Thursday, July 25th, 2019 July25th2019

Sell for More News: Hotels and apartment buildings enter the co-working business

Published on July 25th, 2019

Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.

 

A popular alternative to traditional office space, co-working space providers have been competing with office owners for tenants for several years. Now, co-working operators face new competition of their own as hotel and multifamily operators enter the co-working market.

Many multifamily and hotel operators are using co-working spaces as an amenity to attract and retain new residents or hotel guests and raise brand awareness. Others are looking for a slice of the action by establishing in-house co-working facilities that charge a membership fee and are open to the general public.

A new workplace study by the parent company of Regus, Spaces and HQ, found that 50% of full-time professionals globally work outside their offices at least 2.5 days a week. With 85% of the 15,000 survey participates reporting that a flexible work option boosted their company’s productivity, demand for co-working space is expected to increase, as more companies adopt a flexible work policy.

Seen as an experiential amenity for residents, the growth of co-working spaces at multifamily projects is exploding. It’s a must have amenity for luxury apartment projects today.  It’s thought that a co-working space and an impressive fitness facility are the top two amenities prospective tenants look for when choosing a new apartment unit.

In fact, a company called Craftwork is focused on providing “space as a service” in the multifamily sector. It provides apartment owners with additional income by leasing underutilized space for a specialty coffee bar and co-working space.

Craftwork creates a co-working environment with free access for apartment residents, but also offers social and dedicated office memberships to non-residents, which include access to conference and meeting rooms, free coffee and events.

In a similar move, hotel operators seeking a slice of the co-working market and something to set them apart from the competition are increasingly adding co-working spaces to their facilities.

Some think this could be a big opportunity for hospitality operators, as workplace flexibility becomes more commonplace and young professional freelancers and entrepreneurial nomads add to demand for co-working space in hotels internationally.

Hotels are uniquely positioned to succeed in this market. With expertise in providing quality services and amenities, the hospitality industry is a natural match for today’s office user, who has come to expect a good workplace experience. Hotels offer a range of services that enhance user experience, including restaurants, bars, coffee bars, meeting spaces and multiple common lounge areas.

For example, the Virgin Commons Club, a paid membership co-working facility at the Virgin hotel in Chicago includes access to private meeting areas, wireless printing, and a lounge area with a bar, free drinks and a library.

Branded hotel chains are beginning to embrace this concept and are revamping hotel common areas to create working and lounging areas available for both hotel guests and the public at large. The Downtown Moxy by Marriott in New York City, for example, created an interactive common area called The Living Room that doubles as a co-working space and game room by day and transitions to a hangout and party spot at night.

While it is too early to know if a co-working amenity will have a positive impact on hotel occupancy or loyalty, hotels that offer co-working space have received strong feedback from consumers.

Co-working is the real deal…ignore it at your peril.

 


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About Beau Beach, CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 800-721-3287, click to schedule a call or Beau@ProwessIRES.com