PDF RALEIGH/DURHAM COWORKING
[Pages:7]RALEIGH/DURHAM
COWORKING AND SERVICED OFFICE MARKET REPORT
What's Next in the Evolving World of Flexible Office Space
Q1 2019
photo credit: SPACES at The Dillon
THE EVOLVING WORLD OF FLEXIBLE OFFICE SPACE
The demand for flexible workplace solutions has been surging in the U.S.
and worldwide, resulting in providers adding millions of square feet of
coworking space in 2018, an increase of more than 30% since 2017. In
response, investors are pouring billions of dollars into coworking, while
landlords are opening up collaborative spaces and provisioning their
own flexible office solutions. Industry stakeholders are examining their
Jen Dittmer Vivolo
Director, Global Flexible Workplace Solutions
approach not only to this emerging sector, but also to incorporating resiliency in real estate in general. The current report by Cushman & Wakefield (C&W) sees very few providers who are currently achieving
success in the sector with only a coworking model. Instead, the trend is toward hybrid
solutions where operators supply not only open plan coworking space, but also fully demised
private suites that can be customized and branded, known as managed and serviced offices
(MSO). The average term is 12 months, a short as month-to-month, and as long as five years.
A number of factors drive this demand. For start-ups and small to medium sized enterprises (SMEs), the mitigated risk, avoidance of capital expense, and especially the short-term commitment are enticing. Entrepreneurs can allocate money, time, and resources to growing their business and not managing real estate. Moreover, not only do contingent workers (freelancers, independent contractors, consultants, or other outsourced and non-permanent workers) make up a larger share of the growing labor force, millennials find the coworking model compelling - they want to be located in urban areas and work in innovative workplaces that inspire them. Hence, larger established companies are now seeing opportunities in coworking facilities to retain and attract young talent. Many corporations are examining their workplace models in a bid to encourage creativity by providing a more unstructured and less centrally controlled environment than their traditional offices. They are also seeing value in the scalability that is intrinsic with flexible workplace solutions. Particularly when occupiers are growing or downsizing, a workplace strategy that includes some flexibility can make business and financial sense.
Going forward, coworking and MSO in real estate portfolio strategies will likely continue to gain traction. We all know that cost containment remains the primary focus for occupiers during periods of volatility and rising rents. Given this, more companies will embrace flexible workplace as a solution set. This has already been the trend in industries such as life science, financial services and insurance, and especially technology, which are all major drivers of office activity in the Raleigh-Durham market.
30%
INCREASE IN COWORKING AND MSO INVENTORY
IN 2018
photo credit: Industrious at Charter Square
GLOBAL & U.S. FLEXIBLE OFFICE LANDSCAPE
1.5+ MILLION COWORKING MEMBERS WORLDWIDE
675X MORE
GLOBAL COWORKING SPACE TODAY THAN IN 2008
50+ MSF
TOTAL U.S. COWORKING
SQUARE FEET
OVER THE NEXT DECADE, FLEXIBLE WORKSPACE WITHIN CORPORATE REAL
ESTATE PORTFOLIOS WILL GROW
5-10%
(CURRENTLY 1%)
FLEXIBLE OFFICE NOW MAKES UP APPROXIMATELY
5%
OF ALL CLASS A OFFICE INVENTORY IN THE U.S.
GLOBAL COWORKING TRENDS
ESTIMATES PREDICT THERE ARE NOW CLOSE TO
30,000
SHARED WORKSPACE LOCATIONS WORLDWIDE
40%
OF THE U.S. WORKFORCE NOW COMPRISES CONTINGENT WORKERS
Going Corporate
Becoming a staple for developers
A breeding ground for in-house
innovation hubs
Booming in Asia Pacific
Rapidly growing within all U.S.
metropolitan areas
Gaining momentum through M&A
Cost arbitrage will not slowdown the momentum in emerging markets
RALEIGH/DURHAM FLEXIBLE OFFICE LANDSCAPE
Duke University 302,015 sf
LARGEST OCCUPIERS OF NEW LEASES 2016-PRESENT
NEW LEASES
SAS 419,994 sf
Syneos Health 258,250 sf
Lab Corp 221,988 sf
IWG (Regus/ SPACES) 187,691 sf
Relias Learning 184,378 sf
Allscripts 234,470 sf
MetLife 219,002 sf
Teleflex
WeWork
163,568 sf 156,000 sf
MAJOR COWORKING PROVIDERS
23+24351H15% 5%
23%
33%
57%*
24%
WeWork Regus* Other
Spaces* Industrious
*part of IWG
SUBMARKET SHARE OF COWORKING SPACE
Coworking locations are well distributed throughout the Triangle, but the largest representation is in the downtown Raleigh market with 29% of the market's share.
