Temporary office space is popular with entrepreneurs and start-ups.
When John Lenker opened his own marketing and communications firm three years ago, the question of where to set up offices was a bit of a no-brainer.
His young company, Lenker Consulting, wasn’t big enough to lease a wide swath of top-notch (and inevitably expensive) Class A offices. And “the alternative of [older] Class B space struck me as kind of lonely. Who wants that?” he said.
Lenker opted to rent flexible office space from Regus, the world’s largest provider of flex space, which ranges from fully equipped offices to professional meetings rooms and business lounges to tiny “thinkpods” for the executive on the go. European-based Regus is expanding in the Twin Cities, with seven locations, and two more in the works in Roseville and in the AT&T Tower in downtown Minneapolis.
Recently, Lenker moved his firm, now eight employees strong, to Regus’ tony new facility in St. Louis Park’s West End development.
Regus tends to locate in high-demand buildings and areas, said Scott Ravenscroft, the firm’s area director. “Location is obviously important,” he said. “What we’re selling with Regus also has a lot to do with image.”
Tenants range from “one-person tax accountants to organizations like Google that have different space needs at different times,” he said. Fees vary from single-day passes to longer-term office leases, and typically each office complex is anchored with a receptionist, as well as common and refreshment areas, where tenants inevitably congregate and network.
Regus, which has more than 1,700 locations in 600 cities worldwide, has capitalized from the wholesale change in the way office space is used in an increasingly mobile and technologically savvy world.
A Regus study indicated that 48 percent of the 26,000 clients surveyed work remotely for half their working week. “The clear implication is that those who continue to work regularly from an office will soon be in the minority,” the study noted. Regus offers clients passes so they can work, literally, at facilities worldwide.
The flex-office trend has further evolved as the nation’s 80 million millennials — young people born after 1980 — have entered the workplace, changing its often-staid, cubicle-culture dynamic.
Other Twin Cities flex-office firms, such as Executive Suites of Minnesota, have embraced the trend. Executive Suites was founded by Wayne Freeman in 1990, and now has four locations throughout the Twin Cities, with plans to open a fifth. Freeman says many of his clients are lawyers starting their own firm, and financial planners, who don’t want a long-term lease.
CoCo, a co-working and collaborative workspace for independent workers, small businesses and corporate workgroups, has locations in downtown Minneapolis and St. Paul, and a recently opened facility in Uptown.
“In some ways, we’re all similar in that we offer people an alternative to working in a traditional office where the employer provides the space and tells you where to sit, or where you work at home or at a coffee shop,” said Don Ball, founding partner of CoCo.
“Our folks are completely mobile,” Ball added. “If you have a laptop and a mobile phone, you don’t need an office with a door or a receptionist … You don’t need to put on a show.”
Even hotel chains are getting into the game — earlier this year, for example, Westin Hotels and Marriott Hotels & Resorts announced plans to open or test flexible workspaces.
The trend comes as large companies downsized their offices in the Great Recession to drive down costs, prompting some firms to rethink how they use and configure their space. In many cases, that thought process has led companies to expand shared space and reduce the number of private offices.
A recent report prepared by the real estate firm Colliers International found that absorption — the rate at which available space is leased — slowed in the Twin Cities during the third quarter. This was due in part to the “densification,” or the contraction of square feet of office space per worker, in an effort to “encourage collaboration, cut costs, and take advantage of technological advances that allow for more mobile computing,” the report concludes.
Although companies may be confident enough in a still-skittish economy to sign and renew leases, they are often reducing the amount of space they rent, though not necessarily the number of workers, Colliers said.