The landlord-owners of the Six Central Row office building in downtown Hartford are plying what they hope to become a more versatile coworking-space model for monetizing excess office space.
Connecticut techpreneurs Garold Miller and Dan Weinstein, creators/marketers of the globally successful HALO portable electronic charger, bought the 15,700-square-foot, four-story office building opposite the Old State House, as HALO’s headquarters.
Now, they’ve turned the heavily renovated first floor into coworking office space, called Central Row.
“It’s a very professional, very luxurious place to have a meeting,” Central Row sales associate Brett Kahn, who assisted the HALO landlords in setup and marketing, said during a recent public walk-through of the approximately 3,700-square-foot coworking space.
Central Row joins a burgeoning roster of new and pending Hartford area coworking outposts, which have grown in popularity across the U.S. as landlords adapt to a digital economy that requires less office space. Coworking spaces are also seen as a way to attract entrepreneurs to city centers.
Other Hartford players include Think Synergy, a hybrid coworking/co-living set up with office space and apartments in the Cast Iron Building, 242 Asylum St. There’s also Upward Hartford in the Stilts Building, 20 Church St.; reSET on Hartford’s Park Street; and Manchester’s town-owned coworking space at 903 Main St.
Meantime, MakerSpaceCT signed a lease late last year to outfit more than 20,000 square feet at the G. Fox Building on Main Street into a coworking space targeting artists, technologists, and entrepreneurs. Operator Devra Sisitsky said the space is open for classes, but will not open to MakerSpace members until Jan. 2019.
Another so-called makerspace, which allows hobbyists, hackers and others to hone their skills on 3D printers, CNC machines, laser cutters, etc., operates on 30 Arbor St. It’s called MakeHartford.
In West Hartford’s Blue Back Square flexible workspace provider Spaces has signed a lease to occupy the more than 25,733-square feet vacated by outdoor retailer REI.
Spaces is part of IWG Group, British parent of leading U.S. coworking-space vendor Regus, which has several Connecticut locations including Hartford (100 Pearl St.), West Hartford and Windsor.
Coworking spaces and their tenants and landlords are very close kin to traditional office-space providers and their occupants, except for one monumental exception: Occupants pay a set fee, or rent, to use coworking space for a short, finite period measured in days and weeks vs. the traditional model of tenant-landlord brokers hashing out fees and terms for space usually for two or more years.
Kane Willmott, a Canadian coworking landlord and president of the Global Workspace Association, said coworking’s growing popularity is tied to the rise of the internet, which is unbundling many traditional professional services and making them more accessible to a consumer base that is more demanding.
Coworking emerged in North America in 2010, during the Great Recession, and still only accounts for barely a sliver of the overall U.S. office-space market. However, coworking spaces and lead vendors like Regus and New York-based WeWork have permanently altered the office landscape, observers say.
“The biggest thing coworking [space] has done is reduce the friction from the price of acquiring office space,” said Willmott, who is also co-founder and CEO of iQ Office Suites in Toronto. IQ, which has four coworking sites in Toronto, and one in Vancouver, British Columbia, is eyeing U.S. expansion sites, but he declined to elaborate.
Regus in 2010 had over 1,000 coworking locations vs. one for WeWork, Willmott said, citing a Jones Lang Lasalle survey. Today, Regus counts more than 3,000 locations and WeWork more than 270.
Coworking spaces, Willmott said, allow companies or individuals to more quickly and more flexibly contract for office space. Coworking landlords can realize returns of 20 percent or more on their subscription spaces through add-on services, he said, than the 5 to 7 percent yield on an office building whose returns are heavily tied to the prospect of that building being fully occupied during its investors’ ownership.
However, owning and operating coworking spaces also carries risks, Willmott said. One is limited access to bank loans or other low-cost capital because many coworking-space operators are office tenants themselves, rather than owners of the property that could be used as bank collateral.
Typically, coworking landlords rely on private-equity funding from individual or institutional investors or loan guarantees to fund development and marketing of coworking spaces.
Willmott also sees risk in Central Row’s owners trying to monetize space in a building meant primarily as a corporate headquarters.
“It’s very difficult for building owners to do coworking well because it’s not their expertise,” he said, noting iQ leases its coworking spaces from landlords. “The challenge is that as a building owner, you have to build a brand and have a brand promise. Coworking is moving so fast, that if you’re not doing it full time and you don’t have scale, it’s difficult to meet the demands of the customer.”
Since its debut last November, Central Row has attracted six members who share in using its six 150-square-foot offices, priced at $900 per month; six dedicated desks for $400 monthly; and nine tabletop workstations, known as “hot desks,” for $250 a month, said Kahn, the Central Row sales associate.
Rates include use of Wi-Fi, printers and fax machines, two conference rooms — each with large flat screens and seating for six and 12 — and an equipped kitchenette installed inside an old bank vault. Non-members pay $250 per day, or $50 an hour, for the larger conference room; the smaller one runs half that.
Central Row’s operators are in talks with The Hartford Club, located nearby, about allowing Central Row members access to its underground parking spaces and to dine there at a discount, Kahn said.
Central Row’s conference rooms have been in demand so far, Kahn said. Several video depositions have been taken there and small businesses use them as meeting space. Apple has reserved one of the rooms for future use.
Members also get access, via an app, to a “virtual mail system,” Kahn says, in which Central Row receives and forwards their postal mail and package deliveries.
Entering Central Row, visitors sign-in at a concierge desk at the entrance to an oversized living room, with sofa seating, coffee table, and contemporary, bright-colored wingback chairs. This space, Kahn says, is an ideal, informal space for private meetings and gatherings like the recent space tour.
HALO in 2017 paid $762,500 for Six Central Row, a historic office building erected in 1850 that now houses the company’s headquarters. HALO previously called Glastonbury home.
Miller, a fan of old office edifices, said he fell in love with the location and the opportunity to be in the Capital City.
HALO occupies 6,000 to 7,000 square feet on the upper floor of Six Central Row, where its administrative and R&D operations are based. The fourth floor contains HALO’s “secret lab” for product development, Miller said.
Live and work
Inside downtown’s Cast Iron Building, adjacent to the Goodwin Square office building, landlord Keith Warner says he has created 5,000 square feet of coworking space on the second and third floors. So far, four subscribers pay from $150 a month for desk space, and from $450 to $650 a month for a small office, with internet, Wi-F and a kitchen with coffee and beverages.
Warner, who frequently encountered the shared workspace concept while traveling the globe on business, says he modeled Think Synergy after New York City coworking-space innovator WeWork, whose shared workspace concept launched in 2010 and has since been replicated in urban markets nationwide.
On top of the shared workspaces in his Hartford building, Warner also carved out six, two-bedroom apartments — sized 1,200 to 1,600 square feet, renting from $1,750 to $2,500 a month — from the building’s former office spaces, so tenants can live and work in the building. Four are occupied, Warner said.
“I figured the coworking space is where the Millennials wanted to go work,” he said.
On top of the shared workspace, Think Synergy also provides a smorgasboard of business-support services, he said, such as financial consulting, bookkeeping, even assisting clients in pursuing debt or equity financing.
Warner says those offerings differentiate his shared workspace concept from competitors’. The ability for members to expand or shrink their space needs with market conditions, too, is an attractive plus, he said.
Warner says he’s looking to expand Think Synergy to other Connecticut markets, including Stamford and Greenwich. Warner says he does not yet own buildings there.