Austin works its way towards the top for growth in coworking spaces
The coworking scene is exploding in Austin. A recent forecast from commercial real estate company JLL about coworking hot spots for 2019 ranks Austin No. 4 among the top 10 markets for projected coworking growth this year.
“Austin is one of the nation’s premier destinations for entrepreneurs,” Russell Young, managing director of JLL’s Austin office, says in a release. “Our city’s unique culture, quality of life, and low cost of living [foster] a wealth of innovation and creativity for companies of all sizes across a variety of industries. We’re the envy of many major markets across the U.S.”
The Austin coworking market is quite active. For instance, WeWork already operates five locations in Austin, with more sites on the way, and The Riveter is establishing its first Austin location in March.
Stephen Newbold, national director of office research for commercial real estate company Colliers International, says tech companies are the dominant tenants in coworking spaces, which helps explain why coworking represented 3.4 percent of all office inventory in the tech-heavy Austin market in mid-2018, compared with 0.9 percent in DFW and 0.6 percent in Houston.
Austin’s coworking share also outpaced that of Seattle (2.6 percent) and San Francisco (2.3 percent).
Elsewhere in Texas
Another survey, this one by Colliers International, finds that among 19 major markets in the U.S., Dallas ranks No. 1 for coworking growth. In DFW, the amount of coworking space in downtown markets and core submarkets soared 250 percent from the fourth quarter of 2016 to mid-2018, winding up at nearly 370,000 square feet (roughly equivalent to the size of two Walmart supercenters). That figure excludes suburban markets.
DFW’s coworking expansion dwarfs that of Austin, which ranks 14th in the Colliers survey (30 percent increase, landing at almost 300,000 square feet in mid-2018), and Houston, which ranks 15th (27 percent increase, landing at just over 706,000 square feet). San Antonio wasn’t included in the survey.
Marti believes that coworking is flourishing in DFW thanks to the region’s economic diversity, and that this diversity will continue to fuel coworking growth.
“The freelance, startup, and small business economy in Dallas has been on the rise for the last five years, helping spur the initial inception and growth of coworking in our market,” she says. “Now, larger companies — even up to the Fortune 500 — are becoming increasingly attracted to coworking spaces, not just because of the cutting down of overhead costs, but mostly because of the collaborative, creative environment that coworking typically boasts.”
Newbold points out that DFW’s and Houston’s shares of coworking space are lower than Austin’s because they rely more on a traditional base of tenants consisting of financial services firms, professional firms, and major corporations.
Colliers notes that coworking made up just 1.6 percent of all office space in the U.S. in mid-2018, or 27.2 million square feet. However, JLL says coworking represented nearly two-thirds of the occupancy gains in the U.S. office market in 2018, and it predicts coworking will constitute about one-third of the office market by 2030.
“Our research, and our conversations with corporate executives across the globe, indicate that flexible work is not just a passing trend — it’s woven into the fabric of the future of work,” Scott Homa, senior vice president and director of U.S. office research at JLL, says in a release. “Even though some markets are better positioned for rapid growth, this still leaves significant runway for expansion across all U.S. office markets.”