What Coworking Needs To Thrive In Houston

Coworking is still in its infancy in Houston, but experts say it may begin to play a bigger role in the office landscape as more operators enter and expand here. 

JLL Senior Vice President Beau Bellow said while the measure of success for coworking is undefined at this point, there is still plenty of growth left in the city.

How much the niche thrives will depend on educating and attracting the right clientele, partnering with landlords and tenant rep brokers and elevating the property to attract additional tenants and business. 

Bellow, along with other panelists at Bisnow's Workplace of the Future event Tuesday, outlined the future of coworking in Houston. 

As flexible workspace rises as an option for smaller companies and entrepreneurs, coworking companies should target second-career professionals instead of focusing solely on the startup community, Transwestern Managing Director Adam Stoltz said. 

For a midlevel professional looking to launch a new business venture, it may not be the wisest decision to sign a 10 or 15-year lease in a traditional office building. But they may not want to work from home or a coffee shop. This type of person may be an ideal candidate for coworking, he said. 

“A very small portion of our membership base is startups,” The Work Well Director Miranda Hadamik said. The Work Well is a coworking space in Northwest Houston owned by Caldwell Cos. “A lot more are retired-from-industry [professionals] starting a consulting practice.”

The startup community in Houston is also more mature and specialized in the energy and healthcare sectors than other cities, Station Houston CEO Gabriella Rowe said. At Station Houston, a hub for tech companies and entrepreneurship, there are more mid-career professionals, who found a problem in their industry and are developing a solution to fix it. Serving those groups well means looking beyond coworking templates.

"We want to cater to their needs instead of what we think their needs are," she said. 

If they want a permanent place in the marketplace, coworking companies must strike a balance between being too trendy (an issue with flexible office space) and not being captivating enough to draw users from their homes. 

Hadamik said it is still part of her job to help potential clients consider coworking as an alternative.

"It's been around for a long time, but we are still educating people that there are other options other than working from home or renting a traditional office space in a building that you don't really want to be in," she said.  

But flexible and short-term office space is not a new idea. Companies like Regus have been around for many decades offering private executive suites, while companies like The Work Well feature open, collaborative workspaces, private offices and a full range of amenities like conference rooms, big kitchens, networking spaces and other meeting rooms.

"A lot of people think Houston is behind when it comes to flexible space," Bellow said. "But, when you factor in Regus and the newer [coworking] spaces, we have an above average percentage of inventory in flexible office space. It is the portion of workplace 2.0 that Houston is lagging behind in."  

The new wave of coworking will focus on establishing a community environment, which can be narrowed by theme, philosophy, industry or passion such as wellness, Stoltz said. 

Having a coworking tenant can elevate an office building, Hadamik said. Other building tenants can use the coworking amenities like the conference rooms and other meeting rooms. The landlord and coworking operator can also partner to renovate the lobby or other shared spaces.  

A coworking operator can serve as the face of a building and attract new tenants, International Workplace Group Senior Director Marcellus Parker said.

Regus, a brand operated by IWG, has more than 40 locations in Houston and allows its members to use facilities worldwide. This access introduces out-of-state and international clients to a range of shared workspaces, he said.

In the future, landlords and owners can reinforce these relationships for leasing deals, expansion and partnerships in Houston and other cities. Or coworking clients may consider other spaces by that landlord if their company expands or wants to relocate. 

"We are helping to attract eyes on the building," Parker said. "We are bringing in [smaller] companies, but also large corporations, who are there because they have an international relationship with us. That is a win-win for everybody."

With soft office fundamentals in Houston, it is a tenant's market. Landlords and owners are offering concessions and allowances to close deals. Therefore, they could embrace coworking as a way to secure small or short leases, Stoltz said. The coworking system relies on the strength of these relationships.  

“It goes back to putting some new pressure on owners and landlord to reframe their relationship between them and what it means to be a tenant so it brings more partnership,” he said.

Similarly, tenant rep brokers can be a strong pipeline to fill coworking space, Bellow said. Together, they can find tenants seeking immediate space and help those tenants find bigger space as the companies expand.  

“We can’t do what we do without broker partnerships,” Parker said. “We are not a real estate company but a service company.”