SHARED OF­FICE SPACE: A FAD OR THE FU­TURE?

The trend is boom­ing along the Front Range, lead­ing some to spec­u­late it will take over the of­fice mar­ket

The Denver Post - - FRONT PAGE - By Joe Ru­bino

Co-work­ing and shared of­fice space are boom­ing along the Front Range, but ex­perts dis­agree on whether it’s a fad, an in­cu­ba­tor for new busi­nesses or the next step in the evo­lu­tion of the work­place.

Pur­vey­ors of co-work­ing and shared of­fice space have a the­ory: Tra­di­tional of­fice real es­tate is dead. Flex­i­ble leas­ing ar­range­ments, chic in­te­rior de­sign and in­of­fice hospi­tal­ity ser­vices killed it. It might just take a while for the flu­o­res­cently-lit cu­bi­cle farm to die.

“What is mak­ing non­tra­di­tional of­fice (space) suc­cess­ful is it sim­ply works,” said Ja­son Win­kler, co-founder of lo­cal shared of­fice gi­ant In­dus­try Den­ver. “It’s value-gen­er­at­ing. You can be more pro­duc­tive and more cre­ative. I am amazed people are looking at what I call old-school real es­tate at all.”

The metro area is in the midst of a flex­i­ble work space ex­plo­sion, and the blast ra­dius stretches from Lodo to the sub­urbs. Whether or not that rapid ex­pan­sion in the mar­ket rep­re­sents a revo­lu­tion is de­bat­able, to say the least.

A re­cent CBRE Re­search sam­ple of the Den­ver/boul­der com­mer­cial real es­tate mar­ket turned up 57 co-work­ing leases to­tal­ing 1.3 mil­lion square feet of space. That’s a 62.5 per­cent in­crease over the 800,000 square feet of cowork­ing space CBRE found in the area in De­cem­ber.

Den­ver economic devel­op­ment of­fi­cials don’t see it as a fad or a prod­uct of a com­pet­i­tive com­mer­cial real es­tate mar­ket. They look at it more as a next step in the evo­lu­tion of the work­place and be­lieve it has taken root in the Mile High City in par­tic­u­lar be­cause of its en­tre­pre­neur­ial and co­op­er­a­tive busi­ness com­mu­nity.

“The rea­son for this ex­pan­sion, the rea­son for the growth is people are looking for new ways to bring their ideas and prod­ucts to the mar­ket,” said Jeff Romine, chief econ­o­mist with the Den­ver Of­fice of Economic Devel­op­ment. “Firms are de­sir­ing and en­trepreneurs are de­sir­ing to work in a dif­fer­ent man­ner, and that’s what this is re­flec­tive of. It’s all over the metro area and we em­brace that.”

Oth­ers are more skep­ti­cal. De­spite its rapid ex­pan­sion the last nine months, co-work­ing leases make up just 1.2 per­cent of the 112.7 mil­lion square feet of of­fice space in the Den­ver/boul­der mar­ket, ac­cord­ing CBRE Re­search.

Bill Mosher is se­nior man­ag­ing di­rec­tor of the com­mer­cial real es­tate devel­op­ment and in­vest­ment firm Tram­mell Crow Co., over­see­ing the com­pany’s Colorado ac­tiv­i­ties. The com­pany doesn’t de­velop co-work­ing space, Mosher said, but his im­pres­sion is that co-work­ing is gen­er­ally where com­pa­nies oc­cupy their first bit of real es­tate be­fore grow­ing and mov­ing into more tra­di­tional of­fice spa­ces.

“My take on it is they are smaller, more startup-ori­ented, and once you get larger, firms tend to go into their own space. So the no­tion that it is go­ing to fully change com­mer­cial real es­tate doesn’t reg­is­ter with me,” Mosher said.

Ac­cord­ing to na­tional re­search per­formed by CBRE, about one-third of co-work­ing users ex­pected to grad­u­ate to leased of­fices in the fu­ture.

