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— Office Properties Quarterly — October 2015
Market Drivers
al office space,” said Bonnie Fisher,
Regus regional vice president.
As the Great Recession contin-
ued to take its toll on America, the
demand for workspace flexibility
grew as people lost jobs and began
new careers as freelancers, contrac-
tors and entrepreneurs.
“The idea behind co-working
has been around for decades,”
said Fisher. “It’s really just another
solution in the market. It’s heat-
ing up because it caters to a lot of
mobile users, start-ups and contract
workers. We cater to that as well,
of course. And a lot of workspace
solutions still remain in the office
suite segment, so a lot of our clients
want private offices or shared team
rooms in addition to being offered
co-working spaces.”
With this increase in demand,
the blurring of the line between
co-working and executive suites
became more apparent. It is no lon-
ger a given that a co-working space
always has more open areas than
private areas.
“I wonder if co-working has lost
its meaning in Denver,” said Baute.
“It’s mostly used as a marketing
term now versus the traditional
co-working aspect of a collabora-
tive workspace that is focused on
people first, space second.”
Another Denver co-working space,
Thrive Workplace, was founded dur-
ing the recession by brothers Chad
and Charlie Johnson. Thrive dedi-
cates 50 to 60 percent of its square
footage to private offices, the pri-
mary profit provider, Chad John-
son said. A lot of Thrive’s stability
comes from the office leasing, but
the co-working element highlights
a sense of community that is fresh
and new, he said.
“We recently signed up an office
member that came from execu-
tive suites,” said Alex Neil, head of
Thrive’s community and business
development. “What really sells
people on co-working is that you
can have your own office and your
own private desk. You can sit there,
do your work and then lock up. But
when you’re done, you can come
out into the energy in the lobby,
with music and people hanging out.
The energy and the community feel
warm and welcoming.”
With the increased availability
of private and team offices in co-
working spaces as well as more
infrastructure and administrative
options, each new space must cre-
ate a unique environment to set it
apart from the others.
“No longer can you compete to
be everything for everyone,” said
Rex Roberts, founder and owner of
Steno. “You have to identify a silo
and build for a specific industry or
business phase, which is where we
saw the opportunity to enter the
market here in Denver.”
Steno, a 6,000-sf space that
opened in August and offers
open desks, dedicated desks and
dedicated offices, caters to people
interested in productivity, first and
foremost, said Roberts. “Which isn’t
to say that we don’t appreciate
community, collaboration, events
and programming,” he said. “But we
don’t want to push that to the fore-
front of why you would want to be
a member and office here.”
These distinctions are crucial to a
property’s success because many of
the co-working and executive suite
spaces are competing for the same
members within a relatively small
office worker pool – mainly remote
workers, contractors, small-busi-
ness owners and freelancers.
One thing that sets some execu-
tive suites and national co-working
firms apart can be the companies’
wide network of properties. For
example, Regus’ foundation is in
working with Fortune 500 compa-
nies, which can take advantage of
over 3,000 Regus locations world-
wide, said Fisher.
“We have a lot of large accounts
that use us across the globe to out-
source their workspace needs to be
more flexible and successful, espe-
cially if they’re moving to Denver or
opening a new division,” said Fisher.
Other typical members include
many traditional office users, such
as technology companies, profes-
sional services and energy firms,
she said.
Thrive, whose members are
largely small-business owners,
offers educational pieces, office and
administrative services, and flexibil-
ity within the design of the spaces,
to help members grow their busi-
nesses, Johnson said. “Offering the
community and the services to help
people grow is a niche we take great
pride in,” he said.
Meanwhile, Creative Density is
sticking with what it knows best
– a workspace for freelancers and
remote workers who are opting
to office there because they like
the friendly community environ-
ment. Of the 3,500 sf of space at its
Uptown location, less than 500 sf is
private offices.
To Baute, his locations – one in
Uptown and one in Capitol Hill –
are critical to his success. “Co-work-
ing is an optional thing,” he said.
“It’s something you choose to do,
not something that you have to do.
So we needed to be in a convenient
spot.”
No matter how you define co-
working, shared space and execu-
tive suites, everyone agrees that
the industry is booming. Creative
Density expanded twice last year,
Regus opened five Colorado offices
in the past year, and Thrive is in the
middle of leasing a two-floor proj-
ect in the Ball Park area in addition
to its Cherry Creek space. Add these
expansions to other announce-
ments, including WeWork entering
the market with three downtown
locations, and it’s clear that the
market is growing.
“Never before have we seen more
flexible ways of working and, espe-
cially with the younger generation,
the expectation of work is chang-
ing,” Fisher said. “There’s a lot more
flexibility in co-working, and I think
there’s an endless appetite for flex-
ibility, not only for space, but also
time, cost and how people want
social connections and a sense of
community when they come into
work.”
The impact co-working will have
on the office property market could
be a slow shift in the way people
think of office in general, said Rob-
erts. People may move away from
thinking of an office as a com-
modity and, instead, think of it as
a service. “More and more you’ll
catch people using office less as a
noun and more as a verb. ‘I office at
Steno,’” he said.
Some office developers are begin-
ning to incorporate co-working into
office projects as an amenity for
tenants, said Baute.
“It’s not like the bottom is going
to fall out for traditional office guys,
but I am a little scared for them,”
he said. “I think the business model
of signing a five-year lease for a
big chunk of space is going to start
chipping away. We used to sign
an annual contract for everything,
but that lease structure is going
away because people want to be
flexible.”
s
Photo courtesy Regus
In addition to offering the typical executive suites products, such as private offices, administrative services and infrastructure, Regus
offers co-working spaces for members.
Photo courtesy Creative Density
Creative Density still devotes most of its space to open desks
