New office-sharing concepts are going upscale and changing traditional and temporary work spaces.
There was a time not long ago when co-working was confined to gritty, industrial spaces with spartan furnishings. To make up for the low-end and typically inexpensive environments, purveyors would provide kegs of beer or bags of chips to their mostly millennial customers.
But a new generation of co-working spaces is revolutionizing the shared-office concept throughout the Gulf Coast and beyond, with upscale offerings and, at times, triple-digit rents.
As the concept has evolved — and proliferated, with no fewer than a dozen separate offerings from downtown Tampa to Naples — so too has its customer base.
“Google and other tech companies created cultures built around fun, and so now that’s the bar that people judge their work spaces by,” says Bri Walling, community coordinator at Venture X, a Naples co-working platform housed in the Mercato office and retail complex that has been in business since October 2012.
“And as a result, people today expect more out of their co-work spaces as well.”
Another significant shift: Today, too, co-work spaces are threaded with baby boomer entrepreneurs and established multimillion corporations that toil side-by-side with tech startups and sole practitioners.
“One of our biggest challenges has been in finding things that appeal to multiple generations,” Walling adds. “because there’s a huge age spectrum of folks who use our space.”
But perhaps no setting defines co-work 2.0 better than Industrious’ recently expanded digs in downtown Tampa, on a pair of the top floors of the 36-story SunTrust Financial Centre, a “Class A-plus” tower at 401 E. Jackson St.
With unparalleled views of the water and much of downtown, Industrious’ space — expanded from a single floor earlier this year to roughly 41,000 square feet in September — offers private glass cubicles, open-air work stations and Pottery Barn-esque furniture. Printers are scattered about, and the co-work chain offers tech support on-site, as well.
In a nod to co-work’s historical beginnings, Industrious has bare, polished concrete floors, exposed wiring and duct work.
But amenities are plentiful. Breakfast is served daily, happy hours and other mingling events occur weekly.
For the benefits of the view, the networking potential and the central downtown location, patrons spend $100 per square foot — triple the average office rent in downtown Tampa — to work there. The space is 90% committed.
David Sobelman, the head of commercial real estate brokerage 3 Properties and Generation Income Properties, a nascent real estate investment trust, is an unapologetic tenant.
“The question isn’t why am I here, the question is why would I be anywhere else?” says Sobelman, who rents a pair of 10-foot by 10-foot glass-ringed cubes at Industrious for $1,000 each per month.
“I have so much going on, and this eliminates the daily thought that goes into running an office,” he says. “The last thing I need to do is to have to spend 30 minutes on X. This allows you to stay focused on work.”
Sobelman’s small companies, which together employ less than a dozen, aren’t the only firms in Tampa shifting to co-work operations.
Strategic Property Partners (SPP), the joint venture between Microsoft co-founder Bill Gates’s Cascade Investment LLC and Tampa Bay Lighting owner Jeff Vinik that is remaking a 50-acre swath of downtown Tampa into a $3 billion, mixed-use neighborhood, has signed on as well.
“A co-working environment with its flexible workspaces allows us to collaborate while meeting the physical needs of an expanding company,” SPP CEO James Nozar says of its Industrious digs.
Since February 2016, when it had just eight employees, SPP has grown to roughly 50 today.
The company moved in this fall while more permanent quarters in Sparkman Wharf, a 245,000-square-foot office and retail complex that will be part of the $3 billion Water Street Tampa development and will itself contain co-work space when completed, is being readied.
Co-work spaces have exploded nationwide over the past decade, the result of changing office dynamics and shifting work preferences. Initially, many were set up like fitness centers, where customers signed on for “memberships” that covered a period of time, whether they were used or not.
As they’ve evolved and become ever popular, more co-work operators have gone instead to structuring more short-term subleases with tenants, while focusing equally on flexibility and community building.
“I think there are two types of co-work models: Office space and community,” says Rich Swier, who founded the HuB shared office environment in Sarasota a decade ago.
“We have always tried to embrace both — but really focusing more on community. Every other co-work space I know of in this area is 90% about space. This ‘space’ business model is where all the growth has been because it makes money, but we didn’t want to go down that path. We wanted to focus on the one thing we know matters — connecting people.”
Still, the space concept and the growth it’s experienced is hard to ignore.
Since 2010, co-working spaces have grown at an annual rate of 23%, according to a study by commercial real estate brokerage firm JLL. That year, co-work accounted for 12 million square feet nationwide.
Today, the figure is approaching 60 million square feet., with co-work firm WeWork Cos. now the leading occupier of office space in Manhattan, with nearly six million square feet — more even than J.P. Morgan Chase & Co.
Although WeWork has struggled to turn a profit in the decade since it launched, that hasn’t stopped Japanese financier SoftBank Group from plunging more than $5 billion into the company.
Perhaps not surprisingly, with the rise of co-working industry, big-name landlords like The Blackstone Group, Tishman Speyer, Boston Properties and TH Real Estate — an affiliate of the mammoth investment firm Teachers Insurance & Annuity Association — have jumped in.
