How Does Coworking Space Affect The Shared Legal Office Space Market
You've probably read a lot about Co-working in the past year as it is a phenomenon that is taking the commercial real estate market by storm! Co-working spaces are opening at an unprecedented rate, eating up a tremendous volume of office space - and turning around and re-renting it as fractional office space or offices. The primary benefits of coworking spaces seem to be:
- Flexible term
- Attractive Cost
They offer "cool" spaces with high open ceilings, polished concrete floors and generally a very modern, relaxed look that is very appealing to the Millenial generation - but does it work for attorneys?
I saw an experiment once in a shared legal office suite where a large interior room was converted to a coworking space for attorneys. After giving it a good try, the owners decided to convert the space to conference room use, because they were unable to get traction among lawyers with the concept. They continued to rent windowed offices and interior offices to attorneys - as well as large workstations...but the coworking concept of having multiple people in one room just didn't seem to fly in the legal community.
This kind of makes sense. Most attorneys are looking for a private space - and most attorneys would prefer to have their own office and their own door - so shared legal office space or a legal office suite will present an ideal opportunity to attract attorneys as subtenants but they don't seem attracted to the concept of coworking.
The coworking idea is an offshoot of the executive suite business - where instead of renting individual offices the facility rents desk space in a large, open room, with multiple (and varying) occupants. The facility will often provide conference room space on demand as well as a well stocked kitchen with snacks and beverages. The community of like minded entrepreneurs is what attracts most people. They automatically fit into this group - and immediately feel like they have a lot of friends. Plus they get to make a lot of connections with each other as start up businesses tend to have similar goals and similar problems.
So we've defined an environment that is ideal for entrepreneurs and start up companies, but not of much use to an attorney who generally will require privacy for his/her work as well as his/her meetings. Often the matters that attorneys get involved with have a much higher level of security requirements, than the start up entrepreneur - but they can have issues with this as well so in addition to benches and workstations, the coworking facilities frequently have private offices also available for sublease or license - and these offices can be rented in conjunction with a number of seats for employees in the open seating "co"working area.
A primary benefit the Co-working facility can provide is the opportunity to expand or contract when needed. This is a very big deal to a start up company - but not such a big deal for a small law firm. Sure, you'd like to know if you need to expand in the future that you will be able to do so without having to move to a new address. Coworking facilities are ideal for this type of expansion, especially if the employee head count is not fixed. Coupled with the ability to expand or contract, the Co Working facility offers the ability to have a short term lease. In a facility like WeWork, the license agreements are generally for month to month occupancy - which gives the tenant the option to pull out and relocate pretty much on demand.
The community is also a very important feature that is the basis of attraction for many people. This gives you access to "like-kind" personalities, whether they are engaged in a business comparable to yours or not. You can bet however that they will have all of the same concerns and will be looking for all the same answers that you toss and tumble with late at night. Access to the community is critical to the co-working business model and it provides the "legs" that the whole movement stands on. Additionally some co-working facilities have developed venture capital arms that in addition to helping the tenants will get involved in loaning funds as well as financing their future in exchange for equity in the company.
So, what is the effect on shared law office space? I think it has very little effect on the total number of attorneys seeking shared legal office space - but it does take some pressure out of the market because many prospective subtenants that are not attorneys are drawn away from traditional shared legal space that they formerly would have rented. So the number of lawyers looking for space will be relatively the same - but the overall number of people looking at shared legal office space will be lower - because a lot of people in this cohort are being drawn out of the pool of potential tenants for the law firms, because they are relocating to the co-working facilities instead.
That about wraps it up for today. Thank you for reading reading this article. Please note that in addition to advertising individual offices for rent from law firms, we are also tenant representatives and commercial real estate brokers who are deeply involved in the finding the perfect space at the perfect price for our clients. If your firm is looking for space with occupancy in Q1 of 2017 - now is the time to start looking. We'd be happy to provide a full and comprehensive survey of available office space proximate to Grand Central Station. This will allow you to compare the price structure in various deals and help you make your "top" choices for further evaluation and ultimate negotiation.
If you have a space to sublease, we are also happy to stop by and "value" it for you - as well as give you our perception, based on experience, of how long it could take to get your space rented and what you could expect in terms of sublease revenue. We'll explain the entire process to you for as long as it takes to make you comfortable.
If you are looking for space or if you want to sublease a space, in either case we will provide detailed financial analysis of the proposed transaction(s) - so you can compare deals with varying parameters on an equal footing and always have the ability to drill down to your cost per useable sq. ft. This is the common denominator for all spaces in a ciy where the loss factor can vary from building to building. Anybody can "eyeball" a space - but you really have to have your architect calculate the loss factor and the useable sq. ft. - and then see what the cost is per useable square foot in each deal you are evaluating.