Flexible workspaces are attracting businesses of all sizes because they offer affordable short-term leases, collaboration, networking and a professional aesthetic along with a turnkey setup, according to providers in Arkansas.
One downside for tenants is a lack of customization. For the providers, churn can be a downside. But before diving into all that, a few definitions are in order.
Flexible workspace is an umbrella term for office space that is leased from the same provider by different companies and individuals for different reasons. Coworking space is a type of flexible workspace, as is a virtual office.
Virtual offices give companies or individuals a business address even if they don’t need an everyday physical work space, said Jennifer Lind, area manager for flexible workspace provider Regus.
Coworking refers to space where each person has a desk but those working alongside each other are employed by different companies, Lind said.
Regus is a portfolio company of International Workplace Group, headquartered in Switzerland. Regus has about 3,000 locations in 1,000 cities worldwide, including one in Little Rock’s Regions Center and two in Bentonville.
Little Rock Tech Park Executive Director Brent Birch gave another definition for coworking: “affordable, shared workspace providing freelancers, satellite workers and entrepreneurs a productive, collaborative work environment.”
The Tech Park serves many startups but has long-term leasing options for more established companies. Some tenants work for businesses that are not headquartered in Arkansas and don’t have other offices here.
A coworking desk at the Tech Park costs $200 a month. At Regus, the price is $211 per month for a month-to-month tenant. It’s $200 per month for six months, $189 for 12 months or $178 for 24 months.
Birch cited three advantages to leasing a flexible workspace. First is shorter lease terms, including month-to-month.
Tech Park tenant Mike Mueller, business growth strategist for digital marketing firm Clix of St. Louis, agreed. The “month-to-month arrangement made [the Tech Park] very attractive to us,” Mueller said in an email.
Regus also offers month-to-month leases, plus six-month, 12-month and 24-month arrangements. The longer the term, the cheaper the rent, Lind said.
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Month-to-month leases are ideal for early-stage companies, Birch said. “If things don’t go quite right, they are able to adjust on the fly,” he said. “Same flexibility applies if the business takes off and more space is needed or they need to move out into market-rate space around town.”
The second advantage cited by Birch is that everything or nearly everything is turnkey. Flexible workspaces are furnished and offer access to conference rooms, printers, copiers and more.
The third advantage is a collaborative environment, especially for tech-focused companies.
Mueller agreed, and said another reason he became a tenant was “the location, with so many companies of various sizes all sharing space in the same building, meant that there is ample opportunity to network with founders, CEOs, CMOs, etc.”
Another Tech Park tenant, John Pettengill of Pypestream Inc., also said collaboration and the month-to-month term made sense of leasing space there. Pypestream Inc. is a conversational artificial intelligence company headquartered in New York City.
Pettengill added that he could work from home most of the time, “but I know that I get a lot more done when I’m in an office environment.”
Lind said the biggest benefit Regus offers tenants is one bill for overhead expenses. That bill includes phones, internet, reception services, conference rooms, printing services and administrative services.
Other benefits include Regus’ smartphone app, which provides tenants all the paperwork they need to file federal taxes, and the company’s large network of locations. Regus tenants who travel can have a workspace everywhere or nearly everywhere they go.
Lind said she sold seven Regus virtual offices last month, compared with one physical workspace.
“People are working from home, and they still need that address for their business, so that’s when they look for a virtual office,” Lind said. “They have that look as if they’re in a building, in an office, that’s what their location, their address says. But, in actuality, they could be working from home or it could be a plumbing company that is traveling in their van often and doesn’t need an actual workspace, but they don’t want to use a P.O. box as their location because it doesn’t look professional.”
Regus’ standard virtual office, with a telephone number and phone answering plus the use of a physical workspace for two days a month, costs $69 a month. The $269 “plus” package includes the use of a physical space for five days a month.
Birch cited one downside to leasing flexible workspaces, and that is that they aren’t customized. The one downside for tenants Lind cited was similar: Companies that occupy the same space being incompatible — an attorney’s workspace could be placed next to an eyebrow-waxing business, for example.
Both Birch and Lind cited churn as a challenge for flexible workspace providers like Regus and the Tech Park.
Lind said she enjoyed 100% occupancy last year but has just lost 16 offices. The offices were leased to a large startup called ForeverCare, which pulled out of Arkansas at the direction of its parent company in Pittsburgh. Now her occupancy rate is 74%.
“The business model can be tricky because of the churn related to the tenant base,” Birch said. “Startups and entrepreneurs come and go quite often, and remote workers sometimes revert back to working from home. Our ability to attract some long-term lease tenants has provided stability since we opened in March 2017.”
Regus and the Tech Park will soon be joined by Pine Bluff’s innovation hub The Generator, which plans to offer coworking space next year, and WeWork. WeWork is a flexible workspace provider headquartered in New York that plans to break ground on its first location in the state, in Bentonville, next year.