So have more unorthodox players, like Office Depot Inc., which plans to leverage its services component to launch dedicated co-work spaces in its stores in Los Gatos, Calif., and elsewhere.
Some analysts contend that if the co-working trend continues to grow, it will affect both building design and financing. With the former, landlords may feel they need to include co-work spaces in new developments the way fitness centers and cafes were installed as amenities more than a decade ago.
The amount of parking buildings contain may also have to be altered to take shared offices into account, says Cushman & Wakefield Commercial Property Southwest Florida CEO Gary Tasman, in a recent market report.
Finance could be even trickier. Without long-term, credit tenants on the hook for space, lenders will likely grapple with ways to underwrite loans to co-work operators whose tenants, in turn, can simply choose not to renew short-term deals.
At least so far, along the Gulf Coast, that hasn’t happened.
“The question we constantly ask ourselves is how do we keep activated?” says Taryn Bruck, the owner, operator and designer of Bay 3, a co-working business in the rehabbed Armature Works mixed-use building in Tampa.
“We primarily look at other markets and fill in what’s missing in Tampa,” she adds. “And we try to have something that everyone likes.”
Initially, Bay 3 was intended to fill just 6,000 square feet at Armature. But the concept met with such a positive reception that Bruck and her husband, who co-owns the property, recently expanded it to 11,000 square feet.
Though Bay 3 works on a membership model — tenants pay a fee starting at $135 each — Bruck has differentiated the space by adding day passes, tacking on a mail collection service, providing 24/7 access and offering on-site lockers to patrons for additional cost.
Events and other services have added to the appeal. In addition to standard co-work happy hours, Bruck has introduced yoga classes and discounts to Armature Works’ market hall.
But what has really set Bay 3 apart is its setting, she says.
“It’s such a cool vibe in this building, from the recycled floors that were part of the original structure here to a 20-foot-long table I had installed.”
In Lakewood Ranch, CoWork LWR has also adopted a membership model, but capped its total enrollment to 50 people or businesses at a time.
Keith Pandeloglou, CoWork LWR’s CEO, says the decision to set a limit — together with an application process prospective tenants must go through — creates an air of exclusivity.
He says the 1,300-square-foot business, where customers pay between $49 and $349 monthly, has been almost at capacity since it opened some two-plus years ago.
In addition to snacks, Wi-Fi and other typical office services, Cowork LWR offers tenants a Main Street Lakewood Ranch address, rather than a post office box, which legitimizes start-ups in a way many executive-office concepts can’t.
For him, Lakewood Ranch’s growth — the master-planned community of 31,000 acres is among the fastest growing in the nation — has brought customers as young as 20 and as old as 60, and a wide range of businesses.
“We have to turn people away sometimes because we’re at capacity, and I’ve been very surprised at our tenant base,” Pandeloglou says. “We recently had the CEO of a start-up from Los Angeles with $30 million in funding renting here, because they had a connection to the ranch.
“A lot of people are moving here to Lakewood Ranch, and many of them have high-paying jobs and they’re able to work remotely. Co-work is perfect for them.”
In Southwest Florida, too, the concept appears to be catching on.
The owners of the Miromar Design Center, in Estero, recently opened a shared-work space with furnished, private offices and conference facilities and access to a receptionist.
Further south in Fort Myers, Endeavor Innovative Workspaces has opened, joining Venture X in Naples. There, members pay $40 up to $2,000 per month for a private, seven-foot by seven-foot office. Day passes to the 8,000-square-foot space, nestled among high-end retailers and eateries, also are available.
“It’s been a real boon for our establishment to be in Mercato, which is such a high-traffic area,” Venture X’s Walling says. “People know they can walk out the door and be around great shops and restaurants. It draws a lot of people in.”
But not every co-work platform succeeds, of course.
Dieter Kondek opened The Rocket Lounge in downtown Fort Myers in 2016. The concept went over well enough that Kondek moved to Naples earlier this year, assuming tenants — especially the international clientele he hoped to bring to America — would follow him to a larger space on the fourth floor of a Park Shore office building. Not enough did.
After months of trying to fill the larger Naples space, Kondek closed the lounge in mid-May and decided to focus on developing a venture fund to help European businesses relocate or expand to American co-work sites like Endeavor in Fort Myers or others.
“There are so many co-work spaces popping up now,” Kondek says. “And the cost burden is considerable. I just thought, for myself, I don’t want to be in that space anymore.”
The heightened competition isn’t deterring others, however.
WeWork is said to be scouring the downtowns of both Tampa and St. Petersburg for sites, landlord representatives say, and at least one new co-work space — H2 Innovation Center — is slated to open in Fort Myers by the end of this year, according to its website.
That 120,000-square-foot center on College Parkway is expected to contain an in-house fitness center, craft beer arcade and a “food truck row,” its website notes.
“I think now more than ever before people are starting businesses, and for them, co-work space will be the new norm,” Bay 3’s Bruck says.
Article originally written and published by Kevin McQuaid of The Business Observer.
Photo belongs to HuB Sarasota (hubsarasota.com)