Switchyards, an Atlanta-based shared workspace startup, has raised $5 million in fresh capital and plans expand to 200 clubs in the next five years, the company announced Wednesday.
New locations in metro Atlanta — both in the city and in the suburbs — as well as in Nashville, Charlotte and other cities are in the works, the company said. The announcement comes as many individuals now have increased flexibility after the pandemic changed work patterns.
“The big, big shift that’s fueling Switchyards’ growth — if I had to distill it down to just one thing — for the first time ever, knowledge workers now actually have a choice of where to spend at least a portion of their week,” Michael Tavani, founder and CEO of Switchyards, told The Atlanta Journal-Constitution.
Tavani founded Switchyards in 2016 in a space in downtown Atlanta amid a national rise in co-working clubs, with the best-known example being industry pioneer WeWork. While WeWork went through very well-publicized and self-inflicted setbacks that have led to restructuring through bankruptcy, changing consumer tastes and the pandemic have also forced other operators to evolve.
Credit: Ben Gray
Credit: Ben Gray
But investors appear to see ample opportunity. Switchyards’ latest funding round was led by San Francisco-based venture firm Bullpen Capital. An existing Switchyards investor from the Seattle area, Cercano, and Atlanta-based Overline also participated. Tavani started raising in the fall and closed the deal last week. With this investment, Switchyards has now raised a total of $10.5 million in investor capital, he said.
Tavani describes his company as a “neighborhood work club” — a members-only space that is open 24/7, tucked into residential areas where people can come and get a few hours of work done. Switchyards has 10 locations in metro Atlanta, three clubs in Nashville and will be opening two spaces in Charlotte in the next two months. Membership is $100 a month and gives people access to all the clubs.
When the first Switchyards opened, the club was more of a co-working space for startup founders, but Tavani started to notice a shift in worker habits away from five days in office.
In 2019, he pivoted to the neighborhood work club concept, taking inspiration from coffee shops, libraries and hotel lobbies to create a space that was well-designed, had interesting music and hot coffee but where people could be productive without distractions.
Then the pandemic hit, which accelerated the change in habits Tavani said he’d spotted.
In Atlanta, for example, Coca-Cola now requires just three days in the office and Home Depot and Delta have taken a flexible approach. But UPS and NCR Voyix recently required their employees come back in office five days a week.
‘My neighborhood work club’
WeWork pioneered shared workspaces before a public collapse led it to file for Chapter 11 bankruptcy last fall. The company, which had 11 metro Atlanta locations when it declared bankruptcy, has rejected dozens of leases at unprofitable locations, including several in Georgia.
In court filings, WeWork has named four metro Atlanta locations it plans to keep, including its space at Terminus 100 in Buckhead. The property is owned by Atlanta-based Cousins Properties.
While WeWork’s financial struggles have dominated the perception of co-working, commercial real estate experts say the shared workplace model is gaining momentum again in a post-pandemic work environment.
Remote work and economic uncertainty has prompted many employers to shed office space, leading to record-high vacancy rates across Atlanta and much of the country. Flexible office space, however, presents a middle-ground solution for employers that is expected to grow in popularity.
Credit: Courtesy of Switchyards
Credit: Courtesy of Switchyards
Tavani said Switchyards is going for a different customer than WeWork and other big co-working operators like Industrious.
“The core of those businesses has been to go after the enterprise customers, the businesses, because that’s where the dollars are and those are the people that need fractional office space,” he said.
But Tavani doesn’t view Switchyards as an office replacement and has geared the company towards individual consumers, not employers or corporations.
He declined to disclose how many total members Switchyards has but said that each club has between 300 to 700 members, depending on the size of the space.
The clubs have a distinct feel, filled with design magazines, vintage sports memorabilia, plush leather couches and a special good luck charm — massive Adidas sneakers. The Decatur club has size 21 Stan Smiths and Top Ten Hi shoes.
The clubs often have two main spaces, a common area and another meant for deep focus, quiet like a library. Clubs also have soundproof phone booths for private calls.
An eclectic playlist pipes through the common area, transitioning smoothly from traditional West African songs to rap to bossa nova. Members have access to unlimited tea, coffee and stroopwafels, the thin, Dutch sweet filled with caramel.
Credit: Ben Gray
Credit: Ben Gray
Since the clubs are placed in neighborhoods and not central business districts, Tavani said the average commute is 10 minutes, with people walking, biking or taking a short drive.
By the end of the year, Tavani said Switchyards will open 10 new locations, for a total of 25. They will be opening more intown Atlanta clubs, expanding to the suburbs, adding new locations in Nashville and Charlotte. Two other markets that Tavani declined to identify also are under consideration for new clubs this year.
Venture capital and debt will help fuel the expansion to 200 total clubs across the country by 2029, according to Tavani.
“We think 10 years from now, people are gonna say, ‘Oh, yeah, my neighborhood work club,’” he said. “Right now, people only have analogies … of what existed in the past, but we think this kind of new thing will emerge.”
-Staff writer Zachary Hansen contributed to this report.
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