When investment and distressed asset veteran Bruno Duarte opened the U.S. office of Brazil-based real estate fund TRX, he needed an office that reflected the fund’s discerning investors.
It had to have the right address, the right atmosphere, and it had to be ready right away.
“We have high-net worth investors from Brazil and we needed to select a place that had the right image,” Duarte says.
He found what he needed at Brickell Link, one of downtown Miami’s newest executive and co-working facilities.
The 24,184-square-foot center blends traditional private office suites with trendy collaborative, open-desk bullpens, commonly called co-working space. Brickell Link is on the 16th floor of the 600 Brickell building and is operated by the building’s developer Foram Group.
Like most executive suite models, Brickell Link offers an easy plug-and-play solution for a new office start up like TRX or an entrepreneur seeking a professional environment without long-term commitments and hassles of standard office leasing.
Suites come furnished with Internet and a bevvy of admin services and conference facilities ala carte.
So far, more than half the private suites have been leased since opening in November. Prices on the remaining start at $1,675 and go up to $6,400.
“We saw a niche,” says Andrea Salazar, facility manager for 600 Brickell. “Our target is a more sophisticated entrepreneur or a business person from Latin America or Europe that needs a really nice office space.”
And with the surge in connectivity, technology, and post-recession recasting of the workforce infrastructure from on-staff to freelance or contractual workers, experts say a seismic shift could soon be shaking up the office market.
Technology prompts changes
“The world of work is changing. Large corporations are decreasing their footprint. All that is fueled by technology,” says Annette Reizburg, president of the Global Workspace Association, the national trade group for the executive suite and co-working industry. “I would say that the real estate industry is going to change hugely. Within the next 10 years there will be more spaces in buildings that are collaborative than are traditional office.”
Innovatively designed co-working spaces are infusing the decades-old executive suite industry with a sudden coolness that seems to be spreading like real estate wildfire, but it is still far too early to tell whether it will burn down old models.
Brandishing hipster names like Axis, Pipeline, LAB Miami and Spaces, this real estate segment is getting more local newspaper ink these days than celebrity super couple “Brangelina.”
Proponents of the co-working movement say that’s because this trends is more about creating a community of like-minded business people than it is about creating real estate to park a laptop.
Targeting the creative and techie crowds, these co-working spaces tend to offer vibrant, edgy atmospheres where people work, connect and interact.
�We knew we had to create an environment where you’d have to ask yourself, “why am I sitting at Starbucks all day when I could be here,” – says real estate broker Jay Whechel, who worked with owners of the 980 Cendyn building on North Federal Highway in Boca Raton to start Cendyn Spaces.
Hybrids blend old, new concepts
Like Brickell Link, the 8,800-square-foot center is a “hybrid” because it blends both old school private suites with new age co-working space.
Whelchel says they decided to put their hybrid on the first floor and turn much of the lobby atrium into a hubbub of co-working commerce.
�We completely redid the atrium and we designed the co-working space so it would overflow and come out into the atrium,” he says. “We encourage people to have their meetings in the atrium.”
Unlike traditional executive suites, co-worker spaces are leased through a monthly membership model. They range in cost depending on the facility. At Spaces, someone can buy a day pass for as little as $30 or join as fulltime member for $250.
Whelchel says the new co-working space also helped him close larger office leases as incoming corporate tenants see the onsite co-working desks as a cost-efficient way to house employees or contract employees that spend limited time in the actual office.
�It is the buzz and I think it is a great product in the right market,” says Kamani Yanez, a seasoned executive suite operator, who just opened Zen suites in 12,171 square feet at the Bank of America building on Palmetto Park Road in downtown Boca Raton. That said, Yanez is not giving up prime office suite space for co-working desks just yet.
�The efficiency of the space is very key and what you try to do is maximize the space and make it as office intense as possible,” Yanez says. “The profit margin in this business varies widely. It can be 20 to 30 percent, but the efficiency of your space can also drop it to 10 to 15 percent.”
At Spaces in Boca Raton and Brickell Link in Miami, building owners control their spaces and have been willing to roll the dice that the latest trend will eventually put cash in their pockets.
So far, leasing of those old school private suites is still outpacing membership enrollment for the co-working space. ?
Freelance writer Darcie Lunsford is a former real estate editor of the South Florida Business Journal. She is senior vice president for leasing at Butters Group and is avoiding a conflict of interest in her column by not covering her own deals.