Four factors influencing Orlando’s flexible space market
Until recently coworking growth had lagged in Orlando. Now the fast-growing city is welcoming a host of new flexible space options.
Whether businesses are looking to reduce occupancy costs, scale staffing fluidly or enter new markets, they are increasingly embracing a flexible workspace model as a solution. JLL research has found that nearly half of all corporations already employ a flexible office solution and, by 2020, 65 percent of companies expect to incorporate coworking into their office portfolio. See what this means for Orlando.
1. NATIONAL OPERATORS ARE SHAKING THINGS UP
Coworking represents a small slice of Orlando’s office market—for now. This year national coworking operators made big moves in Orlando, a market that had been tested by local firms for the past two decades. In 2019, WeWork, Novel, and E|spaces inked deals for a combined 197,000 square feet, nearly doubling Orlando’s flexible office footprint. This is on the heels of Industrious opening 24,000 square feet in June of 2018. With 24 unique operators and just under 40 locations in the market, Orlando now touts a wide array of options for the shared-office space customer.
2. MARKET PREFERENCES ARE EVOLVING
Two main office types dominate the flexible space industry: coworking, which caters to individual entrepreneurs or enterprises in a shared office space, and executive suites, which feature private offices with shared amenities and reception services.
Flexible office space providers first entered Orlando in the 1990s and some still remain decades later, including 1998 entrant Execu Suites. Today, total executive suite square footage in Orlando still outnumbers that of coworking. Since 2011, executive suite square footage in Orlando has more than doubled, breaching 350,000 square feet. As 2019 progresses, larger players are taking note of several local operators’ staying power as they begin high-dollar investment into the coworking dimension. Coworking has grown from virtually nothing to nearly 200,000 square feet since 2011. Regus, who has been operating executive suites in the Orlando market since 2008, is now offering a variety of coworking options across seven of its 12 Orlando locations, as it too diversifies its product mix in an attempt to capture more of the action.
3. NEW ENTRANTS ARE AGGRESSIVELY PURSUING DOWNTOWN SPACES
This year has been a banner year for coworking in Orlando’s central business district (CBD). In May, Serendipity Labs took the entire terrace level of CNL Center I, having opened 26,400 square feet of space, taking the entire terrace level of CNL Center I. Novel Coworking made a splash by purchasing the 100,000 square-foot Angebilt building. This summer, 30,000 square feet of the 1923 landmark turned office are slated to open as coworking space, with the remaining 70,000 square feet to open at a later date. WeWork followed suit and scooped up 72,000 square feet at 200 S. Orange Ave, formerly named the SunTrust Center.
4. URBAN IS IN, BUT DON’T COUNT OUT SUBURBIA
Almost 70 percent of coworking space in Orlando will be downtown and along Orange Avenue by this time next year. Coworking’s attraction to downtown settings extends nationally, driven by millennial lifestyle preferences and startups that prefer short-term leasing during their early years. What’s more, coworking is generally more prevalent in markets with lower vacancy. With Orlando’s CBD sitting at 90 percent occupancy, conditions are right for the core to continue attracting the majority of coworking growth. In the suburban areas, executive suite and coworking operators alike have conformed to the live-work-play concept, with locations at the nexus of multiple multi-family housing developments and some even located within apartment communities. And with satellite and remote offices appealing to large companies looking to provide flexibility to a suburban workforce, Orlando may see coworking providers first enter downtown then branch out to suburbia. Worth watching is how increasing enterprise interest in coworking will influence the market.