FLEXSPACE FORCE
Coworking model flexes its muscle as office tenant draw.
When Ryan Hoopes of Cushman & Wakefield helps companies choose new headquarters, he often asks landlords a question that, not too long ago, would have been unheard of: “How do you plan to accommodate flexspace in your building? Because our clients are demanding it.”
Flexible, shared office space — think coworking spaces, incubators and accelerators — is on the rise in Houston. Over the past 10 years, flex office space has absorbed a greater share of Houston’s office market, growing at a compound annual rate of 17 percent, while the office market only increased at a 1.7 percent clip, according to commercial real estate firm CBRE.
With flex office space, companies and individuals can rent by the month and by the number of offices and desks needed, which can be scaled as the user shrinks or grows. The arrangement originally solved a problem faced by many startups that faced too much uncertainty to sign longterm leases. Now the practice has spread to all segments of the office market.
While the model still appeals to startups — The Cannon, which aims to build a tech culture in Houston, converted an entire oil and gas equipment manufacturing warehouse into a home for entrepreneurs — other industries have found use for it as well. Coworking companies say they’ve seen sign ups from individuals looking for a place to work on days they don’t commute to an office and from large corporations that want space for a satellite sales office or are staffing up for short-term projects.
“We’ve got realtors, we’ve got oil and gas companies, we’ve got consultants,” said content creator Carrie Colbert, who shares an office with three desks at Life Time Work with her partner, investor Mark Latham.
“I just got a call from a Fortune 1500 company looking for a way to put 2,000 people in a flexible workplace because they did not want to sign a long-term lease,” said Jacob Bates, chief executive of CommonGrounds, which will open a 27,136-square-foot coworking space in Greenway Plaza this September.
The explosion of coworking space has given rise to a variety of product offerings; it seems there’s a coworking company for every niche.
Into fitness? Life Time Work offers health-centric office spaces (lots of water stations for hydration and plantlife for productivity), and a membership comes with access to Life Time’s highend gyms. James O’Reilly, president of Life Time Work, said the idea to expand into coworking came from seeing people working in the lobbies of its gyms. Life Time Work opened in Citycentre in May and plans a downtown location in GreenStreet and a north suburb location in Shenandoah to open in 2020 and 2021, respectively.
A frequent flier? Several coworking companies are racing to open locations around the world, sometimes by franchising or buying local operations. Mark Patek, the director of sales for Venture X, said the company has sold more than 100 franchises around the world. “So if you travel to Chicago, New York or London, you can check into Venture X,” he said. The company, which has six locations in Dallas, recently announced it is encouraging franchises to open in Houston.
Hoopes, of Cushman & Wakefield, said he’s seen landlords begin to treat coworking spaces as an amenity, a way to offer companies happy hours, lunch-and-learns and the option to expand when necessary.
Some landlords have gotten into the business themselves rather than leasing to an operator. Brookfield Properties’ Houston Center, where architecture firm Gensler is moving its headquarters, is undergoing extensive renovations that will include coworking spaces and conferencing venues. And Hines recently announced its Hines Squared coworking initiative. Squared will launch near the end of this year in two of the company’s buildings, 717 Texas in downtown Houston and the Kearns Building in Salt Lake City.
Aside from providing companies the ability to scale, coworking has also popularized a freeseating approach to work that some workers prefer. Contemplating the move, Gensler asked if any employees would be open to working without an assigned desk for a trial period. Sixty out of 300 employees volunteered.
“We’re experimenting with the notion,” Dean Strombom, a principal at Gensler, said. Eventually, the company may design workspaces with quiet focus zones or more social cafes to accommodate employees who forego a permanent work station.
Coworking and the designs associated with it are the talk of the town, according to Alex Taghi, a vice president with commercial real estate firm NAI Partners. “Almost every institutional landlord I’ve spoken to is investing money, adding them almost everywhere,” he said.
But while Taghi said tenants want more flexible space, “at one point,” he predicted, “it will get overbuilt like everything else.”
And though Strombom at Gensler said the firm’s research shows people see the value the interactions that can come in coworking spaces, but want more private space as well.
“We’ve been advocates for a long time of having a good balance,” he said.