With the tech sector becoming a dominant industry in the Vancouver office market, companies who need large spaces to accommodate their growing staff could soon be forced to look elsewhere. With limited supply available, there are limited options for tech companies who demand for more than 2,000 square feet -- especially in the next two years.
“If tenants want a large space by 2018, there are very, very few options. If you don't want to spend money on tenant improvements the list is even shorter,” said Mark Trepp, Senior Vice President at JLL. “Otherwise, they’ll have to look at short term fixes. Co-working, small packages if you can find it, or have more than one location.”
With companies like Regis, WeWork, and The Profile, co-working spaces in Vancouver have become a popular alternative. With relatively lower rents than private offices and a collaborative design concept that emphasizes teamwork, it’s been an attractive option for all types of organizations. From independent contractors to flourishing startups, some of the benefits of co-working spaces are that they bring together a variety of industries that promote networking, offer lease flexibility, and allow tenants to work in a higher quality office or location that would be otherwise beyond their budget.
Given the lower price tags, more square footage, and availability to accommodate move-in dates, some wonder whether co-working spaces will outperform private office leases, especially in the tech industry
“Seattle has over 24 co-working spaces in that city, and it’s only made a material impact for tenants under 2,000 square feet,” said Kevin Nelson, Senior Vice Presidents at CBRE. “The large guys aren’t biting on it at all. Doing head leases when you’re under 2,000 square feet may impact that zone, but it’s not going to attract a large Amazon-style requirement or anything like that.”
Source: The Profile
Jeff Rank, Senior Vice President at Quadreal, shared how co-working is targeting a different market than large tenants, in particular smaller startups who want flexibility in terms and sizing.
“There’s a place for the Regis and the WeWork’s; however, how deep that market is and who that market is going to cater to may be in the short term. If there’s no other options for 2018 or 2019, [companies may opt for co-working spaces] but that’s not going to the end game. These companies will be planning for their own space eventually. To say there’s no room for co-working spaces isn’t quite accurate, but we’re not seeing the beginning of something much bigger in my opinion.”
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