Shared work spaces evolving into a new normal
Thirty per cent of the office market could be flexible space by 2030, experts say
Jane Barratt in a work space she rents at 1 World Trade Center, where she runs her company, GoldBean, in New York. Photograph: Will Glaser/New York Times
When his youngest child left for college, Lee Rosen decided that he and his co-workers could operate his family law firm from their homes around Raleigh, North Carolina, saving $35,000 a month in rent. Lawyers started writing briefs from their kitchen tables and the local library. Where they worked didn’t matter – except for one thing.
“In our area of practice, people like to meet with their lawyer in person at the outset of representation,” Rosen said. So the firm rented pay-by-the-month meeting rooms, a dozen conference rooms in all, for a third of what the office rent had been.
Shared office space is no longer the province of just sole proprietors, start-ups and young professionals. Companies such as WeWork have capitalised on the popularity of shared working areas, in which people and companies rent office space by the hour, day or month.
Now other types of professionals are also taking advantage of shared spaces, empowered by technology that can make changing offices as easy as carrying a laptop from one room to another.
Tom Carroll, regional head of research for Jones Lang LaSalle, a global real estate services company, says his company predicts that 30 per cent of the market could be flexible space by 2030. And the growing interest in shared space is forcing commercial real estate developers to rethink how they invest in their properties.
“The traditional approach to the office is not fit for purpose in today’s environment,” Carroll said. On the lower-priced end of shared working spaces is a basic “hot desk”, where a tenant pays for the right to use any available work surface. The higher end might be a reserved private office.
What links the diverse offerings are short-term, flexible leases and freedom from office-related tasks.
There is even a virtual office, in which a customer pays for the right to use a business address – often an exclusive address – without occupying the space at all. A local phone number, administrative support and use of conference rooms are part of the deal.
When Jane Barratt’s clients search online for the address on her business card, they see the soaring One World Trade Center building – even though Barratt left the plush-carpet corporate world several years ago and now runs GoldBean, an investment tool for young people, from a hot desk. Her arrangement with Servcorp, an international company offering physical and virtual office space and information technology services, allows her to rent the 85th-floor conference room for meetings where she can impress her clients.
“I think they’re filling a niche,” Barratt said of Servcorp, “a status building with great build-out and technology. The physical space and the virtual services, that’s a huge differentiator.”
By inserting itself between the commercial property owner and the individual tenants, Servcorp essentially becomes a “professional tenant”, according to Marcus Moufarrige, the company’s chief operating officer. Servcorp rents space and then carves it up to fill the needs of smaller businesses.
In addition, Servcorp supplies three things landlords of conventional offices usually do not: tenant services, collaboration technology and networking opportunities.
“There’s a broken piece between the landlord and the tenant now. We sign a lease and the landlord disappears,” Moufarrige said. “That’s where the opportunity lies.”
Services more typically seen in the hospitality industry are increasingly in demand in the work space, according to Carroll of Jones Lang LaSalle. While technology allows people to stay connected anywhere, tenants of co-working spaces still want help with administrative tasks.
When Norwegian Air Shuttle began offering flights to the United States in 2013, Anders Lindstrom, its US director of communications, decided to take a co-working space at WeWork in midtown Manhattan. He liked the young, creative vibe and how easy it was to settle in. He’s now been in a WeWork space for two years.
“We have access to meeting rooms of all sizes, kitchen facilities, printers and other basic needs,” Lindstrom said. Moufarrige said the next area of business for the co-working space operator may be commercial landlords who want to maintain a hands-off approach with renters and not have to provide copy machines, mail forwarding and receptionists to individual tenants.
Moufarrige argues that companies like his can offer such services better than landlords can. “We have 150 work spaces and we all run them like they’re one building.”
Numerous other shared-office providers are also trying to offer a sense of community to their tenants. Javier Martinez, a real estate developer and founder of the Harlem Collective, a co-working space in Manhattan, discovered that he could not be profitable with only small, month-to-month renters. So he found four large tenants to provide a predictable income while filling the smaller niches, called liquid space, with itinerant clients. He then tries to introduce tenants who have businesses that could work together.
“It’s cold out there,” Martinez said, “and if you are starting or trying to run a business it’s even colder.”
On a recent summer morning, jewellery designer Luz Ortiz toured the Harlem Collective, on 152nd Street. She rents space in the Diamond District in Manhattan but was looking for something less expensive. She didn’t like the lack of natural light in the studio that was available at the Harlem Collective building but was wowed by its courtyard garden.
Alex Tsang, manager of the Harlem Collective, said Ortiz could try out the space with a month-to-month lease – no lengthy commitment necessary, unlike at a traditional office.
“The model is a perfect fit for freelancers moving around a lot, social media marketers who go where the work is,” Tsang said. “They’ll pack up their bags and work in another country.” – (Copyright New York Times 2017)