Flexible office space continues to boom in Austin.
Flex office space’s share of the city’s overall office market increased 0.6 percent from the second quarter of 2018 to the second quarter of 2019, to 2.4 percent, according to early September statistics from commercial brokerage CBRE. Only San Francisco, Manhattan, Los Angeles, and Miami have higher shares.
Austin now hosts some 1.233 million square feet of flex office space, an increase of 366,000 feet since last summer.
There are 28 flex-office operators in the city—up five from last year—in 52 locations, nine more than in the second quarter of 2018. Two operators account for more than 50 precent of the city’s flex-office space: WeWork with 35.2 percent and Regus with 20.4 percent. WeWork, in fact, saw its Austin footprint grow more than 87 percent year over year. Below is a CBRE graph charting the rise of flex space in Austin.
What’s driving such growth? The city’s entrepreneurs and its technology sector—a.k.a. Austin’s famed startup culture—according to CBRE. Such companies want the vibe and the leasing terms that flex space can provide. “Flexible office space in Austin continues to thrive due to the dominant presence of the tech industry coupled with a burgeoning entrepreneurial scene,” the report said.
The sector might end up being a victim of its own success, however. The report also notes that the number of available chunks of office space in Austin proper is dwindling, which means flex-space operators might start looking at the suburbs and exurbs for their next locations.
Meanwhile, some of the largest flex space/coworking operators—WeWork in particular—face uncertainty over what a recession would do to their business model. Stay tuned.