The latest coworking space to open in Philadelphia shut its doors last month, raising questions about the fate of a project that gained support from hundreds of community members and the plans for the $1.5 million raised through crowdfunding to purchase and renovate a long-time vacant Manayunk building.
“There is not an easy way to get yourself in the property owning industry for the first time,” said Simon Rogers, who co-founded The Transfer Station with his brother Adam. “Everybody wants to see what you’ve already done.”
The brothers planned to open the Transfer Station – a shared space for paying members to use for their retail, office or event needs -- at the former power substation at 114 Green Lane.
The pair partnered with Philadelphia-based developer Shift Capital and Washington-based Fundrise LLC to generate a portion of the capital needed to acquire the property through a crowdfunding campaign, which allowed Pennsylvania residents to invest as little as $100 in the project.
The unusual financing model quickly surpassed their $500,000 goal, reaching more than $1.5 million with the help of 623 “investors.”
But the renovations required to repurpose the Green Lane building, which lacked plumbing and other necessities, to suit the Transfer Station’s needs were too costly.
“There are more important parts to what we are trying to do than having that specific location,” Simon said.
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Regardless, no one who gave money towards the purchase was bilked out of their cash, said Shift Capital’s Brian Murray.
“It was a test the waters campaign,” Murray said. “No money whatsoever exchanged hands. If you were on Fundrise… the statement is if this investment was available to the public would you be willing to invest and how much would you invest.”
The Transfer Station co-founders’ aborted pursuit of the vacant substation means Shift Capital no longer controls the building and, in turn, the developer’s role in the organization is over.
“Our primary role was to try to put together a project at the Green Lane property,” Murray said. “Now we’ll support them from a cheerleading standpoint.”
The decision to abandon the building the co-founders had set their sights on came just as the short-term lease at 4120 Main St., the temporary location where they opened in November, was ending.
“The roadblock we kept coming up against,” said Adam, “to customize a space to the extent that we need to, it doesn’t make sense to pour that much money into a space that we do not own.”
The building lacked flexibility and its retail-based design didn’t fit the Transfer Station’s other intended uses, he said.
Instead the six-month run in the cavernous retail building at the end of Main Street’s business corridor served as a “pilot period” for the Transfer Station’s business model.
“It felt like a lot of people were so excited about the transfer station, and we were too, but they didn’t know what they were excited about,” Adam said. “In the next revision, we are focusing that excitement to be more controlled.”
Both Adam and Simon admit to saying yes to proposals, like a gallery space, at the temporary location that were not part of The Transfer Station’s original purpose.
When the next location opens, the co-working space will refocus on its core mission – providing a space for entrepreneurs and business consultants to connect and collaborate.
“When you get to the root of why we created [The Transfer Station], we met so many talented people who have something to contribute to society,” Simon said. “There are people who have incredible talent, but don’t have the know-how or the resources to convert that into an active business or to bring a product to market.”
The search for the next location is underway and Simon and Adam say they are not limiting themselves to the city’s Manayunk neighborhood.
“We are honing in on what makes the most sense as far as public transportation, safety and distance from Center City,” Adam said.
Simon added, “The case could be made that North Philadelphia could be a great place to build a testing ground.”
Contact Alison Burdo at 610.668.5635, alison.burdo@nbcuni.com or follow @NewsBurd on Twitter.