200,198 sf
143,619 sf
131,013 sf
80,730 sf 55,507 sf
73,237 sf
Downtown Raleigh
Downtown Durham
Chapel Hill
North Raleigh
Cary
RDU/RTP
LARGEST COWORKING OFFICES BY SQUARE FEET
WeWork ONE CITY CENTER
76,000
Regus MERIDIAN PARKWAY
54,376
Spaces THE DILLON
34,290
Industrious CHARTER SQUARE
34,141
Spaces STATION AT EAST 54
31,304
Regus BRISTOL PLACE
26,354
Regus EAST 54
24,203
Regus 3737 GLENWOOD AVE
19,507
Regus REGENCY PARK Regus CENTREGREEN V HQ Raleigh CAPITAL CLUB Regus BOA TOWER Regus FORUM I
19,000 17,937 17,832 15,375 15,350
COMPANY SIZE
Local National International
Amer Undgnd TRUST BUILDING
15,000
HQ Raleigh 311 S HARRINGTON 14,710
Source: Cushman & Wakefield Research
RALEIGH/DURHAM AVERAGE MONTHLY COSTS
SHARED
P R I VAT E
$250
Virtual Office
Use of an address and access to
business functions, such as phone answering and
conference room rental, without
physically occupying the space.
$300
Membership
Touchdown desk on fixed monthly
or annual fee, includes the cost
of desk space, access to pay-per-
use services and networking events.
$350
Coworking
Access to a desk in a shared area, but not dedicated.
Availability is not guaranteed. Resources and services are pooled, both for efficiency and to encourage
collaboration.
$450
Dedicated Desk
An assigned desk in a shared area but is often located in close proximity to the coworking space. Includes lockable filing
cabinet or locker.
$575*
Serviced Office
Exclusive access to defined and secure office(s) or demised suite, often with 24/7 keyed access and some signage such as lobby directory.
*per person, in 2-person, 120 sf window office, 12 month term
TO SPEC*
Managed Space
Similar to direct space, a branded, turnkey, and customized workplace solution leased and managed by a third-party from buildout to ongoing daily management.
*solution for 10+ people and commitment term of 12 months
or longer
MARKET COMPARISON
Average Class A Rental Rate
New York (Midtown) San Francisco
Washington D.C. Miami
Boston Seattle Chicago Denver Atlanta Dallas / Fort Worth Nashville Raleigh/Durham St. Louis
$43.96 $41.94 $39.36 $33.16 $31.89 $30.31 $30.01 $29.74 $27.00 $22.46
$61.47
$82.91 $79.27
RALEIGH/DURHAM
39%
BELOW THE NATIONAL AVERAGE
60%
~2/3 OF ALL CURRENT COWORKING SF HAS COME INTO EXISTENCE SINCE 2016
Source: Cushman & Wakefield Research
LOCATIONS
DUKE UNIVERSITY
/0501
]\^85
!(2 (!18 !(4
DURHAM
CHAPEL HILL
0/15
!(8 !(10
UNIVERSITY OF NORTH CAROLINA
!( ]\^40 3
OLD CHATHAM GOLF CLUB
B EVERETT JORDAN LAKE
WeWork
Regus
PARKERS CREEK Other
CROSSWINDS
SEAFORTH
WHITE OAK
POPLAR POINT
Spaces Industrious
BEAVER DAM LAKE
FALLS
# Company Name SF OccuLpAieKdE Opening Date
#
1
WeWork
81,032 FALLS LA5K/E1/19
15
2
WeWork
76,000
STATE REC AREA
16
3
Regus
54,376
17
Company Name HQ Raleigh Regus Regus
?
SF Occupied 17,832 15,375 15,350
44
Spaces
52,619
4/13/20
188
American Underground
15,000
5
Spaces
34,290
19
HQ Raleigh
14,710
6
Industrious
34,141
2200
Regus
14,288
67
Spaces
78
Spaces
89
Regus
32,000 31,304 26,354
12/16/19
211 CrossRoBaLdUEs JBAuYsiness Center
2222
POAINcTcess
COUNTY PARK
2233
Regus
11,300 10,200 9,010
190
Regus
24,203
2244
American Underground
8,842
111
Regus
20,000
4/1/19
2255
Regus
6,903
122
Regus
19,507
2266
Office Evolution
6,441
133
Regus
19,000
2277
Office Evolution
5,000
144
Regus
17,937
2288
Intelligent Office
2,000
!(9
!(22
RALEIGH-DURHAM INTERNATIONAL AIRPORT
!(17 !(20
LAKE CRABTREE COUNTY PARK
LAKE CRABTREE
!(!( 14 11
WILLIAM B UMSTEAD STATE PARK
!(27
CARL ALWIN SCHENCK MEMORIAL FP
SHELLEY SERTOMA PARK
!(!( 26 7 !( !(!( ]\^ 12
440
16 23
0/70
PRESTONWOOD COUNTRY CLUB
FRED G BOND METRO PARK
CARY
APEX COMMUNITY PARK
0/64
!(13
REGENCY PARK
MEREDITH
NC ST COLLEGE
COLL
RALEIGH
OF VETERINARIAN MED
!(!( NORTH
CAROLINA STATE
!(!(!(!(!( UNIVERSITY
15 19 24 15
28 25
!(21
LAKE JOHNSON PARK LAKE JOHNSON
!(6
/0401
0
/01
]\^540
]\^495
WALNUT CREEK PARK NORTH
Miles
2.5
5
photo credit: WeWork at One City Center
WHAT'S NEXT
TO LEARN MORE ABOUT COWORKING AND THE RALEIGH/DURHAM OFFICE MARKET, PLEASE CONTACT:
JEN DITTMER VIVOLO Director, Global Flexible Workplace Solutions +1 919 645 3591 jennifer.vivolo@
JOSHUA CHILES Research Analyst +1 919 645 3590 josh.chiles@
Copyright ? 2019 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
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