The following narrative is authored by Downtown Indy, Inc.’s Research and Data Coordinator Oliver Ware, who joined the DII team late this summer. Prior to the pandemic, Downtown welcomed 155,000 workers. It is likely that the data will show a continued trend toward pre-pandemic worker levels Downtown, as the Indianapolis job market continues to fare well, with predictions of continued growth in employment over the next year (Cushman Wakefield Office Market Report Q3 2022). Moreover, workplaces continue to adopt hybrid working models that consist of a mixture of both traditional and flex office spaces in addition to fully remote work. The presence of the Downtown workforce cannot be overstated in its importance to the Downtown ecosystem. Read on to learn more.
The COVID-19 pandemic fundamentally altered the workplace and in particular, the roles that flex and coworking office space play in meeting the changing needs of businesses and workers. The shift to remote work at the onset of the pandemic increased significantly but has since leveled out. New research suggests that these changes in the workplace are here to stay.
In a recent study conducted by researchers at Arizona State University, Virginia Commonwealth University, and the Dallas Federal Reserve claim that nearly 75% of the increase in remote working in the U.S. since the start of the pandemic will remain. According to data from the Census Bureau’s Household Pulse Survey, as of August 2022, approximately 36.5 million people in the U.S. worked remotely at least 5 days a week. One of the key takeaways from the shift in remote working are the reported increases in employee satisfaction with their work/life balance. 81% of respondents in a recent survey conducted by Cushman and Wakefield, reported positivity and increased satisfaction when they were given flexibility as to how many days they are expected to be in the traditional office. Many companies and workers have begun to rethink workplace strategies in an effort to strike the right balance of productivity and employee satisfaction.
Flex space is an asset class within the office space spectrum. CBRE defines this term to include multiple office space formats that are leased for shorter than traditional terms. The primary objectives that flex spaces aim to achieve in comparison to traditional office space are increased flexibility in leasing terms, greater choice for employees with hybrid work policies, reduced overhead and capital costs, and improved collaboration. Leasing terms for flex spaces can range in flexibility from a single person for a single day, to managed offices at the other end of the spectrum. Coworking spaces fall under the umbrella of flex space and can be commonly characterized as having communal desks, common spaces, a diverse tenant pool, and shared amenities (CBRE). One of the core principles of coworking space, that perhaps distinguishes itself from other forms of flex space, is the promotion of collaboration between members.
Flex and coworking space offer solutions to some of the biggest challenges in office real estate that tenants are facing in the midst of changing employee/firm needs and preferences.
In a report by Jones Lang and LaSalle, there are four primary solutions that flex coworking space can offer to tenants in the face of today's office real estate landscape (JLL The Future of Flex 2022).
- Coworking space can help reduce costs through pre-built, move-in ready spaces.
- Flex spaces can provide organizations with increased agility to scale up and down as needed, with flexible leasing terms, which proved particularly valuable in the economically uncertain period since the pandemic.
- Coworking space also fosters greater employee interaction, networking and collaboration than remote work, through face-to-face interactions while better allowing for the cross-pollination of ideas.
- The final solution offered in the report lies within an organization's ability to attract and retain talent, where a majority of the workforce has positively acclimated to a hybrid workplace structure.
Coworking and flex office spaces are well positioned to help companies and individuals meet the evolving workplace in a post pandemic world and the market outlook for flex office space is positive. CBRE predicts an explosion of growth over the next 8 years, expecting the asset class to grow over 700% (CBRE, Global Flex Office Market Research, 2021). New data from a study conducted by the Instant Group found that the demand for flex office space to be 58% higher than pre pandemic levels. The same study found that nearly 60% of companies that are adapting their workplace strategies are considering flex office space. The demand for flex and coworking office space is significantly predicated on employees’ shifting desire to retain significant levels of flexibility in how and where they work in the post-pandemic world. CBRE reports that of 10,000 respondents in a workplace sentiment survey at the height of the pandemic in 2020, 85% said they prefer to work remotely at least two to three days a week. In response to this demand, companies are shifting their strategies in their workplace policies in favor of new hybrid structures that help in recruiting and retaining talent. WeWork, one of the largest flex/coworking office space operators in the world, reported that nearly half of their membership is made up of enterprise customers, nearly 2,300 enterprise organizations.
LOOKING LOCAL: Indianapolis market activity reflects broader national sentiments, and more substantial projects are on the horizon. Three of the largest leasing transactions for office space in the Indianapolis MSA in Q3 of 2022 were located Downtown, and approximately one third of the over 127,000 square feet of these three key transactions Downtown are to be operated as flex coworking space (Cushman and Wakefield Office Market beat Q3 2022).
Demand is also driven by individuals seeking a healthier work life balance, sense of community, desirable amenities, and the opportunity to network and collaborate with like minded peers. One of the most noteworthy coworking spaces, with a particular emphasis in peer networking, in the Downtown Indianapolis market to open its doors in 2022 was Indy Maven Space, located at 433 N Capitol Ave. In addition to promoting amenities for working and event space, its website markets to prospective tenants with a collaborative mindset, stressing that, “...you’re joining an entire community of movers, shakers, dreamers, and doers who are there to make magic right alongside you.” Maven Space is unique in its emphasis to build a dedicated and supportive community of women where a diverse pool of talents, experiences and backgrounds can come together and feel safe and supported. Collaboration is highly encouraged and viewed as a catalyst to achieve personal and professional growth.
Another outstanding addition to the Downtown Indy roster of coworking spaces and future tenant in The Stutz building as part of a $65 million redevelopment at 1060 N. Capitol Ave is Industrious, set to open in January 2023. This will add another 26,700 square feet of cutting edge, amenity filled coworking space to an already healthy flex office space market in the Downtown area (IBJ). Industrious is a multinational coworking space operator that features some of the most dazzling design features, services and amenities in the industry. The company's other location in the Downtown Indy market, at 350 Massachusetts Ave., contains several premium amenities worth highlighting. The location is equipped with a wellness room, private conference rooms, multiple dining options, a gorgeous outdoor space, retail options, and is even pet friendly. The space also offers mail and packaging, community events, daily breakfast bars and professional grade cleaners.
COhatch, another stunning coworking space with premium amenities and strong sense of community, has opened three locations in the Indianapolis area. The Downtown location is located right in the heart of the city in Circle Centre Mall. COhatch offers an impressive breadth of features for members including physical amenities, community building and networking opportunities. Like other coworking space operators, they offer very reasonable and flexible lease terms, and most plans allow members to renew monthly. The ability to design custom corporate plans, however, is particularly attractive for companies with specific needs or unique scaling variables in their business model. COhatch is particularly well suited for entrepreneurs and start ups as well. A rich incubator ecosystem exists at COhatch with opportunities for scholarships, accelerator programs, and fellowships.
16 Tech offers more of the same solutions to hybrid workplace formats discussed in this article but places a particular emphasis in local economic development programming. The campus, located at 1220 Waterway Blvd., consists of a 50-acre community dedicated to fostering world-changing innovation and economic opportunity. A significant piece of the mission at 16 Tech is to bring together, "...entrepreneurs, academics, startups, corporations, and community members in a single place dedicated to collaboration and creative problem-solving”, according to its website. The 16 Tech Community Investment Fund provides grant opportunities for local entrepreneurs and innovators to stimulate economic development and community building.
The Downtown submarket is home to approximately 12 coworking locations. Each offers a unique attraction and community of tenants that make them worthy of consideration. Stay tuned for a Downtown coworking page on our website, built to present options and help find the perfect coworking or flex spaces in the area.