Yardi x Hubble - all things acquisition and 
the future of the flex brokerage

When Yardi’s acquisition of Hubble hit the headlines, it spread like wildfire. Flex and The City sat down with Justin Harley, Senior Director at Yardi, and Charlie Bastier, Commercial Ops Director at Hubble, to deep dive into the details behind the leading PropTech giant’s acquisition of the flex brokerage. Gathered inside x+why’s Marble Arch workspace, we got the scoop on what the future holds for both brands, the vision driving their partnership, and how their combined expertise is set to impact the flex-tech landscape.

Justin, in your opinion - what would you say made Hubble the 'right' brokerage for Yardi to acquire?

I think, first of all, it's super exciting to be working with Hubble. For us, it's really groundbreaking, and it's part of the wider Yardi strategy within flex space. For a while, Yardi has been spewing lots and lots of work into flex space and, as Anant, our CEO, will say, it's still only 2% of our revenue, but 80% of our time is being spent in this space - we have over 15 billion square feet of commercial office space.

In reality, we are a software provider, and this represents a huge opportunity. I think it's quite clear how work patterns have shifted and how people find their space. Typically, that's not something that we do, but I think our customers want help in doing that. And so, naturally, our distribution mechanism has become a really key part of our business. It's something we've done in residential with Rent Cafe, and that has been super successful. Having met Hubble, really liking the team, and seeing the brilliant work they do - if you can make the numbers work, then clearly, partnering with them would be a natural fit for us.

Charlie, what would you say makes Yardi the right partner to take Hubble to the next level?

We’ve entertained the idea of acquisitions and mergers over the years and spoken to a lot of different businesses about it, but never really found the right fit for us. Many of them were more traditional, old-school businesses who were competitors of Hubble just trying to Hoover us up. But then we started conversations with Yardi, and it was really clear that there was a lot of overlap in terms of our vision for the future of the industry, the tech focus that they have with product development, and the innovation that they're striving to do.

So, it made a lot of sense for us from that perspective. And as we were progressing through the deal, it also became really clear that our company cultures are really similar - they have a lot of open strategy sessions, a lot of trust, and it's just a team of happy, driven, smart people. So, it just seemed like the perfect fit for us.

Justin, why now? What is Yardi's strategy and how much does flexible working play a key role in this?

I mean, there isn’t real-time inventory. There isn’t a real-time system that allows someone to go online and book directly - a system that’s connected, without the need for manual updates. And I think there’s an opportunity here that we’re excited to exploit. Someone said to me, “Oh, you're going to be like the Booking.com of the industry,” and I guess that's it, I think that's the opportunity. The more we can learn from companies like Hubble, WeWork, Deskpass, and probably others along the way, the better positioned we are to advise our clients. Yardi is a sizable organisation, and it's one that’s investing in the future - 15% of our revenues go back into R&D. That’s unheard of in technology.

In your view, what does the future look like for Hubble under the Yardi banner? What is relationship between the two brands?

Charlie: It’s quite early to say. Right now, we’re still figuring each other out - where all the pieces of the puzzle fit together. Hubble as a brand is here to stay, and the way we're going to operate as a business will remain unchanged for the foreseeable future. Yardi has a massive international presence and deep knowledge of real estate across the world, while Hubble, as Justin said, has great scope on the brokerage side of things. So, we’re just learning from each other at the moment. We were discussing earlier that it normally takes about a year for an acquisition to really find its feet and begin any kind of expansion. We've got a lot of really cool, interesting product ideas - ones we're not allowed to talk about just yet…

Justin: I think that’s right, and I think it’s as much a learning exercise for us - looking at the whole industry, seeing what works, and then asking: are there resources we can offer Hubble to help expand their business? So, it’s definitely still very early stages, and we’re feeling each other out, learning the ways of each other’s business - and doing so with mutual respect. I think that’s really key.

Hubble is recognised as a tech driven brokerage, how do you see its tech evolving under Yardi? What new opportunities does this acquisition create, will there be deeper integrations?

Charlie: Absolutely. Yardi is a tech company at heart, right? So, we've both got the same vision - we want to do a lot of product development in the market, and we’re definitely really excited about that. I think Yardi, as a business, is obviously much bigger than Hubble, so there are a lot of new resources being unlocked for us. Thinking about how we might deploy those is really interesting. I imagine there will definitely be some sort of expansion happening with Hubble - whether that's within our core market in the UK or internationally…

Justin: Knowing Yardi, there will absolutely be deeper integrations - that is a natural course of action. We're always looking for economies of scaling across co bases. It's a journey, and one of the things that I actually love about Yardi is that everything we do is long term. We know where we're going with it, we won't be hurried by people, and we'll get it right. And I think that's a really important message with whatever integrations we work on along the way, they'll be assessed and properly delivered.

Your latest co-branded report concludes that 72% of businesses are working hybrid - how do you think flex operators will tackle the challenge of 'right-sizing' the office spaces in terms of usage, size, and spend?

