As more workers shed the conventional 9 to 5 office life, the number of coworking spaces continues to rise, and Pittsburgh is no exception. Next month, New York-based Industrious opens on the 31st floor of 1 PPG Place. Chicago’s Level Office purchased a building at 606 Liberty Ave., Regus just opened Spaces Bakery Square in East Liberty, and New York coworking giant WeWork’s arrival, while not official, seems like the worst-kept secret in town.
With such an influx of national brands, local coworking spaces are looking to establish a niche to differentiate themselves in a crowded marketplace and establish new revenue streams.
According to the 2016 Flexible Workspace Review, the flexible workspace market increased nationally at a rate of 10 percent in 2015. The number of coworking spaces nationally is expected to rise as the gig economy grows and more and more businesses offer their employees the option to telecommute.
When StartUptown opened in 2006, it was Pittsburgh’s first coworking space. “Coworking wasn’t even a word or concept at the time,” says Tad Hale, co-director of StartUptown.
Today there are around 30.
The goal of StartUptown is to revitalize Uptown through inclusive entrepreneurial activity as a catalyst for redevelopment. A part-time membership costs $100 for 10 days of access, or members can purchase 24/7 access and a dedicated desk for $250 per month. In addition to their Fifth Avenue headquarters, StartUpTown also operates the nearby Paramount Film Exchange.
This summer, StartUptown will join forces with Oakland’s Revv, home to on-demand dining app Nowait. Details are preliminary but Hale says the merger is borne out of solidarity: the two groups saw an opportunity to join forces as like-minded neighbors. And with seven buildings spread across the Fifth/Forbes corridor, the newly-merged entity will be able to offer startups different size workspaces as they scale their business.
Hale says that it’s inevitable that a few coworking spaces will go out of business while others will consolidate—he compares it to the early days of the hotel industry when everyone was still independent—but overall he sees the influx of national brands to be a good thing, something that will raise the level of service at all area coworking spaces.
“If no one wanted to come here you’d wonder if there’s much opportunity,” he says. “As you look at other cities, Pittsburgh has a lot of coworking but we’re not at the saturation point.”
Mike Woychek, Operations Director at Northside’s Alloy 26, agrees that the coming uptick in national coworking spaces is a good sign for Pittsburgh: “They’re discovering what we’ve known for a while, that Pittsburgh is a great place to be with a lot happening. More choice is always better.”
He believes more workers will continue to move to the gig or “1099 economy,” and as that happens, more coworking spaces will establish unique spaces to stand out from the rest. As an example, he points to recent NYC startup Spacious that transforms restaurants that are closed during lunch into daytime coworking spaces.
In the South Side, a unique coworking space has taken shape in the form of The Wedding Factory. Opened six months ago by the team behind Modern Era Weddings, the venue provides wedding vendors like DJs, photographers and craft makers a hub in which to work.
Owner T.J. Harris says it’s not always easy to find new clients in the wedding industry, and that rather than working against one another, members have been able to bounce ideas off each other and share leads whenever there’s an event that one member can’t cover. He says the model has been such a success that he hopes to expand into DC and Florida in the coming months.
Another industry-specific coworking space is Code and Supply—a site specifically for software professionals—which opened in Friendship this January. Founder Justin Reese says that they have about 20 members and that the location has allowed coders to find job referrals as well as attend lecture-style events from industry leaders.
“The people that we have here are very focused in software so we can teach each other and ask each other questions,” says Reese. “We’re all knowledgeable about the same thing so we can collectively be smarter, individually.”
In East Liberty, startup incubator Ascender, formerly Thrill Mill, recently took over an 11,000-square-foot warehouse space on the third floor of a former drapery manufacturer that now sits across the street from Google. Ascender CEO Bobby Zappala agrees with Hale and Woychek that Pittsburgh’s coworking scene still has room for growth.
“My understanding is that if you look at coworking in most major markets, it is about one percent of commercial real estate that’s available. And in Pittsburgh, that’s somewhere near half a million square feet, so if you just do the math around the number of coworking spaces we have, and the ones coming online in the foreseeable future, we’re still below that threshold.”
Zappala says that Ascender intentionally tries to draw from a large cross-section of sectors when attracting members. In addition to attracting members through their incubation services and programming, they offer private office space for tech startups and other professionals as well as bigger universities and corporations looking for higher-end, state-of-the-art amenities. A flex coworking membership at Ascender costs $200 a month, or $300 for a dedicated desk.
Ascender has also joined forces with a former rival, having recently turned over the day-to-day management of their coworking services to East Liberty’s Beauty Shoppe, which is itself opening a second location in Midtown Cleveland in June.
While some spaces pool their resources, others are taking on new business models entirely. In Allentown, Work Hard Pittsburgh is transitioning from a coworking space to a cooperatively structured business incubator. [Disclaimer: the author of this story is a member of Work Hard Pittsburgh.]
Josh Lucas, founder of Work Hard Pittsburgh, says the most viable coworking spaces in the coming years will be the ones that can demonstrate added value, like access to capital, technical expertise, or lead generation.
Lucas says that turning the coworking space into a cooperative is part of Work Hard’s retention and attraction strategy, as well as a way for the coop to generate income. He says that since memberships at Work Hard are below market rate ($90 a month for a desk) revenue needs to come from elsewhere.
“Generally speaking, real estate coworking spaces, where I’m leasing you physical space, is not a sustainable business model, to a large degree. And it’s not an equitable system that will allow anyone to participate because you have to set your desk rate at hundreds of dollars to stay solvent.”