Atlanta coworking space reshapes entire office market
Coworking has become a strategic business option for a variety of tenants in Atlanta, with over 1.2M sq. ft of office space that’s expected to grow.
Coworking is not just for freelancers and solo-preneurs anymore. It has become a strategic business option for a variety of tenants in Atlanta—from startups that don’t want to commit to a long-term lease to major corporations that use it as a recruiting and retention incentive.
Coworking spaces usually house several tenants and include open floor plans with unassigned workstations, shared break rooms and conference areas and sometimes private offices. Most charge membership fees or provide short-term leases to give users financial and site flexibility.
Atlanta has more than 1.2 million square feet of coworking space on the market, and that number is expected to grow, according to JLL research.
Most of the coworking space in the region is in the central business district – Midtown is particularly dense, with 38 percent of the local coworking space. In the first-quarter of 2019, one of the metro area’s largest leases was signed by coworking operator WeWork, which snagged 100,300 square feet in the Downtown submarket, at 101 Marietta. JLL’s data shows that coworking providers WeWork, Regus, Industrious, Spaces and Roam dominate the local coworking market in terms of square footage.
Not long ago, brokers and coworking operators saw each other as competitors. But as coworking has evolved and become more of a legitimate solution for a larger number of companies, the two have begun to recognize each other’s value and have started to collaborate. JLL brokers now evaluate with every client whether such space makes sense for the deal. It’s always a potential recommendation.
Coworking popularity soars
There are four main types of corporate tenants drawn to coworking:
- Companies that need temporary quarters while they build permanent office space
- Businesses that want satellite offices for employees to work closer to their homes
- Fast-growing companies that can’t predict their space needs past a year or two
- Companies that see value in sharing space for business development purposes
As popular as coworking has become, though, sharing isn’t for everyone. Usually, prospects either are drawn immediately to the culture and the spontaneous interaction or they see it as distracting and claustrophobic. But there are clients that are willing to put up with some discomfort because they know that coworking space tends to attract smart young professionals — especially in the technology industry — and being in close quarters with rising talent might lead to a chance to collaborate with or hire that talent.
For example, JLL Atlanta recently worked with an IT recruiting company that said shared space wasn’t its first choice, but it signed a coworking lease anyway because of the chance to meet potential clients and employees.
A wider range of alternatives: subleasing and direct spec suites
If coworking space still isn’t for you, you might consider subleasing or direct spec suites, which are also becoming common alternatives to build-outs and long-term leases.
When you sublease, you get the benefit of traditional, private office space with the move-in-ready convenience of coworking space, because many subleases come fully furnished. Your company can be up and running overnight. And in Atlanta, subleases have been priced below market and open to shorter-term commitments.
Many landlords also are offering move-in ready direct spec spaces, providing a private work environment that often includes common break rooms, conference rooms and lounge areas. These spaces tend to be much less expensive than coworking space.
Competition from these alternatives is now prompting coworking space operators to get into the traditional office game. WeWork recently built out the eighth floor at Terminus in Buckhead, for example, creating several 2,000- to 5,000-square-foot offices, each of which can accommodate a single tenant.
Coworking vs. traditional space
Coworking may be busting down the doors in Atlanta—growing more than anyone projected—but traditional landlords are still in a great position to attract the right tenants. While certain occupiers see value in the flexibility of coworking, the Atlanta market is keeping the coworking expansion in check based off different organizational needs. When choosing between coworking or traditional office space, the most important factor is to determine what fits your business for both the present and the future.
Read more about Flex spaces’ explosive growth in Atlanta and other top U.S. markets in JLL’s Flex Space trends and insight report.