Denver Coworking Boom: Peaking Trend or New Way of Work-Life?
A number of new coworking spaces came online in Denver in 2016. Are there enough coworkers to fill all of the desks?
When you step inside the new business at 1001 Bannock St., you might not immediately grasp the history preserved in the air.
From 1936 to 2014, the Fistell family owned an electronics shop at the location. Erected in 1880, the structure hauled out more than 50 truckloads of transistor-laden debris to make room for a new business, Shift Bannock, and its customers: small businesses, freelancers and independent contractors.
The lobby and main lounge at Shift Bannock feature some serious style.Within the 22,000 square feet, Grant Barnhill and his Shift Workspaces team reimagined Fistell's Electronics as a communal office of the future, with 87 private offices, coworking space and seven conference rooms as well as such perks as a massage room, bar and kitchen. Though the original timber ceilings and aged brick walls remain, visitors are no longer met with endless electronics, but greenery, glassed-in offices, modern art and soft leather armchairs. The $30 million rehab project wrapped up in Oct. 2016.
The Bannock location joins Shift's first Corona Street space. A third is slated to come online in 2017 in the old Cathedral High School complex in the Uptown neighborhood.
With these ambitious acts of adaptive reuse, Barnhill is betting on a new norm for former 9-to-5ers of Denver.
Though coworking still amounts to only a fraction of the overall commercial office market throughout the United States, Denver is experiencing a noticeable uptick in the square footage dedicated to this fresh workplace paradigm. According to Hadley Cox, vice president of commercial real-estate broker CBRE Denver, roughly 125,000 square feet of coworking spaces opened in 2016, and "that's excluding some of the small ones. We've got a really healthy, vibrant, mostly grassroots coworking scene here."
As of August, CBRE tracked approximately 808,000 square feet of total coworking space between Boulder and Denver. The launch of Shift Bannock, along with spaces from WeWork, Thrive Workplace, Galvanize, Backyard on Blake and many others, signals that coworking has become a mainstream market offering. The question remains: Has Denver reached coworking capacity or is there still potential for more growth?
"I think it will continue to grow and evolve," Cox says. He attributes a newfound desire for flexibility in professional pursuits and style of work to the meaningful absorption of the coworking model into the market.
"Denver is one of the big epicenters of this millennial population increase," says Jim Deters, founder and CEO of Galvanize, a learning community for technology. "Denver has seen massive growth in coworking opportunities in the past three years. . . . The more space and more flexibility startups have, the better for the overall ecosystem."
At the start of his career, Barnhill was an office-leasing broker, today recalling that companies would contact him looking for leases in urban high-rises. To fit their specifications, the companies would renovate units for up to $100 per square foot and landlords recouped the remodel costs with long lease terms. Though tenants typically started out the lifespan of the rental agreement pleased with their new digs, many were ultimately dissatisfied.
"Who is smart enough to predict what's going to happen to your business in 10 years?" he asks. At Shift, like most other coworking offerings, Barnhill and his team have designed modular spaces that can easily be reconfigured.
CBRE has not established a hardline definition for coworking because "there's such a broad range of different spaces," says Cox, "and who they're trying to attract." However, many themes and consistencies emerge in each of the spaces, such as flexible lease terms and a multitude of amenities.
"People want community and that's why they go to coworking," says Craig Baute, owner of Creative Density, an Uptown-based collaborative workspace. However, he adds, "We are in a moment of oversupply."
"Property developers got on board and they're not afraid to build tens of thousands of square feet," Baute says, pointing to WeWork, the 80,000-member global coworking network that opened two downtown Denver outposts in 2016, and INDUSTRY, a 150,000-square-foot space off Brighton Boulevard, the brainchild of husband-wife team Ellen and Jason Winkler. The duo is also in construction on INDUSTRY RiNo Station, a second "creative workspace" at 38th and Blake streets.
Baute says big name operators are "building awareness," which will be beneficial for the industry and coworkers themselves in the long-term.
"People are gravitating toward amenity-driven opportunities," Barnhill says, adding, that Shift locations "look and feel and act more like a hotels than coworking facilities” and aims to attract mid-career professionals. While the behind-the-scenes team has invested in comforts and conveniences for its members, "There's no ping-pong. It's not a party scene with all the distractions," according to Barnhill. Instead, Shift has programming that reflects the values and tastes of his community, such as wine tastings and film festivals.
Mike Osborne and John Barocas of bieMEDIA, a video-production firm, decided, rather than focus on beer or board games, to open their oversized office at 511 Broadway as Creative511 Workspace in fall 2016 to other media-minded companies and sole proprietors.
Baker's Creative511 Workspace targets media-centric tenants.One of their tenants, Eric Owen is the CEO of Mono Solutions North America, the U.S. arm of a Danish digital services platform. Owen worked out of Galvanize for more than a year, describing the community as tech-focused and finding value in that. However, he opted for a change of scenery and moved to 511 Broadway.
"Here we have other companies that are the same stage we are," Owen says. "It fits us really well. We have access to meeting rooms; we can bring clients in here. It's a slightly different feel in an eclectic building."
He says from a macroeconomic perspective, he anticipates that flexible workspaces are only going to become more popular. "People, by their very nature, are social animals."
But Baute expresses a concern: "We've flipped a switch -- it used to be people first, space second; now it's space first, people second," calling many spaces "cool but commodities," noting the dreamily posed pictures on coworking websites.
Deters echoes Baute's sentiment, saying, "We need coworking and shared workspace to actually fulfill their promises to the companies."
Though the collaborative workspace model has no doubt gathered momentum, there remains an education gap, as well, according to Thrive's co-founder Chad Johnson. He says he has a 50-50 success rate when talking with new people about whether they are or are not familiar with the concept.
To further expand coworking, Baute is bringing Deskpass, a floating coworking membership, to Denver that allows people to drop into several shared offices throughout the state. The program, launched in the Los Angeles and Chicago markets, is set to start before the end of this year.
In the spirit of human-focused coworking, WeWork recently launched Mission Possible, a new initiative with the support of General Assembly and Denver's Office of Economic Development that offers sponsored space and services for early-stage entrepreneurs and mission-driven organizations in Denver.
With an eye on the horizon, Cox anticipates consolidation in coworking. When asked if there are any customers who ne would encourage to shy away from the non-traditional office model, he responds, "Not necessarily. At one time, it was just geared toward entrepreneurs and people in tech. Now it can serve professional services and corporate clients, too."
When talking about the market in aggregate, Barnhill believes there's still a lot of room to grow. "How much more runway do you have in the shared workspace model?" he asks. It's not unlike craft beer and local food: He's chipping away at a macro-scale industry with an attention to detail and quality. "I would say I'm competing with traditional office buildings," answers Barnhill, describing many of them as "functionally obsolete."
Anticipating what will come next for coworking may be anyone's guess, but Baute agrees, "the losers will be traditional offices and lease agreements."
"But it's not enough just to have free coffee and beer," Barnhill adds. "The more you can help people achieve work-life balance, the happier your members will be."