Seattle Impact Hall is shutting down in a potential warning sign for other co-working operators amid the COVID-19 outbreak.
Formerly known as Impact Hub Seattle, the company launched back in 2011 as one of Seattle’s first co-working spaces. Its Pioneer Square location at the historic Masins Building became a hub for the local startup community, particularly for entrepreneurs and events focused on social causes.
The outbreak and resulting economic downturn was the nail in the coffin for Seattle Impact Hall, which had already been struggling financially due to increased co-working competition around Seattle and escalating operating expenses, among other issues.
“There were wonderful conversations and programming that happened there, and just a lot of support,” Impact Hall Executive Director Heather Staples told GeekWire. “I think everyone is sorry that this is the end of an era. We’re trying to stay positive and remember all the good things that happened there.”
Staples said that seven employees will be laid off as part of the shutdown. Impact Hall, which changed its name a few months ago after it left the Impact Hub network, is offering its tenants special discounts at nearby co-working spaces.
The Puget Sound Business Journal first reported the news earlier this week.
Co-working concerns
WeWork has become the dominant co-working operator in the Seattle region, with about 20 locations.
“A lot of the co-working spaces are funded by Wall Street and had money to pursue members in a way that mom-and-pop businesses could not,” Staples said. “It wasn’t really a fair fight.”
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But even well-funded WeWork is struggling with the COVID-19 crisis that “could deal a fatal blow” to the company, Bloomberg reported last week. SoftBank this week backed out of a plan to buy $3 billion worth of WeWork shares.
The company, which had its IPO plans crumble last year, is still keeping spaces open despite the fact that buildings “have been virtually empty” during the outbreak, The New York Times reported. The decision is causing controversy among members.
With social distancing mandates and work-from-home orders in place across the world, the future of co-working appears ominus, at least for the time being. Industry leaders such as Industrious and Knotel had layoffs in recent weeks.
“Even if it’s a co-working group that has 10 locations, to have the faucet completely turned off is something that’s unsustainable and devastating,” Staples said.
Last month The Riveter, a women-focused co-working space operator, put 24 employees, or 34 percent of its staff, on standby. The company makes about half its revenue on co-working office space fees and hopes to drive more activity to its new online community.
Read the full letter sent to Seattle Impact Hall members below:
Dear Seattle Impact Hall Members,
I’m writing with a heavy heart and sad news: Seattle Impact Hall will close its doors permanently. Floors 1 and 2 of the Masins (220) Building will close on April 30, 2020. The 240 Building and the Basement of the Masins (220) Building will close on May 31, 2020.
Impact HUB Seattle started modestly in the former Elliott Bay Books Store on 1st Ave in 2011, supported by investors and members who wanted to create a space where social entrepreneurs could connect to solve pressing social and economic issues. In 2012, we relocated to our current location and expanded to include offices, programming and community events on a wide range of subjects important to members of our community. Despite a tidal wave of new co-working spaces in Seattle over the past several years (currently 40+), Impact HUB Seattle – re-branded as Seattle Impact Hall in January 2020 – has managed to continue to offer a distinctive and meaningful socially-conscious experience for its members and the community.
Despite our best efforts, we’ve struggled over the past few years to find a mission-compatible financially sustainable formula. We’ve battled multiple headwinds including substantial increased co-working space competition (note: Impact Hub San Francisco closed its doors in January 2020 for this stated reason), inefficient floor plans (resulting in large and escalating building operating expenses), difficulty in attracting staff for what we could afford to pay, and an unwelcoming/”perceived as unsafe” street-scene outside our building.
Thanks in large part to our Executive Director Heather Staples, over the past year we’ve optimized our staff, streamlined our operations and relinquished our 3rd and 4th floors in the Masins building in order to “right size” the business. Despite these efforts, however, we’ve continued to sustain monthly losses.
In the past few months, we came to recognize that we’d reached an “existential fork in the road” regarding our future. Our choices were to: (a) wind down our operations to avoid further losses or (b) reconfigure Floors 1 and 2 of the Masins building at an approximate cost of $250,000 and operate in those spaces only. After careful consideration, our Board and investors concluded at the beginning of the second week of March that we simply didn’t have the wherewithal to further invest in the business and that the only realistic path was to wind down. By that time, however, the COViD-19 pandemic had intensified, and, like other single location businesses, the financial consequences of the pandemic began to hit hard, starting with cancellation of all of our upcoming events. By mid-March we realized that we needed to act quickly in the face of near certain further plummeting revenues from events, membership and offices.
From Day One, the Board and investors have believed and still believe in the mission. For investors, It was never about potential investment returns, and they have suffered significant financial losses. Despite our challenges, past and present Board members, as volunteers, and staff have worked tirelessly to keep Impact Hall moving forward. The journey has been enriching for us all – the Board and investors, staff, the community and beyond to all those we’ve reached. We just couldn’t overcome competitive challenges and now, the COVID-19 pandemic. While we are all saddened that we will have to close our space, we are proud of the community we’ve built within these walls, the connections made, and the positive ripple effects of those relationships outside of our walls. We feel fortunate to have been a part of this journey along with such committed, passionate and forward-thinking members.
We understand that this decision may cause hardship and inconvenience for many, particularly at this time. We have been working through details designed to make this transition less painful and, in the next day or two, Heather will send a follow up communication with transition details regarding the wind down. We also will announce special discounts we have arranged for current members and office tenants at one or possibly two nearby co-working spaces in order to provide for a softer landing for our Community.
What’s next? The end of the Seattle Impact Hall marks the start of a new journey for each of us from a different location(s) as we work to make the world a better place. To celebrate and honor the time we shared together, we plan to hold a boisterous Irish wake type celebration in late May – which at this point may be virtual – so please stay tuned for details.
Peter Miller
Seattle Impact Hall Board Chair
March 26, 2020
