The Opportunity
Coworking is transforming the commercial real estate landscape. By one estimate, nearly 14,000 co-working spaces will be operationalized and serving over one million contractors, remote employees and other independent workers by the end of 2017.
Today, Regus serves as the world’s largest provider of flexible workplace solutions, with more than 3,000 business centers across the globe. In 2015, Regus acquired SPACES, a Netherlands-based company and leader in the creative space coworking industry. SPACES had a strong reputation for facilitating connections between its members and for hosting unique events. Upon acquisition, Regus sought to quickly expand SPACES into the U.S. with a target footprint of 30,000 square feet each, looking to establish a flagship outpost in Dallas, TX.
But high demand across the office sector presented challenges to this strategy. Regus faced rising rents, tightening supply and reduced concessions. At the same time, other aggressively managed and cutting-edge coworking concepts were competing for prime locations and market share. Regus turned to CBRE to help.
The Solution & Outcome
Regus and CBRE enjoy a long-term and strong partnership. Since 2004, CBRE has provided portfolio advisory and transaction services in 25 major metropolitan areas, arranging more than 650 transactions, and delivering more than $300 million in quantifiable transaction value-add.
To address their need in Dallas, CBRE leveraged its research team, in-market professionals and proven transaction processes to identify opportunities that met Regus' requirements and also, aligned with the SPACES brand. The CBRE team met with both institutional and entrepreneurial owners, educating them on the opportunity SPACES presented as a destination—an elevated building profile, a stable client, and a co-tenant amenity.
CBRE demographic analyses pinpointed a unique stand-alone building in Uptown Dallas, one of the city’s preeminent office submarkets. The century-old building formerly housed an architectural firm, and featured exposed brick and metal ductwork, and enormous windows flooding the space with light. At 64,000 square feet, the facility was nearly triple the size of a traditional Regus center.
CBRE guided SPACES to validate operational assumptions and proforma, out-maneuver competition, and embrace an opportunity to truly make a strong statement in the market. The location had compelling draws for future members—access to the citywide DART rail service, the McKinney Avenue Trolley stop and walkable area amenities including Klyde Warren Park, Victory Park, The Arts District and more—as well as high-profile building signage and an inviting, multi-purpose outdoor courtyard.
With a Dallas presence secured, the CBRE team turned to the broader national landscape. They began by identifying market-leading trade areas with commercial space that met the SPACES profile. Once identified, the CBRE team engaged landlords in those markets, demonstrating how the SPACES concept could elevate the profile of their building and surrounding community.
The result has been powerful. SPACES has taken off in the U.S. with 23 locations opened in the U.S. and another 150 in the development pipeline.