Co-working space at LaunchPad City allows multiple companies to work in the same office for less rent.[/caption]Frisco businesses are feeling the cost of renting office space in this market.
As of the second quarter of 2017, average office rental rates in the Dallas market have increased more than 5 percent year over year to an average of $26.61 per square foot, according to JLL, a Chicago-based real estate firm. Asking rent rates have been rising for the past several years.
Business owners who are unprepared for the cost of renting office space in Frisco could end up closing their businesses or vacating their spaces, said Tony Felker, Frisco Chamber of Commerce president. For some business owners, rising rent costs have led them to search for other solutions.
Small or startup businesses are turning to nontraditional office space, such as co-working space, as an alternative.
“I’m seeing more and more people that are talking to me about whatever you want to call it: flex space, co-op working space, office sharing models,” Felker said.
Unlike a traditional office setting where one company rents one space, co-working space allows multiple companies to be housed in the same space. Spaces available for rent could include shared desk space, designated desk space and private offices. In some cases, co-working space leases could be shorter and more flexible than traditional office space.
LaunchPad City is an example of a co-working space in Frisco. Formerly known as the North Texas Enterprise Center, LaunchPad City’s location on Research Road is a 50,000-square-foot building with different program options geared toward startup technology companies.
Rather than leases, LaunchPad City’s rent plans are called memberships. Companies have four different workspace options. A flex desk is a shared desk area with multiple seats that operates on a first-come, first-served basis. A dedicated workspace is an assigned space that is not shared. A private office is also an assigned space separated from the open office space. Finally, team suites can accommodate up to eight people.
LaunchPad City’s memberships are month to month, so businesses are not committed to long-term leases.
“They are welcome to stay as long as they wish,” LaunchPad City co-founder Brian Dick said. “We don’t put a limit on how long, and all we ask for is 30 days’ notice when they’re ready to leave.”
Dick said co-working spaces may help companies grow by allowing them to collaborate and build off each other.
“In essence, what we’re trying to create is a community of sharing,” he said. “If you get companies that are all within the same realm of technology, then we think there will be a better opportunity for them to share experiences and, hopefully, build their companies together.”
Companies can also consider smaller office spaces to cut costs, Felker said.
The chamber is considering whether to move out of its current space on Main Street, and one of the factors the chamber board is considering is the cost of rent. Just as shared desk space is cheaper in a co-working space model, cubicles can be cheaper in a traditional office space.
“People have already asked us as we’re doing our analysis, ‘Are you looking at individual offices for everybody, or are you going to cubicles?’” Felker said, adding that cubicles are “one way to cut down on the amount of square footage.”
Before businesses decide whether to move into any office space in Frisco, Felker said they should be realistic about how much space they can afford in this market.
“Everybody knows real estate is expensive; everybody knows real estate is going up,” he said. “They love it when it’s their house. They love it when it’s the building they own. They don’t want to admit to it when it’s space that they’re going to lease. I think that’s where more businesses get themselves in trouble is in the real estate itself.”
