Move Over WeWork And Traditional Office Space, There's A New Competitor In Town
While coworking giant WeWork battles ongoing liabilities from its rapid expansion and failed IPO, a newer flexible-office product is spreading its wings in Texas and attempting to cut costs associated with coworking and traditional office products.
Austin-based Swivel is now offering its agile office solution in Dallas, Houston, San Antonio and Austin. The Denver office market also is on the company's immediate market expansion list, with more locations expected to open in 2020.
What makes Swivel different from other flexible-office concepts?
“We do not lease spaces,” Swivel founder and CEO Scott Harmon said. “We felt that was too risky for us to have a lot of leases on our books. What we do instead is we work strategically with the owner of the asset — or the firm that owns the building — and we strategize with them about taking some portion of a building and making it available using the Swivel model.”
Swivel then markets 10% to 20% of a building to growing companies and digitally savvy firms that desire room to grow while maintaining the shorter lease structures associated with coworking firms.
Essentially, the partnership Swivel forms with local landlords allows tenants access to shorter office leases with private, fully furnished spaces minus the higher rental costs associated with shorter coworking contracts or the inflexible and longer lease terms tied to traditional offices.
“From a dollars and cents perspective, we think our approach is the most cost-effective,” Harmon said. “With a traditional lease, especially with a high-growth company, you really have to lease a lot of excess space [to prepare] for growth, and it's just very expensive. If you are going to sign a five-year lease, you just have to have a lot of unused space.”
Coworking offers flexibility, but this freedom often comes with a higher-per-SF price, which can quickly add up as growing companies add staff members, Harmon said.
“I think maybe the simplest way to think about it is that Swivel’s approach is to cut out the middleman and allow companies to lease directly from landlords, but to do so on shorter and more flexible terms,” Harmon said.
When tenants search for space through Swivel, they receive opportunities that match their preferred location, layout and requested furnishings.
With landlord partners like Capital Commercial Investments, HPI, Knight Construction, Kucera and Live Oak Partners, Swivel has access to 40-plus properties inside DFW's top office submarkets alone.
The concept essentially connects Swivel's tenants to top landlords, brokers and leasing agents while reducing markups charged by workspace operators, Swivel said.
While traditional office products run tenants upward of $1,131 per employee on a monthly basis for a five- to 10-year lease commitment and coworking costs $1,313 per employee for a six-month to two-year lease, Swivel's agile office product costs approximately $1,065 per employee for a one- to three-year commitment, Harmon said in a blog post.