In today's creative office landscape there is "co-working" and there are "shared offices." Co-working fosters community with content, programming and cooperation. Shared offices solve short-term office requirements. Shared offices like WeWork are the hot trend now, but there could be a pendulum shift to little companies and smaller spaces.
CBRE SVP of global tech and media Dan Lyne said true co-working spaces are well-curated environments where managers know every detail of what’s happening in the office, and put their workers in positions to be successful both individually and in a team setting. Shared offices giants like WeWork and MakeOffices operate on a large scale that Lyne feels does not fit the traditional notion of co-working. These groups are absorbing astounding footprints across the country, a trend that Lyne calls “big box co-working mania.”
In downtown Chicago alone, WeWork controls 356k SF of office space across five locations, while MakeOffices has 160k SF under lease at three locations. It's a trend that's playing out in most major markets. Lyne said these growing footprints are causing real concern about shared office saturation among brokers and top tech sector professionals.
Shared offices are still a relatively new class of business product and their long-term viability is unproven, Lyne said, so it's a gamble to take one on in your building. Some landlords have done deals with shared office companies to fill space vacated by a larger tenant. But if the big-box co-working space doesn't succeed, the building owner has little choice but to tear down that office and start over.
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The ability of companies like WeWork to lease large footprints is setting them up in competition with tenants for traditional office space. Lyne has seen deals negotiated between multiple tenants held up because that landlord was also negotiating to bring a shared office firm in the building. The demands of a lease with a shared office firm, such as the need for space on contiguous floors, forces landlords to put smaller deals on hold. And the smaller tenants can’t wait for the situation to be resolved, so they look at their other office options. If those landlords can’t land the shared office deal, Lyne said they may end up with no deal at all.
But there’s the possibility for another successful model to emerge. Lyne believes the ideal co-working model will eventually shift to local companies controlling smaller footprints of less than 40k SF. These companies will be ones with strong reputations for building communities, while retaining the innovative design elements that make shared office space attractive.
To learn more, attend Bisnow's Chicago Creative Office event, 7 a.m. Jan. 24 at 311 South Wacker. Register here.
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