With the biggest name in flexible office space, WeWork, heading to a public offering this month, it’s a sure sign that the sector has grown up. Whether it ends up ill-fated or not, the WeWork IPO suggests one certainty about coworking: the sector has evolved and flexible office operators are catering to a larger client base than in years past.
“The entire flexible office market, whether they are competitors or not, wants WeWork to be successful because they have done such an excellent job of spearheading the flexible office brand and offering around the globe,” said Charlie Morris of Avison Young. “People know about and are willing to engage with flexible office space because of WeWork.”
Showing that they too are betting big on the future of this space, Avison Young recently hired Morris as the leader of Avison Young’s U.S. flexible office solutions practice. Based in Dallas, his initial focus will be on Chicago, New York, San Francisco and other major U.S. markets with a mandate to then expand across the U.S. and globally.
Though WeWork has helped to propel an alternative office solution that is palatable and comprehensible to a larger portion of the public, that comprehension has likely fallen behind the reality as the space has evolved far and fast. The old coworking stereotype conjures images of a hip, open place for freelancers, independent contractors and the startup community to work and collaborate. And while those people are still leasing desks in coworking facilities, the offerings have shifted in the past few years to focus on enterprise users.
“To me, there is no doubt that we are well past the fad phase of this sector,” said Morris. “Everyone is now acknowledging that, for owners, flexible office has to become part of your asset management strategy; if you’re an occupier, part of your portfolio management strategy.”
Large firms like the agility that a coworking space offers. They can reduce their own real estate expenditures while staying nimble enough to be able to grow as they see fit without having to worry about where to put bodies. According to Morris, the allocation of space that operators offer are only going to grow in the future, regardless of the WeWork valuation, because there’s still so much enterprise appetite for flexible space. With the demand side driving momentum forward, there are a number of parties approaching the market in new and unique ways.
“I think that there will continue to be multiple options and the world is going to continue to develop,” Morris said. “We’re still very much in the early stages of this evolution.”
The flexible office market has been around for decades. While WeWork has been able to apply a glitzy veneer to the phenomenon (and attract billions of venture funding in the process), there were other pioneers such as Regus, which is also one of the few firms that to this day has a sizable offering in the suburbs. But the flexible office world has changed quite a bit in the last few years with a stronger focus on enterprise users, meaning each of those players have and will continue to evolve their practices to support this new way of thinking.
“There is always going to be traditional leasing done, but I think that even that world is changing dramatically,” said Morris. “That’s one of the reasons that I decided to leave the traditional tenant rep side, because I could see that evolution and I wanted to be on front end.”
Morris has 13 years of experience in the commercial real estate industry, largely specializing in office tenant representation with Avison Young, Cassidy Turley and Colliers International. Prior to rejoining Avison Young, he handled business development for LiquidSpace, a PropTech startup company that brokers flexible solutions designed to assist tenants with peak workflow, seasonal demand and volatile business growth.
“There’s going to be a lot of significant growth around this scene and we are looking to find people that are engaged in the flexible office economy, those who truly want to be part of the future and not some legacy operations,” Morris said. “I think that people acknowledge that change is coming and there are a lot of plusses and minuses that I’m fairly confident that, whenever we can sit down with people, they are going to see that we are building something that is truly unique.”