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4 Things Holding Back Creative Office in Houston

Houston’s starting to pick up on the creative office and co-working trends, but not at the same pace as much of the rest of the nation. Experts at Bisnow’s Workplace of the Future event last week broke down some reasons why.

1. Age of Decision Makers

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One of the reasons that Austin is ahead of Houston for co-working space is the age of companies' leaders, says Parkway Properties managing director Mike Fransen (left, with CBRE’s Brandon Clarke and Graham Horton). He’s regularly amazed by how young the CEOs he tours in Austin are, but it’s not surprising there’s such an immense amount of creativity among those companies. Mike believes Houston will have retention issues if we don’t see a change in leadership. He has seen this start to change; in the last few years, he’s gone from typically touring 50- to 55-year-olds to touring 40- to 45-year-olds.

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DE Harvey Builders VP Dennis Kikolla agrees that the shift is taking place, even in the big oil companies. He’s working on a West Loop construction project where the facilities guy left and was replaced with someone 22 years younger. He expects that trend to pick up steam, especially as $40 oil impacts staffing decisions. Dennis is far right with our second panel: moderator Kirksey EVP Brian Malarkey, Scott + Reid VP Chris White, January Advisors principal Jeff Reichman, Boxer Property president Justin Segal and Ziegler Cooper principal Jim Hanlin.

2. Implementing Beyond the Physical Space

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Architects are ahead of the curve and designing for the future, but management and HR are lagging behind, according to OpenWork partner Drew Jones. He says HR is often having a different conversation than the facilities team, and a more flexible building is useless if management and policies don’t also update. If done right, open layouts can improve management (like Facebook’s Mark Zuckerberg) if the upper echelon are highly accessible for questions and guidance. Drew ran the first co-working space in Austin and now is helping real estate investors implement the model in their space. Pictured: 275 attendees joined us at Headquarters for the event.

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The same concept is true on the landlord side; Justin says operating co-working facilities in particular takes a whole new set of skills that most property managers don’t traditionally use. That’s leaving a “world of opportunities” for the operators who've figured out how to manage the space well.

3. Pricing/Retrofitting

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Upgrading to the office of the future is capital intensive, Mike says. Arch-Con SVP Brad Jameson concurs, and adds it can be hard to pin down just how much you’ll need to pay. The techniques and technology are evolving very quickly, he says, and there won’t be a lot of historic pricing data to analyze. Brad suggests that whenever possible, you should make a switch to an open format when you’re moving to a new location; trying to retrofit your existing office costs a lot of money and takes a lot of time. Here’s Brad (far left) with NASA’s Steven Gonzalez and PDR’s Amaury Rodriguez.

4. Financing

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Creative office and especially co-working space is hard to get underwritten, Justin says. Lenders aren’t very keen to finance space that will be filled with a bunch of small tenants with no credit. Although that’s what Boxer has been targeting in its projects, he says his team has signed quite a few full-floor tenants to its co-working (“Boxer Workstyle”) facilities. Plus, WeWork’s crazy valuation has made some finance guys take notice; it might become a more accepted investment soon. Pictured is our moderator, FBX Elite managing partner Larry Horning, with Bury's Jason Atkinson and FMG's Jamie Moritz.