Low Cost
Lower cost of flexible office space compared to other markets.
Market Growth
New companies and workers moving to Houston.
Supply Growth
Major growth in the flexible office sector.
Major Flexible Office Growth in Houston
Houston is experiencing major growth in the flexible office sector. One company has launched with an 86,000 sq/ft office building, and another TechSpace currently launched with 46,000 sf. These two spaces are already greatly increasing the supply for dedicated flexible office spaces throughout the Houston market.
Houston Core and Flexible Office Trends
Core
Core - stable office space that companies rent out for terms spanning years mostly for headquarter spaces.
Flexible Office
Flexible - office rented for spans of hours, months and years. Companies use flexible office space to expand into new markets, create satellite office space, and provide employees with mobility options.
Corporate real estate managers and the C-suite are beginning to organize their real estate portfolios into core and flexible offices. Core - stable office space that companies rent out for terms spanning years mostly for headquarter spaces. Flexible - office rented for spans of hours, months and years. Companies use flexible office space to expand into new markets, create satellite office space, and provide employees with mobility options. Flexible offices are often furnished, serviced workspaces from coworking, serviced office and direct from buildings.
Average Annual Cost per Worker in Houston
The core (traditional) office lease price in Houston is $30.43 per sq ft per year (source JLL), with the average worker receiving 150 sq ft.
Core costs out to $4,565 per worker for the year.
This cost is for the office only before amenities, services and incidentals.
While in flexible office the average price on LiquidSpace is $165 per person per month in Houston costing $1,984 per year per worker. Putting the cost of flexible office leasing at 43.5% of the cost of traditional leasing. Plus flexible office, depending on the space choice, can give the company access to flexibility to change their real estate footprint at a moment’s notice, and each employee access to community, services and amenities.
While in flexible office the average price on LiquidSpace is $165 per person per month in Houston costing $1,984 per year per worker. Putting the cost of flexible office leasing at 43.5% of the cost of traditional leasing. Plus flexible office, depending on the space choice, can give the company access to flexibility to change their real estate footprint at a moment’s notice, and each employee access to community, services and amenities.
Flexible office gives increased flexibility and the social benefits of a team environment. You can’t get this anywhere else while still saving money per worker. One of the reasons it has been hard to implement flexible office in Houston has been the lack of locations another is local landlords only now starting to buy into guest’s need for flexible terms. However, the trends in the Houston Market and in other markets show growth across the board in every submarket creating more coworking space, shared workspace and other office types conducive to the flexibility demands of today’s workforce. CBRE has predicted that 65% of companies expect to use coworking as part of their office portfolio in the Americas by 2020.
altSpace
An area where LiquidSpace is adding to the available flexible office options is through altSpace. altSpace combines carefully curated office fit-outs with LiquidSpace approved landlord and partner spaces. The altSpace service layer provides design consultation, IT procurement and a dedicated LiquidSpace concierge to help manage a customer’s move and the facility manager’s needs. The altSpace product alters existing space into coworking space. Houston is the perfect city to benefit from this program as there is over 7 million square feet of current sublease space on the market looking for tenants, as the primary lease holder has downsized staff or already found a different space.
In terms of size Houston has been lagging behind some of the larger markets for flexible office space. Some of the coastal cities such as New York, and San Francisco have exploded with supply. In the Texas market Houston is right up there with Austin and Dallas in terms of the flexible office space. Learn how you can leverage the altSpace program as a building owner in the Texas market.
We didn’t have to do the same level of build out for altSpace that we normally do, so we could do a shorter term transaction and make it work from a profitability standpoint.
Chad Cook
Managing Member at Quadrant Investment Properties
Job Growth Fueling Houston Flexible Office Space Demand
Houston job growth is expected to trend upward in 2017 and 2018. This trend will fuel the growth in the shared office sector. One worry about Houston’s continued growth is the reliance on oil and gas which constitutes 35% of the current GDP. The city has been working on diversification for over a decade. Houston is working hard to woo business from other sectors to come to the city. This benefits the flexible office sector as companies try out the Houston market before permanently moving.
Future Growth Projections in the Houston Market
When Oxford Properties asked CEO’s of companies in their “Destination Collaboration: The Future of Work” report what their main worry was? “The ability of the enterprise to attract and retain top talent” came out as the top concern. The workers that are now joining the workforce, millennials have different office criteria than their predecessors the retiring baby boomers.
Millennials (18-34) currently occupy 1/3 of the total working population. This generation wants something more out of their office. Trends, reported by Forbes, have shown experiential retail, virtual reality, and so much more, contribute to an environment that facilitates more than just 9-5 work.
Population Growth in Houston
Population
Texas Market Flexible Office Summary
In Texas three cities are poised to become the rising stars of the flexible office sector.
Austin
$429/mo
the average monthly price per person
24,036 sq/ft
flexible office space
Austin is a city with a total of 24,036 square feet of coworking space with an average monthly cost per person of $429.
With the tag line “Keep Austin Weird” the capital of Texas is poised to be a leader in the future of office space.
Austinites and the tech scene will continue to grow as more and more companies decide to move to the city.
Dallas, the Silicon Prairie, has been growing rapidly and is largest hub of coworking space in the state of Texas.
With over 1,299,899 square feet already Dallas is an industry leader.
With Dallas coworking space costing $176 monthly per worker it is one of the most affordable in the country.
Thanks to the influence of technology in the city, Dallas is attracting young growing businesses and Fortune 500 international corporations.
Dallas
$176/mo
the average monthly price per person
1,299,899 sq/ft
flexible office space
Houston
$165/mo
the average monthly price per person
1,830,351 sq/ft
flexible office space
Houston, people are still moving in record numbers.
According to the U.S. Census Bureau, Houston added 125,005 residents in the 12 months ending July 1, 2016.
Houston is again fueling growth for the coworking sector. Moreover, Houston remains an international destination.
Over 28,000 people moved to Houston from abroad in 2016.
The coworking sector in Houston costs about $165 per worker per month, with over 1,830,351 square feet of space throughout the city.
Top Monthly Office Space in Houston
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