Co-working is an unavoidable buzzword in Denver. In the few short years dedicated co-working space has had a presence in the city, the definition has evolved from a strictly communal environment to one that often embraces private offices as well as community areas. The long-term effects of what this new office environment means to the office property market has yet to be seen. But its ever-growing presence, which capitalizes on flexibility and a plethora of officing options, should not be ignored.
“Traditional co-working is mostly hot desking and open desks,” said Craig Baute, Creative Density founder. “When it started, it focused on people who could work from home but didn’t want to. They really wanted to be around friends. You were first solving the need of people versus the need of space.”
After helping open a co-working space in Toronto in 2010, Baute moved to Denver to open a similar space in June 2011. In addition to not wanting to be the first co-working space in a city – Creative Density was the second – he wanted a city that offered the right amount of risk and reward when considering cost as well as culture.
“I chose Denver because it was affordable, it was in growth mode, and the culture was accepting of remote working, freelancing and the start-up culture,” he said.
At the time, Baute’s concept of co-working space was pretty different than executive suites, which was one of the only flexible office environments available. While co-working focused on people first, executive suites focus primarily on meeting office space needs for its members.
For example, executive suite provider Regus, which was founded 25 years ago and has 20 locations in Colorado, offers a plug-and-play office environment. A tenant can rent an office for himself or for a team, and Regus supplies the infrastructure and services, including phone, Internet, administrative and reception staff, furniture and meeting rooms.
“Our tenants typically are people that want the flexibility that we offer and don’t want to invest the initial capital outlay that it would take to open up their own traditional office space,” said Bonnie Fisher, Regus regional vice president.
As the Great Recession continued to take its toll on America, the demand for workspace flexibility grew as people lost jobs and began new careers as freelancers, contractors 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 heating 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 longer 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 collaborative workspace that is focused on people first, space second.”
Another Denver co-working space, Thrive Workplace, was founded during the recession when Thrive’s Chief Operating Officer Chad Johnson moved from Minneapolis to Denver and began the business with his brother. Thrive dedicates 50 to 60 percent of its square footage to private offices, the primary profit provider, Johnson 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 executive 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 create 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 Stenu. “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.”
Stenu, 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 forefront of why you would want to be a member and office here.”
These types of 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-business owners and freelancers.
One thing that sets some executive 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 companies, which can take advantage of over 3,000 locations worldwide, said Fisher.
“We have a lot of large accounts that use us across the globe to outsource their workspace needs to be more flexible and successful, especially 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, professional services and energy firms, she said.
Thrive, whose members are largely small-business owners, offers educational pieces, office and administrative services, and flexibility within the design of the spaces, to help members grow their businesses, 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 environment. Of the 3,500 sf of space at its Uptown location, less than 500 sf is private offices.
To Baute, his location – one in Uptown and one in Capitol Hill – are critical to his success. “Co-working 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 for them.”
No matter how you define co-working, shared space and executive 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 project in the Ball Park area in addition to its Cherry Creek space. Add these expansions to other announcements, 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, especially with the younger generation, the expectation of work is changing,” Fisher said. “There’s a lot more flexibility in co-working, and I think there’s an endless appetite for flexibility, 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 Roberts. People may move away from thinking of an office as a commodity and, instead, think of it as a service, he said. “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 have taken note and are beginning 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.”
