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Shared Workspace Sector Growing Fast

CHICAGO—Although the total amount of shared space is a small proportion of the market, it already plays a key role in the economy.

By Brian J. Rogal | brianjrogal | | Updated on July 08, 2016

 

chi-KammererHeadshot (4) Steffen Kammerer of JLL
CHICAGO—In the past few years, the rise of the sharing economy has changed the way people work, and in response shared office providers have begun a remarkable expansion in many top markets. And although these providers now account for just 0.7% of the total US office space, they play a key role in the market, a role which will only grow in the future. Since mid-2014, shared office providers such as WeWork , Regus and others, signed 3.7 million square feet in leases of more than 20,000 square feet, according to a new report on the sector from JLL . Nearly one million square feet of this leasing activity was completed in the first quarter of this year alone, bringing the total size of the industry to 27 million square feet. “Even though it is a small percentage of the office market from a square footage standpoint, the shared office sector plays an important role,” Steffen Kammerer , senior vice president at JLL, tells GlobeSt.com, especially when it comes to smaller tech firms and start-ups. “It offers a flexibility that traditional leases can’t supply.” When a young firm occupies a shared office space run by a top provider, it removes many burdens that once preoccupied start-ups, he points out. Instead of worrying about establishing offices, entrepreneurs can concentrate on developing their products or services, giving each the nimbleness so important to tech and creative efforts. Furthermore, shared offices offer a host of amenities that equal those found in the offices of Fortune 500 companies. “And it’s not just for start-ups,” adds Julia Georgules , v ice president and associate director of US office research for JLL. Regus, by far the largest provider in the sector with roughly 960 US locations and 17 million square feet, has many Fortune 500 clients. And large firms today see shared offices as a way to quickly establish satellite offices in new submarkets without the risk or inflexibility of a traditional lease.     
chi-Georgules_Julia (3) Julia Georgules of JLL
These key roles have made landlords more open to including shared office companies on their tenant rosters. In fact, many have come to see these spaces as another amenity for their traditional tenants, Georgules says. These tenants can occupy a meeting room in a shared office for a day, for example, if they have large groups of clients coming through for a presentation. “It increases the value and profile of a building; it’s like having a good coffeehouse in the lobby.”   Furthermore, Stefan says shared offices can bring buzz to a building, since they typically fill a space with activity. As reported in GlobeSt.com, for example, when Google left its space in Chicago’s River North neighborhood, the landlord brought in WeWork to fill most of that space, and the building at 20 W. Kinzie now has a constant stream of visitors and new occupants. WeWork now has 68 locations and about 4.4 million square feet in the nation’s most in-demand office submarkets. Next week: GlobeSt.com talks with Georgules and Kammerer on the prospects for shared office providers in secondary markets.
   

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