James Rankin says quickly expanding multi-location flex providers are aggressive on pricing.
DALLAS—Texas ranks as the third-largest state for flexible workspace, behind New York and California. While the supply of flexible workspace centers in Texas grew 12% from 2017 to 2018, more than the national average for emerging markets, the cost-per-desk in a flexible workspace decreased 9% in Austin and 8% in Dallas during the first half of 2018, according to a study by the Instant Group.
“After steady growth for a number of years, we are likely seeing a market correction in pricing for flexible workspace,” said Justin Harris, US sales manager of the Instant Group. “Additionally, part of the discrepancy is likely a result of the growth of centers outside of the central business districts, which naturally impacts average rates.”
Austin is the priciest city in Texas in which to rent a desk, with an average cost-per-desk in a flexible workspace in 2017 reaching $896 per month, whereas Dallas had an average of $728 per month. In the last year, Austin and Dallas also had an increase in hybrid centers which offer a mix of co-working and serviced office spaces.
“We have seen a number of years of high supply growth in the Texas market,” James Rankin, head of research and insight at the Instant Group, tells GlobeSt.com. “Despite demand growing by 30% last year in Texas, the market has grown very competitive in the short term as providers look to gain share.”
In particular, Rankin points to quickly expanding multi-location providers which are proving very aggressive when it comes to price. These providers often offer high-level discounts to quickly fill new space and gain an ever-increasing share of the new wave of corporate customers taking up flexible space.
“We do not see this competition lasting due to the expected long-term demand growth, but there certainly has been an adjustment in pricing within the market which has caused the average rate to drop in the last year,” Rankin tells GlobeSt.com.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
