Can't Afford an Office? Rent a Desk for $275

By EMILY GLAZER

Originally Published on WSJ.com

Forget privacy. Shared workspaces are the latest trend in office space.

The offices, set up in a variety of ways but emphasizing open space and the ability to rent a single desk, are also known as co-working spaces. Such offices have long been popular with technology start-ups in the San Francisco Bay Area looking for cheap space, but as the latest tech wave rises, shared workspaces are popping up in cities around the country.

Besides the cost advantages, entrepreneurs in technology and other fields say they like co-working spaces because their open floor plans boost collaboration, offer more flexibility on leases and can even help land investors.

"Nowadays with the shared workspaces you don't need to buy furniture, you don't need to set up Internet, you don't need to sign a long-term lease," said Saeed Amidi, founder and chief executive of Plug and Play Tech Center, a co-working space in Sunnyvale, Calif., with about 1,000 workers. "You can just get started... within two hours of walking in."

Workers share deskspace at General Assembly, a New York co-working space that opened in January.

Plug and Play is exploring expansion to Pittsburgh, Chicago, San Diego, Denver and Vancouver, said Mr. Amidi.

Meanwhile, reserved desks at General Assembly, a new 20,000 square foot co-working space and educational center that opened this past January in New York, are filled, according to the company.

Investors are also showing some interest. General Assembly said last month it raised $4.25 million from Yuri Milner of investment firm DST Global, and venture firms affiliated with Amazon.com Inc. founder Jeff Bezos and Starbucks Corp. founder Howard Schultz.

Loosecubes, a start-up that has created an online marketplace for office sharing, lists more than 2,300 spaces across almost 500 cities and 60 countries, and claims 7,000 registered users. Last year, it raised $1.23 million led by prominent venture capital firms Accel Partners and Battery Ventures.

Office spaces amenable to co-sharing are proving to be more popular and lucrative than traditional Dilbert-like offices both for established companies looking to change their atmospheres and companies hosting the spaces for start-ups. The total vacancy for a "creative" space with open floor plans ideal for co-working was 2.54% in San Francisco in July, and the asking rent ranged from $32 to $53 per square foot per year. Meanwhile, more "historical" spaces with closed-door offices that lack open space had a total vacancy of 10.55%, while the asking rent ranged from $21 to $36 per square foot per year, according to commercial listing broker The CAC Group.

The Pitfalls of a Job Without a Desk

Owners of stodgier office spaces are tearing up their floor plans to chase the market. Earlier this year, a building at 115 Sansome St., in downtown San Francisco, started remodeling for a more flexible layout to appeal to high-tech start-ups.

"We are transforming this project because we think we will achieve greater demand for the space as well as higher rents than could be attained by maintaining the traditional office space," says John Winther, founder and managing partner of Emeryville, Calif.-based Harvest Properties, which is leasing the building.

Other spaces, like the roughly 12,000 square-foot Launchpad in New Orleans, help entrepreneurs by housing service providers that can help expand their business. Launchpad, which is popular with "techies" and creative types such as filmmakers, has expanded twice since its June 2009 opening.

Common workspaces are spurring innovation and providing start-ups with the collaborative atmosphere one might find in academic settings, but with more opportunity for venture capital. WSJ's Andy Jordan reports from New York's "General Assembly".

Workers pay $650 to $1,600 per month for a closed-door office, $450 per month for a permanent desk, file cabinet and personal landline and $275 per month for any available desk. The space can handle 70 companies and up to 170 people.

"If you need your LLC started, there's a lawyer upstairs; if you want to get your books down, there's an accountant right there; if you want a commercial start on the Web, there's a filmmaker in house," said Co-founder Barre Tanguis. "We've done a lot to nurture that and deliberately curate so we have the right people around and the right dynamic."

Collaboration is another part of the appeal of sharing space. Software firm Atlassian lets start-up Odiago use its space for free. In return, Odiago engineers offer Atlassian their expertise in open source software. "It's a full on win-win," said Jay Simons, Atlassian's president. "We take our people and basically embed them in [Odiago's] team.... the best way to learn is to sit next to each other."

The emphasis on learning has been such a draw at some workspaces that they organize workshops or demonstrations of the latest technologies. General Assembly hosts lectures regularly in addition to events such as a recent start-up demo night. Its layout includes a communal area with large, cushioned couches and industrial wooden tables in addition to breakout rooms, small phone booths or even cocoon-type seating for privacy.

Since the action is growing at co-working spaces, investors are also hanging out there more. At Plug and Play, angel investors, including Sand Hill Angels, Band of Angels and The Angels' Forum, typically visit every Monday afternoon to review the business plans of start-ups. More established venture capitalists including Sequoia, Menlo Ventures and Bessemer Venture Partners, typically drop by every other month for deal reviews, Plug And Play's Mr. Amidi said.

Click here to view the original article on WSJ.com.