The def­i­ni­tion of cowork­ing space is a bit amor­phous, but one hall­mark Romine likes to high­light is a co­op­er­a­tive cul­ture in which busi­ness both es­tab­lished and new in­ter­act fre­quently and share ideas and ad­vice. In other words, great in­cu­ba­tors for new and grow­ing busi­nesses.

Den­ver has en­cour­aged the nu-of­fice wave by di­rectly in­vest­ing in projects such as Zep­pelin Devel­op­ment’s Taxi neigh­bor­hood and ar­ti­san food mar­ket The Source, Romine said. The city also is a found­ing part­ner in The Com­mons on Champa co-work­ing space, head­quar­ters of Den­ver Startup Week.

Ja­son Win­kler has been a ben­e­fi­ciary of the city gov­ern­ment’s will­ing­ness to em­brace the con­cept. Den­ver pro­vided $1 mil­lion loans to both his In­dus­try Den­ver and soon-to-open In­dus­try Rino Sta­tion projects, he said. Win­kler and his wife, Ellen, got into the shared-of­fice mar­ket in 2010 when they opened Bat­tery621 with two part­ners. At the time, co-work­ing was still a nov­elty in Den­ver. Taxi was the only sim­i­lar idea around, he said. By the time the Win­klers opened In­dus­try Den­ver in a old pro­duce de­pot on Brighton Boule­vard four years later, the idea had gone from cu­rios­ity to cov­eted.

“The un­der­stand­ing of what it meant to be in a space like ours was grow­ing,” Win­kler said of his 155,000-square-foot baby. “It doesn’t mat­ter if you’re in tech or soft­ware or if you’re in oil and gas and bank­ing. No one wants to work in a cu­bi­cle. We’ve been full with a wait­ing list since we opened, re­ally.”

In­dus­try dif­fers from a lot of smaller scale co-work­ing spa­ces where com­pa­nies some­times op­er­ate in the same room as gig econ­omy free­lancers who drop in to work at “hot” desks rented by the month, day or even the hour. In­dus­try is a “shared of­fice” provider, Win­kler said. All ten­ants have their own of­fices plus ac­cess to ameni­ties in­clud­ing shared meet­ing and quiet rooms, an in-house cafe, reg­u­lar so­cial events and talks or­ga­nized by man­age­ment and, yes, four kegs of beer on tap at any given time. Oc­cu­pants gen­er­ally sign up for at least a year but their pri­vate space can ex­pand and con­tract with a com­pany’s needs.

In­dus­try is now home to 78 ten­ants and In­dus­try Rino Sta­tion, it­self larger than 150,000 square feet, is set to wel­come its first ten­ant Nov. 1.

The Win­klers are far from the only people adding to the growth stats for co-work­ing and share of­fice space in the metro area.

Den­ver has re­cently landed on the radar of some na­tional and in­ter­na­tional cowork­ing brands.

Last spring, We­work opened two lo­ca­tions in the down­town area com­bin­ing to make up 122,000 square feet. The com­pany op­er­ates one of the largest net­works of co-work­ing spa­ces in the world with lo­ca­tions in 17 coun­tries.

On Dec. 1, In­dus­tri­ous will open a 26,672-square foot space with 91 pri­vate of­fices at 1801 Cal­i­for­nia St. A “premium” co-work­ing brand with lo­ca­tions either open or planned in 22 U.S. cities, In­dus­tri­ous in­tends to court ev­ery­one from small, emerg­ing busi­nesses to For­tune 500 com­pa­nies seek­ing to es­tab­lish re­gional out­posts, com­pany rep­re­sen­ta­tives say. Of­fice space for one there will start at $720 per month. A lease will bring with it ac­cess to four con­fer­ence rooms, 11 hud­dle or quiet spa­ces and in-of­fice hospi­tal­ity ser­vices like com­pli­men­tary pas­tries and cof­fee.

In­dus­tri­ous CEO Jamie Ho­dari is nat­u­rally a firm be­liever that co-work­ing space rep­re­sents the death knell of the tra­di­tional of­fice. In Ho­dari’s world, soon com­pa­nies us­ing their own time to find, rent and fur­nish an empty of­fice will be as un­heard of as com­pa­nies build­ing their own data man­age­ment net­works from scratch when they could sim­ply con­tract with ex­perts like Ama­zon or Google.

