Is Dallas-Fort Worth The Next Frontier For Coworking?
Dallas-Fort Worth’s coworking scene has yet to reach the density of more mature markets such as New York, Chicago and Los Angeles, but the number of coworking companies in DFW and the amount of space devoted to the sector is growing dramatically.
The statistics include executive office suites provided by the likes of Regus and Meridian, incubators and coworking companies. For the coworking subsector, JLL has identified 53 operators in DFW — many of them independent companies with just a single location.
Cushman & Wakefield has identified 60 DFW coworking locations totaling 1.27M SF.
Definitions for shared (or flexible) office space and coworking are blurring somewhat with each offering some of the same or similar amenities. Shared office spaces, sometimes called executive suites, generally offer amenities that include a professional receptionist, private offices and short-term lease agreements.
Coworking, at least in its initial form, provided desk or table space and WiFi, often in a shared room, with options for a dedicated desk or a private office. The concept quickly attracted startups, freelancers and entrepreneurs who paid a monthly fee without the commitment of a long-term lease. Besides the affordability and freedom from a lease, they were drawn to the social aspect of coworking, which often can be found in hip live-work-play environments.
Today, coworking’s appeal has expanded beyond entrepreneurs and freelancers to reach well-known corporate brands that may view coworking facilities as an amenity for their remote workers, as an option for short-term assignments or for temporary flex space to accommodate growth.
“At least 35% of memberships at Serendipity Labs are paid by the member’s employer,” said Kimarie Ankenbrand, senior vice president at JLL in Dallas, who represented Serendipity Labs in its Hall Office Park lease.
Landlords more amenable to coworking
The company doesn’t expect to grow to the size of coworking giant WeWork but is focused on strategic growth in certain markets. It goes after Class-A accommodations in live-work-play environments, she said.
Landlords who were slow to embrace coworking offices in their buildings have become more open to the idea as they see the trend has staying power.
“In Dallas, 12 to 18 months ago, you had landlords that were presented with this opportunity and they would pass on it. Even WeWork was going around trying to find which landlords were going to have the appetite for them,” Ankenbrand said.
While acceptance is growing, landlords still have a hard time determining how to value a coworking company’s credit as many are still in startup mode.
One of the largest, WeWork, has been around since 2010. In June, the Wall Street Journal reported that SoftBank Group Corp. was in discussions to invest more capital in WeWork, with a deal that would value the shared-office company at $35B to $40B, doubling its current valuation of $20B. Earlier this month, Fast Company questioned the valuation in a story asking whether WeWork is worth $40B or $3B.
Coworking sector evolves and matures
As the sector grows and evolves, coworking companies have been adding amenities such as wellness clubs and culinary concierges to attract and retain members.
The landscape is becoming more competitive, and amenities allow operators to differentiate themselves, said Cushman & Wakefield Senior Director Cribb Altman, who represented WeWork in its first two DFW leases.
The company now has five locations in DFW and more than 200 worldwide. The most popular submarkets for coworking operators have been Uptown, downtown, Legacy and anywhere a live-work-play urban vibe exists.
Altman said WeWork initially entered DFW due to its abundance of Fortune 500 companies, diversified economy and strong economic fundamentals, and those attributes continue to draw additional coworking companies to North Texas.
The future of coworking in DFW
As far as what the future holds for coworking in North Texas, that may be anyone’s guess as the sector is still considered early in the cycle.
“It’s really tough to predict,” Altman said. “I don’t see it stopping; I never would have predicted, though, three years ago that we’d be at more than 1.2M SF.”
“I don’t think it’s a fad. It’s here to stay,” Altman said. “It’s just what does the growth look like over the next five years?”
CORRECTION, July 18, 5:33 P.M.: An earlier version of this story incorrectly portrayed Kimarie (last name)’s relationship with Serendipity Labs. She is not representing the coworking company beyond the Hall Arts deal. The story has been updated.