothing
Last week, I had a great conversation with Nick LiVigne from Verizon at the new Alley DC co-working space, which is powered by Verizon. Nick and his colleagues are spearheading a vision articulated by John Vazquez, SVP and global head of real estate for Verizon to transform the company’s real estate empire. It is from this unlikely place that I spot tendrils of digital transformation taking place.
Vasquez was recently quoted for an article in American Builders Quarterly in which he said this about his vision:
“My calling card has been transforming real estate operations for the betterment of business,” he says. “As opposed to keeping the lights on, my job has been strategically turning them on and off and finding new lights.” In corporate real estate, “finding new lights” can mean expanding your footprint, but it can also involve finding new uses for the property you already have.
Across the country, Verizon owns about 50 million sq. ft. of telco space at 3,600 properties. With the miniaturization of telecom equipment, Verizon has a dearth of excess commercial real estate space.
According to a recent Washington Post Article, “the shift has rendered more than 80 percent of the company’s real estate footprint obsolete, spurring a $2 billion sell-off in property.”
Welcome to Alley: A Curated Community for Creators
Verizon has partnered with Alley, a NYC-based company that is operating three of the Verizon spaces as co-working spaces. Alley runs and manages the NYC space as well as a space in Cambridge MA and in DC.
From the same Washington Post article,
“Verizon’s partner, Alley, is trying to position itself as a more exclusive option to established brands like WeWork, closely vetting potential tenants based on what they’ll bring to the community. Would-be members go through an extensive interview process that is not unlike applying for a new job or joining a fancy New York apartment building, and only about one out of 10 applicants are accepted.
Verizon has identified 150 Verizon-owned locations along the East Coast that could be converted into co-working spaces “if the market and community is there.”
The company has a request for proposals open for a co-working space in Singapore, suggesting it has global ambitions for the project.”
Hey Verizon, Why Co-Working?
Another article in the National Real Estate Investor talk about the financial implications of this move into co-working, the motivations and benefits.
Verizon is assuming a two- to two-and-a-half-year payback on the capital it’s investing in the co-working spaces. John Vazquez says the motive goes beyond profit, and views the co-working enterprise a business initiative that’s led by real estate, rather than a real estate initiative that’s chasing business.
“I think it’s about embracing the co-working model as an experience. What experience are you trying to cultivate? What experience do you want to see succeed?” — John Vasquez, SVP & Verizon Global Head of Real Estate
The co-working component offers Verizon a great way to monetize its real estate, as well as to generate brand visibility, create opportunities for community engagement and gain access to up-and-coming businesses, according to Vazquez. Many of the co-working tenants are start-ups, including some backed by investment arms Verizon Capital and Verizon Ventures.
Vasquez recent stated that: The co-working approach is “more profitable, quite honestly, than subleasing the space and just giving someone a tenant improvement allowance and collecting rent, and then the space is gone for 10 years and you really get nothing for it except the rent,” Vazquez says.
Partnerships and Utilization
What is apparent is a partnership strategy front and center. Operating an shared working space is hard. Verizon has brought together a number of partners to make this a reality. Alley provides support with programming, community building/curation, and operational support. Additional partners include real estate firms Jones Lang LaSalle and Cushman & Wakefield and professionals from Structure Tone, Tishman Construction, Gensler, Nelson Architects, Edwards & Zuck, and WB Engineering, among others, to leverage the best workplace thought leaders to keep Verizon at the forefront of office design.
Other parts of Verizon are using these spaces to support their innovation initiatives: R/GA runs a Verizon incubator / accelerator within the NYC Alley space called the Verizon Media Tech Venture Studio . Verizon’s Innovation Garage, a team of Verizon Intrapreneurs and their Open Innovation team are also co-located out of the same space. I’m appreciative of Verizon’s dogfooding. The utilization means that this is more than real-estate and Verizon knows it.
Verizon’s real-estate led workplace transformation is a great way to drive innovation within the organization. It literally creates the sandboxes in which to seed and promote diverse thinking. What is significant about this approach is that from a financial perspective, this initiative has a less than three year window in which to recoup a financial investment. Innovation initiatives often times lack the financial clarity in which to unlock enough resourcing and support to survive. The additional returns could be more powerful if more internal innovation initiatives align with the Alley-run spaces and the analog and digital communities which grow around the spaces. This type of initiative should be an HR/recruiter’s dream. The Alley spaces and their startup and enterprise inhabitants can be powerful human stories around the power of entrepreneurship, partnership and purpose-driven work — all themes that have resonance with the Millennial workforce. Verizon has a physical set of spaces that it can use to attract outside-in thinking and surface new voices and approaches through the use of programming and partnerships. The critical part on Verizon’s part will be to support the pathways for those new ideas and people as they emerge from the Alley spaces and through the interactions of the community.
It is the concept of ‘workplace as a destination’ which in and of itself acknowledges the future of work, the rise of the gig economy and the atomization of corporate functions. Getting jobs done these days requires a set of partners across the globe, connected by thin layers of technology, with trust and community established in person and virtually.
If GE the industrial company is on track to become a software and analytics company, perhaps Verizon is on track to be the leader in mixed use real estate, a thought leader in the future of work and an enabler of innovation for startups and the enterprise.
If you’re interested in checking out the Alley DC space, you should attend the humble team’s DC Startup Week session on ‘How to Tell Your Startup Story next Monday, September 11th.