At telecommunications giant Verizon, massive buildings that used to be filled with bulky computers, copper cables and other gear are sitting vacant, as advances in fiber-optics and computers cut down on the need for equipment space. The shift has rendered more than 80 percent of the company’s real estate footprint obsolete, spurring a $2 billion sell-off in property.
Then someone in Verizon’s real estate department happened to take notice of the recent boom in co-working spaces, in which start-ups, freelancers and some larger companies pay to co-locate together in castoff office space or other underused buildings.
The telephone company saw a connection.
The result is “Alley, powered by Verizon,” a co-working space slated to open on June 29 at 2055 L St. NW. The company hired local artists to bring a sense of hipness to rooms once filled with telecommunications equipment and even kept a retro feel by preserving a room full of ancient mainframe computers. Verizon is collaborating with Alley, a New York co-working space operator to run the space and share in the revenue.
More than a real estate deal, Verizon executives hope to benefit from a different kind of networking. “To us, the real value is what we get by bringing entrepreneurs into the building and having them meet our folks,” said John Vazquez, senior vice president and head of global real estate at Verizon. “We realize that things will be invented outside of Verizon and we want to be a part of that.”
Vazquez says his team 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.
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.
“We do it to protect the integrity of the community,” said Alley founder Jason Saltzman. “If you don’t want to be collaborative with the person next to you then this is probably not the place for you.”
Saltzman calls it a “curated community” of professionals, who enjoy the amenities of a large company with the freewheeling vibe of a tech start-up.
And it’s not just a place for technology companies. Sarah Ribner, whose company PiperWai sells a charcoal-based deodorant, joined one of Alley’s New York spaces at the beginning of 2017. She appreciates that she can bring dog Cloe, her Australian Shepherd, to work with her.
Alley’s D.C. debut is shaping up to be a little more formal than that. The wall art in one of the conference rooms shows two converging lines pointing upward, vaguely reminiscent of Verizon’s signature “check mark.”
An open space decorated with a mural will be used for regular talks given by Verizon’s business leaders and technologists. One of the firm’s first events in the space will probably be a “pitch night” attended by members of Verizon’s technology venture arm.
“Yes, it’s party space, but we’re Verizon, so we like to keep it a little more professional,” said Verizon co-working lead Nick LiVigne.
In the D.C. area, Verizon is stepping into a market for start-up real estate that may already be oversaturated. There are at least three other co-working spaces operated by competing companies within two blocks of Verizon’s planned space on L Street NW.
Co-working giant WeWork has been aggressively expanding its presence here in recent years to eight locations with at least 8,000 desks. WeWork declined to disclose its vacancy rates on newly-opened stores.
Co-working is not expected to be a big revenue-driver for Verizon, which makes more than $100 billion annually from its primary lines of business. The company said it plans to charge between $300 and $500 per month to tenants for their most basic membership option.