“It’s not a niche prod­uct,” Ho­dari said. “It’s much closer to mov­ing from a land­line to a cell­phone. There are a small set of people who like the sound qual­ity of a land­line and the heft and the feel of it. And most people are like, ‘Oh, the phone isn’t at­tached to the wall any­more? Give me more of that.’ ”

Ho­dari posits that com­pa­nies will in­creas­ingly be drawn to co-work­ing providers be­cause they spe­cial­ize in at­trac­tive spa­ces in de­sir­able neigh­bor­hoods. He ar­gues that as the in­ter­net and global trans­porta­tion in­fra­struc­ture has evened out com­pet­i­tive ad­van­tages in the busi­ness world, it’s be­come more and more im­por­tant to at­tract and re­tain tal­ented people to suc­ceed.

One way to at­tract tal­ented people is to bring them into an of­fice that re­minds them of Google’s head­quar­ters, Hon­dari said. Build­ing some­thing like that may be far-fetched for a sin­gle com­pany, but if that com­pany were to band to­gether with dozens of oth­ers to pool money and share space, sud­denly the cost comes down and stylish work space with catered break­fasts ev­ery morn­ing is within reach.

There’s no doubt in Ben Wright’s mind that his of­fice at In­dus­try Den­ver has been a valu­able re­cruit­ing tool for his fast-grow­ing busi­ness. The CEO of Ve­loc­ity Global, a com­pany that helps fa­cil­i­tate other com­pa­nies’ ex­pan­sion into in­ter­na­tional mar­kets, said he is very se­lec­tive when hir­ing new staff, of­ten go­ing through four or five rounds of in­ter­views. When he iden­ti­fies a can­di­date he re­ally likes, Wright in­vites them to cor­po­rate head­quar­ters.

“It’s a huge sell­ing point,” Wright said. “We can pitch the ways we are an in­ter­est­ing com­pany and how much fun we are to work for and why we’re spe­cial, but people al­ways walk in and say “Wow, I’ve never been in a space like this.’ ”

Ve­loc­ity Global first leased 170 square feet in In­dus­try in March 2015. By Jan­uary 2016, the com­pany had grown to seven em­ploy­ees and moved into 750 square feet. By that June, it up­graded to 2,000 square feet. Now the com­pany has 40 staff mem­bers in Den­ver and is pre­par­ing to make the jump to a 19,000square-foot space in In­dus­try Rino sta­tion this fall, Wright said. That should ac­com­mo­date the ad­di­tional 120 lo­cal em­ploy­ees Ve­loc­ity ex­pects to add by the end of 2018.

Den­ver’s Romine said he ex­pects co-work­ing to con­tinue grow­ing and ex­pand­ing be­yond its ex­ist­ing hotspots in the Golden Tri­an­gle and Rino neigh­bor­hoods. He ex­pects more spe­cial­iza­tion among spa­ces as well, such as of­fices cater­ing to law firms or craft man­u­fac­tur­ers.

“To us, they’re our part­ners in the truest sense of as­sis­tance and de­liv­ery of busi­ness devel­op­ment ac­tiv­i­ties,” Romine said of cowork­ing and shared of­fice space. “We’re there for all of them to help them grow be­cause the re­al­ity is they are an ex­ten­sion of us.”

Andy Cross, The Den­ver Post

Ve­loc­ity Global is one of 78 ten­ants with an of­fice inside In­dus­try Den­ver. The metro area is in the midst of a flex­i­ble co-work­ing ex­plo­sion that stretches from Lodo to the sub­urbs.

Andy Cross, The Den­ver Post

Melissa Markle, First Des­cents ex­ec­u­tive as­sis­tant/ad­min co­or­di­na­tor, works along­side “Moog­ley” in the of­fice at In­dus­try Den­ver.

All ten­ants at In­dus­try Den­ver have their own of­fices plus ac­cess to ameni­ties in­clud­ing shared meet­ing rooms, an in-house cafe and four kegs of beer on tap.

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