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Austinites need an office to return to. Are coworking offices the answer?

Vessel Coworking in the Highland neighborhood has seen an uptick in demand since the start of the year. (Vessel Coworking)

The future of coworking is bright. Starting earlier this year, local operators report increased demand. Buoyed by the state's early reopening and the ongoing migration of tech employees and companies, the Austin coworking market is performing better than most.

Coworking is the use of an office by people who are self-employed or work for different employers so as to share resources and save on overhead costs. "I truly believe coworking is the new normal," said Lindsey Rohde, senior director of campus operations for Galvanize, which has campuses in six cities, including a 20,000-foot-space in the 2nd Street District.

On the ground

Galvanize has seen month-over-month revenue growth since January and the most sales leads in its 12-year history. In the Austin area, Rohde suspects this growth is due to the continued migration of millennials to the Austin area, which has prompted companies and investors to follow suit.

More so than any of its locations, Galvanize Austin is seeing an uptick in demand from larger companies that need an office for a single remote employee or small remote team—what is known in the industry as a hub-and-spoke model. "Companies have realized, as we've proven ourselves in the last year, that remote work is an amenity that you can offer to your employees," she said.

The Commune in the North Loop neighborhood has also seen demand increase in the last couple of months, mostly among new members, many of whom moved to Austin during the pandemic. (Molly Culver)

The Commune, a North Loop coworking space that caters to artists and creatives, has also benefited. Founder and owner Lauren Cunningham said the business, which lost around 75% of its members last spring, has seen an uptick in demand in the last couple months and is now approaching pre-pandemic levels. The vast majority of the Commune's members are new, and many relocated to Austin during the pandemic.

In addition to these transplants, the vaccine rollout has played a role. "There's definitely a correlation between when we've seen an uptick in new members and vaccination rates," she said.

Post-pandemic needs

Commercial real estate firm CBRE predicts a positive outlook for the local office market in 2021, despite rising vacancy rates and negative absorption. Senior Field Research Analyst Luke Goebel said this is because of the numerous companies that have announced plans to relocate to Austin. Those companies will need office space.

Kevin Hanan, a CBRE broker who specializes in office tenant representation, said clients' main request right now is flexible office space. Coworking spaces offer short-term leases that are easy to get into (and out of) and expand. "The coworking-slash-flexible office market provides a nice, risk-free way to plant your business in Austin," he said.

Clients are also looking for coworking options that offer privacy and network security. This shift away from the communal, "hot desk" model that defined the coworking industry even just a few years ago predates the pandemic, Hanan said, but the last year has accelerated it.

Austin-based Firmspace offers proworking space, which is geared toward business professionals in search of more privacy and security than a traditional coworking space might offer. (Firmspace)

Austin-based Firmspace, which has four locations across the country, including at 500 West Second Street, calls this "proworking." CEO Anish Michael believes the coworking industry is headed in this direction and anticipates a consolidation as a result of the pandemic. Firmspace, however, is doing well. The company is due to open a fifth location in Chicago this month and is exploring the possibility of a second location here in town. "We've always thought Austin is ahead of the game," he said.


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