By H. Cribb Altman, Senior Director
Several transformative office trends have emerged in commercial real estate in recent years. Among the most notable is the proliferation of coworking space.
Coworking has ballooned onto the scene, with a number of new operators coming into the Dallas market. According to Cushman & Wakefield research, more than 60 coworking spaces are up and running in North Texas, for a total of more than 1 million square feet. (For more, see Steve Brown’s recent Dallas Morning News report.) Forbes reports that, as of the end of 2017, an estimated 1.2 million people had worked out ofcoworking locations.
Catering to startups as well as established companies, coworking locations offer highly amenitized office space environments—think beer on tap, yoga classes, game rooms on steroids, and lavish lobbies. The community and social gathering coworking provides has been embraced by many generations, but seems to cater especially to millennials.
Tenants usually have a wide variety of space options, from open, non-reserved seating to entire buildings dedicated to one company. And the flexibility doesn’t end there; most operators will let tenants sign a month-to-month lease in lieu of a traditional five- to 10-year commitment. For high-growth companies, the flexibility is priceless.
Most shared-office companies are seeking space in live-work-play environments, where their members can have walkable access to restaurants, bars, and residential developments. In Dallas, they’ve found just that in urban areas like Uptown, the Central Business District, Deep Ellum, and the Design District, as well as thriving suburban markets like Legacy in Plano, where parking ratios are much higher than urban locations.
During the past couple of years, my colleagues Mike Wyatt, Billy Gannon, and I have represented the largest coworking operator, WeWork, with site selection of their new locations in Dallas. In that short period of time, we’ve seen a big shift in how landlords view such tenancy. Initially, property owners were slow to embrace the concept and required some education on the trend. Today, shared offices have become much more mainstream, and landlords have come to understand how valuable these types of tenants can be. Additionally, retail property owners and tenants love coworking operators, given the activity they drive to their shops and restaurants.
Everyone still seems to be grappling with the million-dollar question: Is coworking a cool new trend, or a complete disruption of office space as we know it? I think it will end up being a little of both.
Its impact is already being felt beyond the office sector. Are you ready for co-living? Stay tuned!
H. Cribb Altman is a Senior Director within the Tenant Representation Group of Cushman & Wakefield.