Page 10
— Office Properties Quarterly — September 2016
INVESTMENT
|
DEVELOPMENT
The employees of United Properties thank
our owners, clients and project partners for
a successful first 100 years. We look forward
to working together as we continue to evolve,
adapt and lead into the next century.
CELEBRATING
A CENTURY
OF SUCCESS
I
n the past five years, Denver
has been a trendsetter for the
proliferation of collaborative
office facilities nationwide.
Galvanize made a big splash
when it launched during Denver
Startup Week in 2012 and gave new
relevance to the Golden Triangle
neighborhood. INDUSTRY, on Brigh-
ton Boulevard, followed in 2014.
This year brought New York-based
WeWork to Denver and its facilities
take up multiple floors of new office
buildings in Union Station and on
Platte Street.
These collaborative office spaces
bring a big cool factor to Denver’s
office market and represent some of
the most prestigious office address-
es in the startup scene. Companies
can choose from desk rentals, work-
station pods, small office suites or a
combination thereof, and the inher-
ent flexibility affords rapidly grow-
ing companies the peace of mind
to change their footprint without
moving.
In this light, the concept increases
efficiencies, and tenants, in turn,
have access to common areas
with chic cafés, leisure areas (read:
pingpong), a variety of conference
and huddle rooms, and convertible
spaces to host large events. Get-
ting everyone out of their offices
and into the common areas creates
community and fosters dialogues,
which leads to innovation.
We often work with companies
that specifically request these types
of offices when we start our search,
because, in part, employers believe
it is what their employees want.
When we hand them the keys, they
are excited and
energized for their
new office space
paradigm shift.
The benefits of
officing in a com-
munity like this
can be very tan-
gible – the busi-
ness attorney who
hangs her shingle
in a collaborative
office has a pro-
spective client in
literally all of her
neighbors who
may not yet have
their corporate legal team in place.
Two founders of a tech company are
casually discussing their next fun-
draising effort, which is overheard
by a neighbor who offers to make
an introduction to a venture capital
firm he knows in Boston and the
tech company secures its funding
within the week. These exchanges
are happening hundreds of times
per week in collaborative offices,
and the Denver startup scene is
thriving, in part, because of it.
But officing in a community
rather than a building is a double-
edged sword, and we now receive
feedback regularly that there is so
much going on at these facilities
that employers see their employees
foregoing productivity at their desk
in lieu of attending an endless sup-
ply of events happening just outside
their door. It would be hard for any-
one to get work done when most
offices are enclosed with glass walls
and drop-in visitors are frequent
when they see you are at your desk.
And the cost! At first glance,
renting a smaller office suite with
access to a plethora of common
amenities seems like the prudent
way to go, financially. Yes, you are
paying base rent for a smaller suite
than your company would other-
wise need, but on a square footage
basis, expect the rent to be consid-
erably higher. Then add in common
area maintenance, insurance and
taxes for which you are paying your
pro-rata share of those massive
common areas.
Some collaborative office concepts
have an additional and mandatory
amenity charge on top of the triple
net to cover front-desk services,
refreshments (including alcohol)
served regularly and event-related
expenses. Landlords have shown a
take-it-or-leave-it mentality when
we have tried to cap these expenses
or their annual increases during
lease negotiations. Our clients, in
turn, have accepted the risk. This
means you are paying for amenities
based not just on how often you use
them but, more importantly, how
often your neighbors use them in
what appears to be the latest itera-
tion of the tragedy of the commons.
Landlord-tenant relations also
were noticeably different from the
perspective of negotiating a lease
and resolving day-to-day issues.
These landlords often had no for-
mal real estate backgrounds and
presented themselves more as com-
munity partners than landlords,
a message well received by the
startup community. Yet as these
office concepts have received major
financial backing from investment
organizations throughout the coun-
try, landlord-tenant relations have
reverted back to the traditional,
which has stung the tenant base.
While these may be relatively
small prices to pay in exchange for
the many benefits, a handful of our
clients have now determined that
being in a collaborative office envi-
ronment is not for them. In some
instances, this was because there
simply was not enough vacancy in
the collaborative office center to
accommodate their massive growth.
In other instances, it is for financial
reasons or greater autonomy.
We have noticed, however, that
when our clients have made the
move out of the collaborative space,
they do not have their sights set
on the traditional office they came
from. Their experience in the col-
laborative environment opened
their eyes to a new way of space
planning, interior design and work-
place culture, and there is no going
back. They are now creating their
own office spaces in the same style
– but at half the annual square foot-
age cost they were paying.
For some companies, collabora-
tive office spaces offer a permanent
office solution, while for others it
acts as launching pad; unquestion-
ably, these spaces are leaving their
mark on the Colorado office scene.
The analysis of your company’s
financial and cultural ideology,
however, will determine whether
such a venue is the right fit for your
business.
s
Alexander F.
Becker
Vice president, Real
Estate Consultants
of Colorado LLC,
Greenwood Village
Leasing Trends
