This ranking is drawn from Business Insider’s Top 17 “Coolest” Co-Working Spaces. Even though co-working and other business innovations have been discussed in the real estate community for some time now, it’s worth looking at how these unusual spaces (or collectives) can fit into the strategy of office real estate investors and operators. Here are my picks for Top 10 Co-Working Spaces in the U.S.:
- Ace Hotel
- Citizen Space
- The Coop
- Green Spaces
- Indy Hall
- Jellyfish Cartel
- Link Coworking
I found the Business Insider article through The Tenant Advisor, an excellent blog focused on workplace trends and office real estate. I’ve been quite interested in this subject as well, and have dedicated a number of posts to the open-space office layout that’s fundamental to most co-working setups. Let’s pause for a brief definition of Co-working, courtesy of you-know-who:
Coworking is a style of work that involves a shared working environment, often an office, and independent activity. Unlike in a typical office environment, those coworking are usually not employed by the same organization. Typically it is attractive to work-at-home professionals, independent contractors, or people who travel frequently who end up working in relative isolation
Take, for example, Indy Hall, a co-working space in Philadelphia’s Old City neighborhood. The establishment is essentially an office where people focused on different projects can come and go as they please. Plus, it has couches, colors other than gray, and no cubicles. Single-day use of Indy Hall is $25, unlimited use is $275/month (and comes with a desk).
These rates are about average for most co-working centers, with the exception of some (like the Ace Hotel’s lobby) which are free.
Co-working spaces are to office buildings what youth hostels are to hotels. One will not replace the other, since they attract different occupants with different needs and budgets.
I would argue the most successful co-working establishment of all time is Starbucks (NASDAQ: SBUX). A great deal of the company’s success comes from the fact that many people go there, not simply for the coffee, but to get out their laptops, enjoy the free WiFi, and work on their novels (or whatever).
Office landlords and investors would be wise to follow the growth of this niche sector. There are plenty of CBDs with office vacancy rates of 15% and higher, and landlords losing money from the unfulfilled space. While they may not be so fortunate as to score a long-term lease with a major law firm, there are many start-up companies, independent professionals (who insist on calling themselves “consultants”), and others who simply need a little bit of space.
For a creative landlord, this could provide a new, consistent revenue stream. And all it takes is a wireless router and a bunch of couches.