Case Objective: While cost and profitability comparisons remain important in consulting cases, the objective of this hypothetical consulting project is, however, aimed at identifying and developing the critical, strategic, and analytical thought processes and capabilities of the students. Case Scenario: There is an increasing trend of co-working spaces in New York City fueled partly by the technology boom. Co-working spaces are communal workplaces, which freelancers and small companies can use as workspaces, while sharing the space with any number of other freelancers and/or small companies. As part of the arrangement, many resources, such as office equipment and bathroom and kitchen facilities, are also shared. "The main benefits of this kind of setup are camaraderie, knowledy-sharing, high energy, culture, and cut-sharing, For example, a software developer can walk to the other side of the office to talk to other software developers working on other projects and for other companies to talk about thorny tech issues. Same scenario can play out for other space occupiers that work in finance, legal, business/ product development, marketing, etc. Basically, a co-working pan occuper can get some of the benefits of scale without being at scale." Matt and Tony are two real estate entrepreneurs who want to capitalize on this trend and start a co- working space that fits 75 people. They are in talks with two office buildings to lease out the space. The first one is a building near the young and trendy Union Square area, which will be $40 per square feet per annum. The second building is in the SOHO/Chinatown area and goes for $30 per square feet per annum. Summation of Operating Costs & Revenues Description Operating Cost per Annum Union Square China Town $41,250 $35,000 Revenue per Annum $55,200 $47,050 Surplus per Annum $13,950 $12,050 Payout Period 38 Months 34 Months Net Cash Generated in 10 Years $1,149,000 $1,042,154 Your Task: 1. Make bullet-point list of relevant considerations and factors that would contribute to, and help you in reaching & making a decision 2. Make a list of factors that might differentiate one location from the other? 3. Make a list of additional information would you have loved to have. 4. Based on your responses in (1) & (2) above, which building/location would you select? Be ready to justify your preference during the class discussion/presentation