Correction: A previous version of this story misidentified Bethany Iverson, co-founder and COO of The Coven, a coworking company.According to Enterprise Rising founder and tribal leader Casey Allen’s frequently updated map of Minnesota coworking spaces, Minneapolis alone has nearly two dozen coworking locations. The greater Twin Cities, St. Paul included, has nearly 20 more. A handful dot greater Minnesota, mostly in regional hubs like Rochester and Bemidji.
Minnesota is no outlier. As of early 2019, coworking — also known as flexible office or flex space — accounted for at least 25 million square feet of commercial space in the United States’ 30 largest office markets, according to a CBRE report from a research team led by CBRE global chief economist and head of Americas research Richard Barkham.
Driven by rapidly growing national and international brands like WeWork and IWG, coworking is an “increasingly relevant factor in asset valuation,” the report said. Compared with non-coworking transactions, CBRE found lower average capitalization rates in “flex transactions,” suggesting commercial property owners presume flex space is less risky than traditional office — though properties with flex space present do not necessarily perform better than properties without, and properties dominated by coworking may actually present more risk than properties where coworking accounts for a smaller share of total square footage, due to coworking’s typically shorter lease periods.
Still, coworking is here to stay, and the Twin Cities’ scene has something for everyone — from Fortune 500s looking to add creative or project-based teams without annexing new long-term space, to startups looking to staff up after successful raises, to independent professionals and creatives seeking social alternatives to the trusty home office.
Coworking at enterprise scale
In every major U.S. coworking market, the elephant in the room is New York-based WeWork, which operates nearly 600 workspaces worldwide. WeWork operates three Minneapolis locations: on three floors of the Capella Tower, in the central business district; at the Nordic, in the North Loop; and at MoZaic, in Uptown. For solo professionals content with catch-as-catch-can space, Capella Tower’s $200-per-month Hot Desk deal is the brand’s best value in town. At less than $500 per month, MoZaic has the best deal on private offices.
With plenty of dedicated desks and suites, WeWork is ideal for multi-person teams and firms that value their privacy. So is New York-based Industrious, another national player with Minneapolis locations in the North Loop’s T3 Building (home to a secretive Amazon IT team) and downtown’s RBC Plaza. With space for 100-person teams at both locations, Industrious works well for suburban enterprises looking to relocate entire creative or tech teams to amenity-rich urban neighborhoods; the T3 Building’s location near Target Field commands a significant premium over RBC Plaza’s 9-to-5 nabe.
The Twin Cities’ latest enterprise-grade coworking entrant might be the most disruptive to date. Carlsbad, California-based CommonGrounds opened a nearly 30,000 square foot space this summer at 801 Marquette Ave., two years after a head-to-toe renovation that created what CBRE touted as “the first high-quality ‘creative office building’ of its type” in downtown Minneapolis.
CommonGrounds’ differentiator is its workspaces’ modularity. Virtually every piece of its built environments is mobile, including walls, allowing enterprise tenants to quickly and cheaply scale up and down as needs dictate. At another CommonGrounds location, a larger occupant safely removed more than 20 walls in 14 business days at a total cost of about $40,000, said CEO Jacob Bates.
For CommonGrounds tenants, “time is everything,” said Bates. “The built environment has to be hackable, flexible.”
One thing CommonGrounds isn’t: a top choice for solo professionals. Its bread and butter is small to midsize teams within enterprise organizations. Coupled with Bates’ extensive prior commercial real estate experience, CommonGrounds’ pool of deep-pocketed clients and prospects endears it to funders. Following a $100 million Series A raise, the brand has grown from one location to 18 in about a year, with 10 more openings on the way into 2020.
Safe, inclusive, productive
The Coven is another ascendant coworking brand with big ambitions and an innovative business model, but that’s about where the similarities to CommonGrounds end. The Coven is a safe space for professionals who’ve historically been marginalized for reasons of identity — in the brand’s own words, “a dynamic, diverse community of women, non-binary, and trans folks who inspire one another to lead more empowered lives.”
