UK Edition
Desk life: why The Office Group is trying to change the way businesses work
Olly Olsen and Charlie Green first met 22 years ago on a beach in Thailand.
Now they are multi-millionaires, following June’s sale of a majority stake in their business The Office Group (TOG) to US private equity giant Blackstone.
Founded by the duo in 2002, TOG was valued at £500m in the Blackstone deal and claims to be London’s largest privately-owned occupier of office space with 34 sites across the capital. Co-chief executives Olsen and Green, who worked for serviced offices business MWB before setting up TOG, both sunk £100,000 of cash into the start-up, which began with one property in Upper Street, Islington. It proved a successful investment, with TOG among a new breed of flexible office providers enjoying soaring demand by companies for “social working space”.
Technology behemoths such as Facebook and Google are among TOG’s licensees but stuffier, more traditional companies are apparently also seeking a buzz that isn’t so easy to find in traditional lease arrangements of offices with little communal facilities other than a coffee machine.
“What people bought in the commercial property market in the old, traditional days was a location and a rent,” says Green. “The market was very corporate and vanilla and didn’t reflect the nature of companies wanting to take space on a flexible basis. Now, people want atmosphere and are asking who else is in the building. They want the benefits of social interaction within their workplaces.”
TOG’s 67,000 sq ft leased building off Regent Street is a case in point. Downstairs is a kitchen-style communal working area that attracts about 1,000 workers a day. Elsewhere are a lounge, 19 conference and meeting rooms, a gym, library, restaurant and a full bar that opens in evenings. Upstairs there’s a cinema that shows films, as well as hosting corporate presentations.
Bland corridors are enlivened by art and memorabilia reflecting the site’s former occupation by the BBC. On one wall, the famous TV testcard that was displayed outside broadcasting hours has been made into a mirror.
On others, there are photos of former BBC figureheads and optical illusions based on the Beatles’ Abbey Road album cover and the Rolling Stones’ famous tongue and lips logo.
Corporates take flexible licences on the space they need, while individual members pay £350 a month for unlimited access or £75 for one day a week. TOG, which has 236 employees, saw revenues increase from £43m to £69m last year and expects that to grow to £98m this year. It sees revenues of £150m by 2019. Pre-tax profits last year increased from £4m to £22m. Olsen says there is a major shift in the uses companies are finding for TOG’s space. Whereas serviced offices were traditionally seen as short-term satellite or project space for large companies, he claims the collaborative benefits of social working are becoming increasingly attractive.
“They are very interested in the type of person we have working on our premises,” he says. “They want to be around a young, buzzy, entrepreneurial atmosphere. Small companies used to gravitate towards larger ones. Now it’s the other way around.” Indeed, a recent survey of occupiers found 38pc saying they now work with other firms in their building. “They’re generating business just by being in the building,” says Green. “If you can layer that over a reason for someone to be in an office building, such as location, flexibility and price, that’s a very compelling reason to be there.”
Green and Olsen both have backgrounds in property. Green is a qualified surveyor, while Olsen’s grandfather, Gabriel Harrison, was a developer in the 1960s and his uncle John Harrison was one of MWB’s founders. For Green, the decision to start his own property business came after a moment of clarity following heart surgery at the age of 29.
“I had four months off and when I went back I saw things differently,” he says. “I just didn’t want that sort of corporate career any more. You don’t realise it at the time but these sorts of things do change your view on life.”
Olsen meanwhile went straight from school into business, selling shirts and cameras at markets, operating in business sectors ranging from debt collection to fashion, and working his way around the world via India, Thailand and Australia. TOG was formed with backing from private equity firm Bridges Ventures, which put in £12m over the first seven years to help buy the first seven properties.
Bridges was bought out in 2010 by Lloyd Dorfman, founder of currency exchange group Travelex, who became chairman and led TOG’s growth through its addition of another 29 properties. In the June deal, Dorfman sold a majority stake in TOG to Blackstone’s real estate arm, which manages $102bn (£77bn) of investor capital and owns Hilton Worldwide. Olsen and Green retain undisclosed minority stakes.
TOG’s competition has changed, however. When the company began, it was Regus, MWB, Abbey Business Centres and conventional workspaces.
Now TOG competes with US group WeWork as well as hotel groups, private members clubs and general property companies in the market for young, trendy, flexible working venues. Olsen, however, maintains that TOG has always forged its own track.
“We never really saw them as competition,” he says. “When we started the business, we looked at the serviced offices model in the UK and had a shared view that we, as young guys, didn’t want to work in that kind of environment. So we asked ourselves what would we like to work in and that was not only about what the space would be like and its design but also about what people perceive as value.
“We thought that if we measured it by what we wanted we would be able to create buildings that would attract people.”
TOG prides itself on taking an individual approach to the design and make-up of each of its buildings. There are no corporate carpets or house colours, with all the buildings designed individually to attract targeted sectors. “We’ve got international finance, technology and media start-ups and established businesses as well,” says Olsen. “Where design is all the same, it tends to attract the same kinds of audiences.”
TOG’s growth is slated to continue with Blackstone set to fund a doubling of its 1.3m sq ft of office space over the next three years. New sites include a location on the Albert Embankment in Vauxhall where a 95,000 sq ft building will be TOG’s largest venue.
TOG owns only 25pc of its buildings, leasing the remainder, but Green sees its future more in ownership, partnering with property companies and landowners. “We want bigger buildings where we can provide more space and flexible licences,” he says. “The average length of stay across our entire portfolio is 24 months but in the newer buildings it is 32 months.” The company also plans to take its flexible offices into international markets, making use of Blackstone’s global scale.
As for that story about how the two men met, it’s true, though they take some time to agree on the year.
“He was travelling the world and I was on holiday,” recalls Green. “I knew Olly’s brother and I saw him on the beach and thought he looked a lot like him so I approached him and we struck up conversation.” Why did Olsen talk to this stranger on the beach? He laughs. “Charlie was playing rugby with some of his mates,” he says. “It looked very, very odd on a near-deserted beach. It’s just not what people do.”
The rest is history but now a new chapter awaits.