WeWork, Spaces and other co-working entities changing Triangle’s office space market

September 14, 2018 | Triangle Business Journal
Ben Graham

Greg Hills is the developer behind the One City Center tower being built in downtown Durham, but it was his son, Austin, who helped wrangle WeWork into signing a lease at the 27-story building.

WeWork, the fast-growing co-working company, has been gobbling up office space across New York City and other major metro areas and had its eye on the Triangle.

Through an old fraternity connection, Austin Hills reached out to the company. It wasn’t too long before the Hills’ family firm, Austin Lawrence Partners, inked a lease with WeWork to occupy more than a third of the office space in the new tower.

With WeWork poised to open in the building in the coming weeks, Greg Hills has become a true believer in the latest trend in office development. “Even though I am the gray hair in the office,” he says, “I did know of them and I thought it was a great concept.”

The idea behind WeWork – with its highly amenitized shared office space, including such perks as arcade games and shared bikes – is that it appeals to the next generation of office workers.

Hills is far from alone as a new convert to the co-working model. As evidence of the rising impact of the model, a Cushman & Wakefield report says that across the country, half of all current co-working spaces have opened since 2015.

And Triangle developers are betting big on the concept. WeWork, a competitor called Spaces and other co-working upstarts now anchor some of the largest and most high-profile office towers currently under construction in Durham and Raleigh.

But with the rapid growth has come questions about how much co-working supply the Triangle can absorb and how these rapidly growing providers might be affected if and when economic conditions change.

“Co-working is obviously here to stay, but we don’t know how it will behave in a downturn,” says Lee Roberts, managing partner at SharpVue Capital and the former budget director for the state of North Carolina. In its report, Cushman & Wakefield predicts economic growth will slow in 2019 and 2020, along with net office absorption.

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