Posted Feb 21, 2019, 11:10 PM
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Registered User
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Join Date: Sep 2015
Location: Austin, TX
Posts: 3,588
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This is nuts, IMO.
Quote:
Nate Paul's next big idea: Turning 1 million square feet of Austin into flexible office space
Real estate magnate Nate Paul, CEO of World Class Capital Group LLC, has a new business plan for many of the buildings he’s snapped up across Austin over the past few years.
Paul just launched NowSpace, which he claims will be the largest provider of flexible office space in the city. He boasts of controlling 1.2 million square feet in 12 buildings in every Austin submarket. That would make him a major player in a hot segment of the real estate sector — flexible space refers to office space with short-term leases that can easily be enlarged or shrunk, and it is in high demand across the capital city.
And Austin is just the start. Paul has plans to roll out the service in other cities across the country this year; he didn't disclose where they might go next but Houston and Dallas have been batted around in social media posts.
“Austin is the ideal market for the launch of NowSpace,” Paul said in an email. “We know the Austin office market better than any operator due to our market-leading position as an office landlord. NowSpace is focused on being the largest provider in the nation’s most dynamic office markets — and Austin is No. 1 on that list of dynamic cities for us.”
To date, WeWork Cos. has been the predominant provider of class A coworking space in Austin. The company now has 448,000 square feet in five locations. A sixth location with about 48,000 square feet is set to open this spring in the renovated Westview building near the Texas State Capitol.
Paul plans to hire more than 100 people at his NowSpace headquarters in Austin. He said the aim is to fill "a huge void in the Austin market" by offering creative offices, not space inside high-rises.
“Companies are attracted to Austin for the 'hip, Austin vibe' and many of our spaces will offer that unique experience," he said. "We are from Austin, so we know what companies want in Austin.”
NowSpace properties range from downtown Austin's historic Phillips Building to the Offices at Braker near The Domain in North Austin. Beyond that, Paul declined to identify other potential locations. However, a look at the buildings he owns offers some intriguing possibilities.
World Class Capital owns a notable number of high-profile downtown Austin sites, such as the IHOP restaurant at the corner of Cesar Chavez Street and I-35 and the old rowing center across the street from the Austin Convention Center.
Yet many of the buildings adorned with the “Another World Class Project” banner are empty, such as the site of the former Headhunters bar at 720 Red River St., the Phillips Building at 103-105 E. Fifth St. — where Karma Lounge and Kingdom nightclubs used to be — as well as 422 Congress Ave., the old home of Ethics nightclub.
World Class’ portfolio also includes the J&S Koppel Building at 318 Congress Ave., a warehouse at 99 Trinity St. and industrial buildings at 501 Waller St. and 1216 E. Sixth St.
One thing those properties have in common is they aren’t traditional office space. NowSpace will design, build and operate flexible office space for companies ranging from one employee to 10,000, according to its website, with coworking, private offices and even custom headquarters space.
Just how big is Nate Paul's latest real estate move? The 1.2 million square feet he wants to put on the market is the equivalent of more than two Frost Bank Towers, Austin's largest office building at more than 535,000 square feet.
Paul said the first NowSpace properties will be ready for tenants by April 1.
“Several of our NowSpace workspaces are custom-built for large enterprise customers and are in the process of being built out for these customers currently,” Paul said.
He said NowSpace is in discussions with “many large companies” for headquarter space.
{snip}
An unquenchable thirst for flexible space
Other flexible office and coworking companies are growing rapidly in Austin. WeWork continues to lease tons of space and recently purchased 4.7 acres at Red River and East Cesar Chavez streets where it could build its first ever ground-up development.
New York-based Industrious LLC will open a second Austin location — 23,658 square feet — at 823 Congress Ave. in the third quarter of 2019. Seattle-based coworking company Riveter Inc., which caters to women, announced in January plans to next month open in a 12,000-square-foot space just west of downtown. Work Well Win, a coworking startup founded by former WeWork executive Frank Bistrian, will open a 100,000-square-foot location at Eightfold in East Austin this summer.
Real estate experts expect Austin's appetite for flexible office space — which includes coworking space as well as incubators and other short-term options — to keep climbing. Central Texas is a haven for the kinds of entrepreneurs with those needs.
Flexible space accounts for about 2.8 percent of Austin’s total office inventory of 54.1 million, according to real estate firm JLL. Flexible space accounts for less than 5 percent of the U.S. office market but is expected to jump to 30 percent by 2030.
While flexible space is in high demand, JLL Executive Vice President Will Douglas said Austin’s inventory will grow at a slightly slower pace than the national rate.
“If we have a client that has a shorter-term need, we survey all of the coworking groups and there is very little to work from,” he said. “The spaces are full.”
Douglas said all of the larger national and regional companies his firm has worked with recently are moving in and leasing coworking space.
Speaking in general terms, Douglas said there would be a lot of interest if someone like Paul injects a million square feet of space into the flexible office market in or near the Central Business District.
“The key is when that space is available,” he said. “There is a demand for it. There is very little vacancy especially when you get to 20,000 square feet and up.”
Demand is higher for newer, class A flexible office space than older buildings, Douglas said.
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https://www.bizjournals.com/austin/n...on-square.html
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