Coworking : The Regeneration Effect
Though in the past, regeneration of our cities has unfolded slowly and organically, with commercial success feeding residential investment, today developers are successfully engineering the multi-facets of a high-value area in one sweep. They aim to successfully bring together established and early-stage companies, local and national retailers, residential developments and transport links. By doing this, investors are able to cultivate demand and populate new areas in a shorter timeframe.
This strategy is aided by the world’s burgeoning technology sector. By leveraging an inherent ability to work from anywhere, product-led technology companies and startups have been free to locate in relatively cheap, edgy city fringe locations, motivated by larger space and lower rents. The sector brings with it a highly skilled, well-incentivised workforce, attracted by its fast-growth, high reward potential, and undeterred by location. The effect of that migration of resource and competency is twofold: (1) it attracts complementary or competitive companies to the area; and (2) it establishes a demand for support services and amenities.
That causal chain gives rise to a regeneration effect; inward investment to an area that increases its overall value to businesses and residents alike. Coworking Spaces are often first to answer the demand, providing the infrastructure and support companies need to setup. Indeed, the Flexible office industry is playing an integral role in urban regeneration globally. Looking at four key schemes; Dumbo Heights in Brooklyn, Factory Berlin, King’s Cross in London and Fuxing Plaza in Shanghai, it can be seen that Coworking providers are helping to ensure the vital injection of business diversity that stimulates many of the economic and social dynamics that follow.
Brooklyn soars
Formerly the Watchtower buildings for Jehovah’s Witnesses, co-owners Kushner Companies, Invesco, RFR Realty and LIVWRK aim to convert Dumbo Heights into ‘an urban campus in the heart of the Brooklyn Tech Triangle’. The Dumbo neighbourhood is already synonymous with the tech and creative scene in New York, where there are over 500 technology companies within a ten-block radius, and Dumbo Heights is certain to bolster the area’s reputation, having signed-up Etsy, Frog Design and jeweller Alexis Bittar so far. WeWork also joins the list of tenants, opening offices this August. The Flexible Office provider has roots in Dumbo, where co-founder Adam Neumann started its precursor Green Desks in 2008 when the area was in far less demand. Neumann comments, “as members of a community of creators, we’ve always been attracted to Dumbo and all it represents. It’s great to be back on the shores where we started, looking out at Manhattan and dreaming of helping to reshape that skyline. The market in Dumbo is so tight right now, there’s nowhere else to find this kind of space.”
“Dumbo Heights is creating a truly collaborative campus that works hand in hand with each of its tenants, and WeWork’s approach perfectly complements our partnership’s vision for the property.” — Jared Kushner, Kushner Properties, New York
Co…working
Adjacent to remnants of the Berlin Wall stands Factory Berlin, a 16,000 square metre campus and self-described ‘stage agnostic accelerator’. Factory hosts some of the world’s largest technology brands including Twitter, SoundCloud, Uber, Zendesk and Google Campus Berlin alongside some of the smallest. By having several established companies in the campus, 85% of people who work in Factory are employees rather than freelancers, dispelling the view that Coworking applies to the one-man-band alone. Founder Simon Schaefer in fact broke the mould with a Coworking model that accommodates both startups and multinational companies together and the results have been exemplary. Schaefer explains, “we’ve applied the Coworking concept to all stages of business in Factory. Having SoundCloud next to Twitter and Twitter next to lots of startups helps everybody involved. Universally, big companies want to be around startups and vice versa due to the opportunity to learn from one and other.” The model will be truly tested next year when Factory expands to six new locations.
“Artists and bohemians have been flocking to Berlin since the wall came down in 1989. Affordable rents and vacant spaces allowed room for experimentation, as diversity in numbers created a dynamic infrastructure for cultural exchange. Today, coworking spaces are helping advance this infrastructure by creating vibrant environments for startups and established companies alike.” — Excerpt from HowYouWork, a DTZ report
Placemakers
An ongoing development covering 67 acres of central London, Argent has transformed Kings Cross from a historically unloved part of the city into a highly sought-after destination for people to live, work and socialise. Its success is beholden to Argent’s emphasis on placemaking; combining effective public spaces with a complementary mix of commercial tenants. Office use makes up over half of the development scheme, so striking the balance will certainly influence the character and overall success of the area. The future looks bright, having attracted the likes of Google, the Jamie Oliver Group and Louis Vuitton, together with The Office Group in One and Seven Pancras Square, bringing with them a community of startups and SMEs. As Charlie Green, co-founder and CEO of The Office Group explains, “the Kings Cross development centres around having a broad spectrum of occupiers. Tenants range from educational institutions, such as UAL Central Saint Martins, to multinational corporates like Havas and Google. The diversity brings a dynamism and a uniqueness to Kings Cross, which will inevitably attract people to come here.”
“I think landlords who have large office portfolios find it beneficial to contract space to Flexible Office providers because they attract small businesses. Startups grow fast and are inherently more innovative than larger companies because they can move quicker and take more risks. For this reason corporates like to be around small companies; they generate an active and energetic environment to be in. ” — Nick Searl, Partner, Argent llp. London
Fuxing creative
Property investor SOHO China has recently piloted its own-brand workspace, SOHO3Q, in Wangjing, Beijing and Fuxing Plaza, Shanghai, with imminent plans to roll out four new sites. SOHO intends to embed SOHO3Q across its portfolio of 5.5 million square meters as well as in new projects, which could make the investor one of the largest Flexible Office operators in the country. Covering nearly 140,000 square metres in the centrally located Huaihai Road area of Shanghai, SOHO’s Fuxing Plaza consists of boutique high-end retail and prime offices awarded Gold LEED certification. SOHO3Q occupies three floors in one of its low-rise blocks and is specifically aimed at early-stage companies and freelancers. Foregoing the stable income streams and strong covenants associated with established companies, SOHO3Q has its sights set firmly on China’s growing market of independent, mobile workers, predicting that a flexible model of work and workspace for an ‘internet generation’ will be good for business in the long-run.
“For SOHO China, the internet is not merely a tool or a technique, but it is a way of thinking. Every aspect of our management has gone online from design to procurement, leasing to energy management. SOHO3Q is a manifestation of this thought process; a new office product accommodating an Internet Generation.” — Pan Shiyi, Partner, SOHO China
Technology communities and talent pools in fringe locations supported by Flexible Office providers will attract inward investment and increase value. Developments including King’s Cross in London and Dumbo in Brooklyn demonstrate that regeneration is based on creating vibrant city districts with transport links, residential, commercial and cultural uses, drawing a diverse mix of people to the area. Flexible Offices provide the necessary infrastructure for technology companies and small businesses, and will play an active role in these new emerging locations. Looking forward we anticipate continued growth in the Flexible Office market as incumbents expand their network and opportunistic new entrants ‘pop-up’ in as yet, unexplored cities and countries.
Global property consultancy DTZ will soon release the #HowYouWork report. This report tracks the growth of the Flexible Office sector from the Business Centre of the 1980s to the Coworking Space of today. Get involved in the conversation @DTZ.
