To communicate the rough fermi here, we were paying around $1.5MM per year for 14,000 sq. ft. of WeWork office space in Berkeley (including upkeep, utilities, etc.)[1]. We ended up getting a loan for the Rose Garden Inn for $20MM ($16.5MM for cost plus $3.5MM for renovations) at 5% annual interest rate, so we are paying $1MM in interest a year (and will likely pay around $500k or so in utilities, upkeep, etc.), for the same total of $1.5MM/yr.
The Rose Garden Inn has about 21,000 sq. ft. of usable indoor space, has zoning that allows us substantially more flexibility (since it’s a hotel we can run retreats there, which of course we can’t really do in an office, at least without making someone in the city angry as Twitter has recently demonstrated), and also has about 15,000 sq. ft. of usable outdoor space, most of which actually gets used quite regularly since Berkeley weather is pretty great. So the overall available and usable space is around 2x for about the same basic price (while I think also being much better for suited for what we want to do with it in many other ways).
I think the math checks out less super obviously for Wytham Abbey, but it seems pretty plausible to me that it does.
On the flip side, it seems the Abbey is likely to require less in the way of upfront renovations, which seem to me to be the significant at-risk part of the Inn, because the sorts of changes you’re likely to want to make it a good venue for running workshops probably make it an objectively worse ‘hotel’, which is what almost anyone else would be buying the space to get.
It seems the two are within a factor of 2 of each other for long term cost, most likely in your favor, while they may have you beat a bit in terms of non-recoverable conversion expense.
In the end it is surprisingly close, all things considered, given quite how different Oxford and Berkeley are.
I’ve very vaguely heard that the renovation costs might end up on the same order of magnitude as well, I think partially because CEA hired an external design firm to do things, whereas Lightcone is doing things in our usual in-house, highly-incremental and local way (we are working extremely closely with a small team of contractors that we hand-picked, and don’t have any kind of design-firm middleman). Though I also don’t think they started construction yet, so this might still change.
I think this will look better on paper for us because Lightcone doesn’t pay market rate for its employees, but will probably overall end up worse for us if you take into account counterfactual earning rate. I still think it’s the right call because it allows us to be more adaptive while we are doing it, and hopefully produce a better result.
To communicate the rough fermi here, we were paying around $1.5MM per year for 14,000 sq. ft. of WeWork office space in Berkeley (including upkeep, utilities, etc.)[1]. We ended up getting a loan for the Rose Garden Inn for $20MM ($16.5MM for cost plus $3.5MM for renovations) at 5% annual interest rate, so we are paying $1MM in interest a year (and will likely pay around $500k or so in utilities, upkeep, etc.), for the same total of $1.5MM/yr.
The Rose Garden Inn has about 21,000 sq. ft. of usable indoor space, has zoning that allows us substantially more flexibility (since it’s a hotel we can run retreats there, which of course we can’t really do in an office, at least without making someone in the city angry as Twitter has recently demonstrated), and also has about 15,000 sq. ft. of usable outdoor space, most of which actually gets used quite regularly since Berkeley weather is pretty great. So the overall available and usable space is around 2x for about the same basic price (while I think also being much better for suited for what we want to do with it in many other ways).
I think the math checks out less super obviously for Wytham Abbey, but it seems pretty plausible to me that it does.
We did recently scale back down to 7,000 sq. ft. again
On the flip side, it seems the Abbey is likely to require less in the way of upfront renovations, which seem to me to be the significant at-risk part of the Inn, because the sorts of changes you’re likely to want to make it a good venue for running workshops probably make it an objectively worse ‘hotel’, which is what almost anyone else would be buying the space to get.
It seems the two are within a factor of 2 of each other for long term cost, most likely in your favor, while they may have you beat a bit in terms of non-recoverable conversion expense.
In the end it is surprisingly close, all things considered, given quite how different Oxford and Berkeley are.
I’ve very vaguely heard that the renovation costs might end up on the same order of magnitude as well, I think partially because CEA hired an external design firm to do things, whereas Lightcone is doing things in our usual in-house, highly-incremental and local way (we are working extremely closely with a small team of contractors that we hand-picked, and don’t have any kind of design-firm middleman). Though I also don’t think they started construction yet, so this might still change.
I think this will look better on paper for us because Lightcone doesn’t pay market rate for its employees, but will probably overall end up worse for us if you take into account counterfactual earning rate. I still think it’s the right call because it allows us to be more adaptive while we are doing it, and hopefully produce a better result.