There are two recent announcements related to new co-working spaces to be hosted in Carmel, IN. These announcements continue a trend seen not only in Central Indiana, but all across the country. As companies shift towards flexible work environments (for both work hours and location), the appeal for co-working spaces is becoming increasingly relevant.
While Smallbox owner Jeb Banner hit the nail on the head with his assessment of co-working spaces about 2 years ago, companies still face challenges when they outgrow co-working opportunities.
The top three challenges that companies face when looking to graduate from a co-working space include flexibility, space uniqueness, and cost. We are fortunate to have worked with some of the best high-growth firms, many of whom previously struggled with the leap from co-working space to monotonous, traditional office suites in town. However, there are some unique opportunities within the Indianapolis marketplace to solve this problem:
For lack of a better term, desk sharing refers to a company subleasing an area of their space on flexible terms. Platforms like PivotDesk are used in other major markets to create a marketplace that aligns companies looking for space and with those looking to fill seats. One great example of this is Max Yoder and his team at Lesson.ly who co-habitated with the TinderBox team on Monument Circle for the first several months until both firms grew to the point that space sharing was no longer feasible. This solves a fundamental problem in real estate with high growth companies that are paying for 15-25% more space than they need because they signed a 5-10 year lease and needed to account for growth. With all the high-growth tech firm announcements (Emarsys, Geofeedia, Return Path, Salesforce, Appirio), there will likely be excess space available while these companies scale up their growth.
There are a couple of real estate developers in town that understand this challenge and have created spec suites or pre-builts. These suites range in size from 1,100 – 3,500 SF typically and include a full and unique buildout. Building owners make the investment in these spaces to make them “move-in” ready and have more flexibility because they have already absorbed the capital outlay. Two leaders in Indianapolis on this front are Zeller Realty Group and Ambrose Property Group. Benefits to the tenant company are unique space design, quick move-in, and lease flexibility. Building owners benefit from getting growing companies to call their building “home” for the long term.
As companies relocate early or downsize operations, they need to dispose of space. The benefits of a sublease scenario include move-in ready space, existing infrastructure, existing furniture, discounted rental rates and flexibility in lease term. These spaces, when in good condition, are typically absorbed quickly. This is especially important when high-growth tenants are designing office spaces, as it might be beneficial to design a layout that will be compatible to how other companies work.
Indianapolis has a tremendous business climate with many high-growth success stories. Stable companies and building owners have the opportunity to contribute to the challenges high-growth firms face which will ultimately result in a growing Indianapolis business community.