Charlie: For almost all of the businesses that we surveyed, their second biggest expenditure is their workspace costs, after salaries. During COVID, many of these businesses went fully remote, eliminating the need for workspace altogether. However, now they need to hit this balance of bringing their teams together in person and reintroducing office space, while still keeping a close eye on costs. In an ideal world, if you could afford it, you'd have a massive office. But it's just not practical from a cost perspective.

In terms of how providers need to think about this - it can be tempting to see yourself as just the office component of the hybrid puzzle. But actually, they could be so much more, and a lot of it comes down to flexibility. That is one tip I’d give providers. A challenge we’ve run into recently, is that many larger companies are now looking for smaller spaces and rotating who’s in on any given day. But they still want access for their entire team. So, if they say they want a 20-person office, they’ll still need 40 access cards. Every employee must have their own card. We’ve actually lost deals where providers refused to offer that. It’s usually around £20 for a pass, and for me - it's just too small an amount of money to act as a barrier or hurdle to the deal.

Justin: Hybrid working is here to stay. The report shows that this is what customers want so I think it's so important to offer this as a service. Operators need to get with the programme. It shouldn’t be hard to issue access cards, and if it is, you need to look at how to do that better.

The report also shows that the tide is turning to more in-person working – 64% of hybrid founders want their teams to come into the office more. How might operators capitalise on this?

Justin: Definitely. There are numerous ways for operators to do this. Funnily enough, we're sitting in one today with x+why. I think the use of food and beverage services throughout a building is a really important way to encourage people to come in and enjoy the communal spaces. I know with our team, people enjoy the communal space much more than they do the actual office. I would also say that, in my experience, when talking to landlords running commercial (non-flexible) workspaces, they're pretty much writing off the first floor as communal space - because they know that is the way to fill the upper floors - by providing that experience. So, I think operators should keep doing more of that, and be aware that commercial real estate will be doing it too.

Although, only half of businesses will be sticking with their current workspace setup in the coming 12 months, and the other half are up in the air. What impact will this chopping and changing have on the flex market?

Charlie: I mean, from a broker perspective, I'm hopeful there's going to be loads of new leads in the market like the glory days, which would be awesome. I think what's really important, and what we're seeing both from this survey and in conversations with our customers, is that people are forever changing their minds. From a provider perspective, things are definitely shifting. You must be on top of your renewals. I’d say there’s a real element of risk here - lots of people are looking to move in the very near future. It's not good enough to simply just move someone in and set a nine-month calendar invite to start the renewal conversation. You need to make sure your tenants know whether they can scale up or down within your portfolio - and that they understand all their renewal options.

You’d be surprised how often someone comes to us looking for new space and doesn’t even realise there’s a bigger option available within their existing building. Providers need to stay on top of this, because nowadays, many people who’ve been in your space for a long time will still consider moving. There are a lot of good deals in the market right now, so staying put isn’t necessarily the best option for the customer. There’s always something around the corner that could be more cost-effective - especially if they’re on a step agreement and started on a low rent to begin with. The market’s always been price sensitive, but never more so than it is right now when it comes to renewals.

Justin: I sit on the outside of the broker side, and when I speak to operators, this is a real challenge for them - because it can have the effect of devaluing the market. And that's a real risk for operators, particularly when you think about how you value a flexible workspace company. It’s got to be based around the average lifetime of the customer. And if that’s being cut short, then intrinsically, the multiple applied to your business is going to be less. So, I think the challenge is on the operator to work out what the best mechanism for renewal is. I’m probably giving away trade secrets here, but at Yardi, our business model is exactly the same - you buy some software, and we want you to have that software forever.

Our job is to make sure you keep using it. For us, that means new releases, new functions, new features - but it’s also about customer relationships. We’re constantly speaking with and sitting down with the boards of our customers to understand their growth plans and the challenges they’re facing. And by understanding that, it allows us to put in the right commercials that suit them going forward - and keep them with us.

How did you seal the deal? How did you celebrate this fantastic partnership? 

Charlie: Yes, this all got tied up at the end of December...I think it was the 30th. It happened right in the middle of Christmas, so we were signing documents while everyone was off. We didn’t get the chance to celebrate with them on the day, but we've since been out for dinners and met the team. The onboarding process takes a couple of months, but everyone's really excited about integrating into the Yardi team. We’ll probably have a big bash at some point relatively soon!

Justin: We had that lovely dinner, and it was really nice - everyone stood up and introduced themselves, and it was great to hear about their experiences. One of the things I found especially exciting was the cultural similarities between our teams. A couple of things jumped out straight away - like the teams' length of tenure at Hubble. That really resonated, because it’s something we share at Yardi too. Our people tend to stick around - we’ve all joked about it being like Yellowstone, with the Y tattoo! The average tenure at Yardi is long, and that speaks to how we look after our people and our customers. And when the Hubble team spoke, that same commitment came through loud and clear. I was amazed at how many people have been there for so long. That kind of loyalty is a strong signal of a great culture, and it’s clearly something we both value.

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