An Exclusive Pre-Opening Preview of Spaces Las Olas
Ken’s Konfessions of a Coworking Convert – Episode 3
Okay – I am going to start my article with it’s surprise ending. A couple of days after I started writing this post, I was asked to find a location for a tech startup looking to open a Miami satellite office in early March. Spaces at Two Miami Central was perfect. The ultra-modern center at Miami’s new transportation hub was set to open in late February. Employees could live along the Metrorail and Metromover lines and take mass transit to work. They could also hop on the Brightline Train and service accounts in Fort Lauderdale and West Palm Beach. I sent info to my client who was very excited. I called my Regus Rep only to find out that all 500 seats have been leased to a major local company. So it appears that Corporate America will be very receptive to the Spaces concept. Thankfully, I was still able to identify some great alternatives for my client on the Truss platform.
As we head into 2019 Truss is beginning to generate a lot of traction with businesses seeking South Florida office space. As I sit in my coworking space at Pipeline in Downtown Fort Lauderdale, I am wrapping up a lease on Miami’s Brickell Avenue, invoicing a deal in Kendall south of Miami, getting pricing on a Brickell coworking space, setting up one tour in Miami’s red-hot Airport/Doral submarket and another in West Palm Beach.
One thing is certain – as I pointed out in Ken’s Konfessions episode 1 and 2, coworking is exploding. I now have well over 100 South Florida coworking centers listed for lease on the Truss Platform. Miami leads the nation with 3 percent of its total office inventory dedicated to coworking, occupancy is remarkably strong and lease rates continue to climb. WeWork is constantly in the news based on their explosive growth and their $20 billion valuation. Their facility in Miami’s $1 Billion Brickell City Centre is spectacular and remains the standard by which all other local centers will be judged.
I lease a great space at Pipeline in Downtown Fort Lauderdale with lots of interior glass, nautical decor and friendly open public spaces. (as shown in our virtual tour) Quest, Buro, Anex, Office Edge and most recently Venture-X also compete in the coworking market with multiple locations in South Florida. But WeWork may finally be seeing formidable competition and it comes from a familiar but unexpected source.
Regus is the world leader in executive coworking space with over 3,000 locations. Regus centers are generally in top Class-A buildings in major cities. They are elegant, but they exemplify the previous generation of executive suites with long corridors lit by fluorescent tubes. Coffee is billed as an add-on. It is not surprising that Regus has been losing market share to WeWork, which caters to millennials with hip open spaces, ample glass and free artisan coffees, cold brew and even cold brews.
But Regus is fighting back with its new Spaces division. Spaces by Regus is a new concept aimed at capturing WeWork’s market. The first two South Florida Spaces locations are opening this month at Las Olas Square in Fort Lauderdale and Two Miami Central at Downtown Miami’s Brightline Station. I was honored to get a preview of Spaces’ Fort Lauderdale location and wanted to pass along my first impressions and pictures of the new concept. My thanks to Arash Jamali, Area Manager for Regus.
Spaces will occupy the second and third floor of Las Olas Square’s Annex building at 515 Las Olas Boulevard. Las Olas is Fort Lauderdale’s premier address for shopping, dining and business. The area is known for its great restaurants, galleries, boutiques and premier Class-A office towers. Downtown Fort Lauderdale is a hotbed of activity with over $2 billion of new development underway including upscale residential condos and rentals, hotels, retail and offices.
Spaces features two floors of offices with floor to ceiling impact glass. While it lacks the ocean views of some of the Las Olas towers, it offers great views of the palm-tree lined Las Olas Corridor; and the ample interior glass lets in plenty of Florida sunshine. It is a huge step forward from traditional Regus offerings. There are open coworking areas and large lounges to encourage collaboration among members. While I didn’t get the chance to preview Spaces at Miami Central, it will have the additional advantage of being a free Metromover ride from Bayside, Brickell City Centre and the American Airlines Arena. It will also have immediate access to Brightline (soon to be Virgin Trains) which transports you in style to Fort Lauderdale in half an hour and West Palm Beach in an hour. Spaces will be worthy competition for WeWork’s Brickell City Center location and it doesn’t hurt that the WeWork location has little if any space available. (Update – I guess someone else figured this out and leased the entire facility)
As a coworking consumer myself, I will be facing the decision of renewing my lease at Pipeline vs. moving over to Spaces. My decision will be based on views, price, quality, networking opportunities and overall vibe. For views, I never get tired of looking at the ocean. I can see the expanding Fort Lauderdale Skyline and an occasional spec of blue from my 10th floor Pipeline office, but nothing like I would get at the neighboring Carr Workspaces and Office Edge or Miami’s Anex Offices. I love the natural light from the floor to ceiling interior and exterior glass at Spaces. The second and third floor views are pleasant and there is always lots of activity to observe along the Las Olas corridor. A key for me and for Truss is the ability to network and meet people who will eventually need office space and become customers. Pipeline does a great job due to the interior glass which encourages collaboration and its promotion of tenant events. WeWork’s first Fort Lauderdale location will not open until 2020.
Regarding price, Spaces is going to be expensive. Interior offices will start at around $1,100 – $1,200 per month and exterior will start around $1,700. That is close to $300 per square foot. Sure, you get internet, a phone and the use of the lounges, kitchen and meeting rooms. But that is more than five times the $55 per square foot that you would pay for Class-A traditional office space on Las Olas. A $1,700 rent bill isn’t outrageous for a business owner looking for a windowed office in a premier building. And every office has ample natural light with the floor to ceiling glass on the interior.
But here is where I have concerns. Spaces, like WeWork, is targeting major corporations, or enterprise users, who are increasingly turning to coworking to accommodate overflow, satellite offices and special projects. Nearly a quarter of WeWork customers are Enterprise users. Spaces will be asking around $30,000 per month for a 1,300 sf Enterprise space – roughly $276 per square foot. The question is whether this flexibility is worth the price. I can lease 1,300 square feet with ocean views for five years on Las Olas for less than the annual cost of the 1,300 sf enterprise space. Can Spaces do it? I wish them luck and hope that I can be the broker that finds the tenant to take that deal.
The ultimate decision on which coworking space to lease comes down to numbers as well as overall quality and vibe. Some people like the quiet, elegance and feel of the traditional executive center. It may be your father’s executive suite, but your father still needs an office and that market segment remains strong. Carr Workspaces is renovating and Regus will be converting a lot of their facilities worldwide to the modern Spaces concept. I can’t yet speak for the vibe at Spaces. Pipeline is cool while at the same time feeling warm. Buro, who has a number of centers in Miami also exudes cool and WeWork wrote the book. There is a fine line between cool and cold – the question is whether Spaces will be cool – I think it will. My decision on a space for 2019 will be based on whether the networking potential of being in a larger center like Spaces will be worth the extra expense.
For Spaces, I am fairly certain that the small offices will be a big hit. Whether the enterprise tenants will be willing to pay those rents remains to be seen. (Update – I assume the tenant for Two Miami Central will paying more than the $55 market rent but less than the $300 enterprise rental rate) And if they are, how long will it be before property owners accelerate the process of bringing their coworking operations in-house? And will Ken renew at Pipeline or go to Spaces, or go for the ocean views at Carr? For the answers to these questions and more, stay tuned to Ken’s Trends and Ken’s Konfessions of a Coworking Convert.