It’s billed as the perfect marriage between companies looking to make money off their underused office space and start-ups leery of a long-term commitment.
Shared office space, already common in tech hubs such as Cambridge and the Innovation District, are making deeper inroads in downtown Boston. As more start-ups move to the area, landlords and existing tenants are showing increasing willingness to consider non-traditional office arrangements.
“At this time last year, there weren’t a lot of options. This year, you’re seeing a lot more shared office space in Boston,” said Will Foley, a senior managing director and principal at commercial real estate brokerage Cassidy Turley.
The shared office space trend is getting a boost from companies such as Pivotdesk that act as matchmakers between companies with unoccupied desks and entrepreneurs looking for inexpensive digs. Think of it as eHarmony for office space, says David Mandell, co-founder of Boulder, Colo.-based Pivotdesk.
“A lot of companies like using us because they don’t want to lock into a long-term lease yet,” Mandell said. “It gets them up and running if they’re not sure what their hiring plan is.”
Pivotdesk operates a website where companies in Boston and five other tech hubs can advertise excess space and rent out desk space on a monthly basis.
As an alternative to Pivotdesk’s web-only business model, competitors such as OuterSpaces lease space themselves and rent it out on a short-term basis.
Boston-based OuterSpaces opened two shared office space locations downtown in late 2012 and expects to add more in the near future, spokesman Devin Cole said.
OuterSpaces has placed approximately 125 workers at dozens of offices in Boston and the suburbs in just over a year since its founding. The company licenses floating and dedicated desks to startups and independent workers on a monthly basis.
“Many of them have spent a good amount of time working from a home office or sitting with another company, and they get to engage with people and be part of a community,” Cole said.
The price of a floating workspace downtown is approximately $400 a month, with dedicated desks costing $500 to $600. Members also are entitled to five hours per month of access to workspace and conference rooms at larger coworking centers on Atlantic Avenue and in Central Square, Cambridge.
Receptiveness to shared office space is catching on in downtown Boston, where OuterSpaces manages locations at 180 Lincoln St. and 201 South St. that opened just over a year ago.
Location, Location, Location
App developer Achvr used OuterSpaces to find a location at 201 South St., the home of mobile app developer Applico, for its seven employees last April. Achvr chose the downtown location over the Seaport District and Cambridge because of its mass transit connections, CEO Ryan Traeger said.
“It was the most central area for all of the people on our team and where they’re commuting from,” Traeger said. “The Seaport is good, but it’s a little harder to get to and since we work incredibly odd hours, (South Street) is better for us.”
A New York company called WeWork has acquired shared space in two Boston buildings that will become available in early 2014. The locations are at 745 Atlantic Ave. and 51 Melcher St. in the Fort Point Channel, said Noah Brodsky, chief experience officer for WeWork.
Founded in 2010, WeWork offers collaborative workspaces at nine buildings in New York, Los Angeles and San Francisco. Seven other locations will open early next year in Chicago, Portland, Ore., Seattle and Washington, D.C.
Brodsky declined to give specifics of how much space WeWork has leased in Boston, but a real estate source said the company has taken 45,000 square feet on Melcher Street and 40,000 square feet at 745 Atlantic Ave. with an option for up to 60,000 additional square feet.
Unlike traditional leases, shared office space arrangements do not involve a transfer of interest or ownership in a property. The start-up typically signs a license with the landlord or tenant spelling out their rights, such as what hours they can use the office and whether they can bring their dogs to work.
Renting slivers of office space on a month-to-month basis is often the only practical option for thinly-capitalized start-ups, real estate experts say.
“Most of the landlords in Boston have memories of the dotcom bubble and peoples’ credit is being scrutinized,” said Benjamin Heller, a managing director for Jones Lang LaSalle. “Landlords aren’t willing to take too many fliers and they’re requiring tenants to secure a lot of the risk.”
That puts them at odds with start-ups’ business models, Heller said.
“Cash is king for them, and tying up eight months of rent is a big issue, but the owners are holding firm in many cases,” he said.
