The Co-Working Transformation: Why Shared Space Is For Everybody
Co-working space. It isn't just for the hoodie generation anymore.
Our panel of co-working experts at last week's South Florida Future of Office event at Wells Fargo Center says the shared office space environment is appealing to generations beyond Millennials as a larger trend of interconnectivity takes hold.
“Co-working was initially identified as a space overwhelmingly for the sort of 20-something crowd that wears hoodies and is focused on development,” said Pipeline Workspaces' Philippe Houdard (here with our moderator, Akerman's Neisen Kasdin). “But what we've also seen is it's people of all ages and all businesses. We found that even large law firms like to be in co-working space. I think that there's a transformation, which I do think reflects greater societal trends, which is shared space is for everybody.”
Philippe and Neisen were part of a panel that involved Banyan Street Capital's Taylor White, WeWork's Craig Pishotti and Buro Group's Michael Feinstein. As Michael noted, office space is following a trend begun with hotels.
Back 30 years ago, hotels were focused on the rooms. Today—with such hip brands as W Hotel—it's about the public space and amenities. “We see that's what's happening in the office sector as well. For many years, people were too focused on having a nice looking corner office and not the communal spaces,” Michael said.
For office landlords though, cost has to balance with the reality of what these co-working spaces want. High, exposed ceilings, hotel-like amenities, open spaces. All that costs money, especially when retrofitting an older suburban office building, which ultimately may not pencil out, Taylor said. And there are some older office buildings that are just too obsolete and will “languish” until completely razed and redeveloped in the future, he added.
But offices in urban centers are prime for co-working space redos because that's where the tenants want to be, and where employees prefer. One example was a building Banyan Street purchased last year in Atlanta called The Peachtree, a 345k SF office building in the heart of the city's Midtown market.
“It's a beautiful building, but you walk in and there's heavy dark wood millwork, sconces on the wall, and pastoral hunting scenes with quails and pheasants and a beautiful marble floor,” Taylor said. “I'm telling you, in 1987, that thing was cherry. But Midtown Atlanta has become a tech center with Georgia Tech there and lots of big tech tenants moving in.” So, Banyan renovated the building to update it to those tenants' tastes.
WeWork has seen a rise in bigger users with its space as well—40% of tenants have 10 or more desks. “We're accommodating IBM, and Facebook and Merck. So we're seeing a trend toward larger office space,” Craig (right) said.
And that's a good thing, as larger tenants are less likely to leave on short notice. “If you take a look at the last 50, 60 years, people have grown more and more isolated. People belong less to organizations, community groups, religious organizations...which has led people to feel a sort of sense of solitude in their life,” Philippe says. “And now we're seeing a sort of reversal of that where people want to connect. “ And that is leading to offices and even communities with more density.