Once Supply Meets Demand, Co-Working Won't Look The Same
Creative office no longer needs explanation. Office-less workspaces built to foster collaboration have become commonplace, regardless of industry. The co-working sector can be credited for bringing many of these office trends to the mainstream. But as the co-working industry matures, supply and demand realities may no longer favor so many operators.
Co-working is a young industry and there is still a lot more demand than there is supply, Vuka Collective founder Brian Schoenbaum said. Vuka Collective is an umbrella of companies that includes an events space called Gather, a co-working space called Impact Hub Austin and professional and lifestyle programming called Wake Up.
“Nationally, co-working is in a a golden era,” Industrious CEO and co-founder Jamie Hodari said. “Despite an increase in supply and enormous demand, there’s still a mismatch of supply and demand.”
All the types of co-working (spaces that cater to entrepreneurs, creatives or tech startups) expand the market, especially in a city like Austin where the city’s culture supports and promotes many of the same pillars as co-working, Schoenbaum said.
But co-working is already succeeding more in some cities than others.
As supply and demand become more evenly matched, there will be clear winners and losers of co-working operators, especially in more established co-working cities like Washington, DC, and Philadelphia, Hodari said. Some signs in DC indicate softening in the co-working market.
Austin’s culture is so highly collaborative that co-working and creative offices just fit here, Schoenbaum said.
Both Hodari’s Industrious and Schoenbaum’s Impact Hub plan to expand. Impact Hub just opened a second Austin location on North Lamar Boulevard. Industrious has expanded to many new locations in the last year or so and has plans to open new offices in the Dallas Arts District, Denver and Indianapolis.
“It’s easy to feel like you can put out a Class-B-minus product and think it will perform well because of high demand. But if you build that, it will come back to haunt you,” Hodari said. The days of a good co-working space — or all creative offices, for that matter — meaning only an open floor plan are over, he said.
Schoenbaum said creative offices usually have industrial decor and warehouse settings, but they also requires flexibility in utilization, a mix of uses and programming that fosters community.
When supply eventually meets demand in co-working, Hodari said the customer will benefit.
“It forces co-working providers to up their value proposition and think ‘What are we doing to make our customers thrilled to be here?’” he said.
Bazaarvoice CEO, president and director Gene Austin said he will never underestimate the power of changing office space after moving his company in December 2015.
Bazaarvoice has about 500 employees in its Austin office on Braker Lane and MoPac Expressway.
When Austin joined Bazaarvoice, the company was in the early stages of relocating.
“CEOs hate moving because it distracts from the company,” Austin said. “But we brought an entirely new attitude to our company and focused on an overall sense of well-being.”
In its new office, Bazaarvoice has an open floor plan that fosters fast decision-making and a ton of communication, Austin said. Retention is at all-time highs and Austin credits the new office as a large factor.
When CEOs start to see the value of a creative workplace, that type of understanding drives innovation.
“When the traditional 10-year lease, build-out, design and operation of a workplace gets replaced with more flexible arrangements and workplaces being run by a third party, that’s completely creative,” Hodari said. “That’s an order of magnitude more disruptive than saying we’re going to wooden desks or whatever.”
Hear more from these creative office insiders and others at our Austin Creative Office event May 4. Sign up here.