All four Coven founders came up through the advertising industry, where they worked (together, at times) to advance gender and racial equity. “There are lots of wonderful things about the ad industry, but we were frustrated with pace of change” said Bethany Iverson, The Coven’s COO.
The Coven’s 4,800-square-foot Minneapolis flagship location is soon to be supplanted by a 9,500-square-foot space in St. Paul’s Blair Arcade building, set to open in December. The Blair Arcade location will have seven private offices — the Minneapolis location has none — and an all-gender space where members can meet male clients and business partners, said Iverson.
The Coven mainly caters to solo clients and early-stage enterprises. According to Iverson, about 30% of its members identify as entrepreneurs, and “a huge percentage” are side hustlers — working steady 9-to-5 jobs when they’re not at The Coven. The balance works in the nonprofit sector or activism. For every five memberships The Coven sells, it gives away one, with preference for members of historically marginalized groups; they’ve given away well over 100 to date, said Iverson.
Giving away memberships “helps us ensure that there’s socioeconomic diversity within our walls and make sure our space isn’t just full of people who can afford access to a private club,” she said.
That private club is growing. After St. Paul, Iverson is aiming for a late-2020 opening for The Coven’s first non-Minnesota location, in Nashville. With $1.2 million in seed funding and a “tight-knit group of advisers” with deep real estate and finance expertise, The Coven plans to open up to 20 locations in the next five years, largely in “underdog cities” with vibrant creative economies and high shares of women and non-binary entrepreneurs.
A novel model?
Chicago-based Novel caters to a broad mix of tenants, from solo professionals in spacious shared bullpens to midsize teams in 30- to 40-person suites. With about 2.5 million square feet of space at more than 30 outposts around the U.S., Novel is a major player — if not as well-known as WeWork or IWG.
And Novel appears to be doing something right: Its TriTech Center location, a stone’s throw from Government Center station in downtown Minneapolis, recently won “best coworking space in Minneapolis” in the Coworker Members’ Choice Awards, a survey based on peer feedback. With shared desk rates as much as 50% lower than other downtown Minneapolis coworking hubs, the buzz is understandable.
Novel’s real differentiator, though, is its business model. It’s rare among rapidly growing coworking brands for actually owning its real estate. Novel owns both TriTech Center and the LaSalle Building, which houses its other Minneapolis location.
Generally, Novel’s buildings contain a mix of commercial uses, not just flexspace. TriTech Center has several “legacy tenants,” including a data center, said Brittany Bartelt, Novel’s on-site sales manager. That makes the brand something of a hybrid — merging the stability of traditional commercial real estate ownership with the upside of coworking exposure.
We can’t have everything
A casual observer might interpret the Twin Cities’ ongoing proliferation of coworking to mean the metro is some sort of flexible workspace mecca. That would be a mistake.
Although it’s doing well to make up for lost time, Minneapolis-St. Paul’s coworking variety actually lags some other major metros.
To join IWG’s No18, a “cosmopolitan members’ club for business,” you’ll need to relocate to Chicago or Atlanta. (Spaces, a more democratic IWG offering, operates one North Loop location.) CANOPY remains, for now, confined to San Francisco. Invite-only NeueHouse’s distinctly un-Minnesotan model works better in New York and Los Angeles, where its target audience of “prominent creatives” clusters.
That’s not to say the Twin Cities isn’t a regional hub for coworking innovation, thanks to homegrown concepts like Fueled Collective and The Coven, whose ambitious expansion plans bode well for the Twin Cities’ reputation as a place where work gets done differently.
True to the Twin Cities’ low-key reputation, some of the most successful local coworking products are more about maintaining the trappings of professionalism close to home than breaking the mold. Twin Cities North Chamber of Commerce president and Reserve member John Connelly likes the “beehive” nature of his Roseville home base — he regularly bumps into clients around the office. And he enjoys the inherent synergies of the multi-location model. During a particularly snowy stretch last winter, he worked out of The Reserve’s Edina location, closer to his southwest metro home.