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Commercial Real Estate
Business Observer Friday, Sep. 25, 2020 3 weeks ago

Industrious shining despite COVID-19

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Office co-working platform continues to expand in Tampa Bay even as rivals suffer from debt and pandemic-related uncertainty.
by: Kevin McQuaid Commercial Real Estate Editor

Although the COVID-19 pandemic has ushered in a wave of work-from-home sentiment aimed at limiting human interaction to stop the spread of the disease, office co-working firm Industrious is pushing ahead with an ambitious Tampa Bay expansion.

Fortified by measures to keep their offices sanitized and increased social distancing, Industrious is on track to open co-working spaces in downtown St. Petersburg’s 200 Central Ave. tower; Sparkman Wharf within the $3.5 billion Water Street Tampa project; and in Ybor City next summer.

The company had hopes to open each of the three locations earlier — the space in the 28-story office tower in downtown St. Petersburg had originally been scheduled to debut in April 2021 — but that build-outs became bogged down by backlogs in obtaining supplies, labor and inspections.

“We expect there will be a real surge in demand during the early part of next summer, and we’ll be delivering these new locations to meet that,” says Peri Demestihas, Industrious’ director of real estate.

“Tampa is a fantastic market for us and I think with these new locations we’ll really be set up for success there,” he adds.

In a nod to the pandemic, Industrious also is implementing a series of other changes aimed at stopping the spread of the coronavirus.

In addition to one-way hallways, the company will institute on-site temperature screenings of members and vendors and install improved air filtration systems, says Jennifer Reilly Kelmer, an area manager for the company’s Florida operations.

It also has redesigned its conference rooms and offices and taken steps to limit gatherings and food and beverage capacity, Kelmer says.

Industrious’ further push in the Tampa Bay area comes as other co-working concerns have stumbled as a result of excess debt, faulty business plans and the effects of the pandemic that has wrought fear in some quarters.

Rival WeWork, for instance, was forced to cancel a planned initial public offering and contract from significant leases when demand shrank earlier this year.

More recently, earlier this month more than two dozen affiliates carrying the Regus Corp. shared space brand — including a pair in Tampa — joined a federal bankruptcy case brought about by a pandemic-inspired drop in demand nationwide.

Critics say such co-working spaces, where “members” rent small offices or open-air tables and collectively utilize amenities such as a lone kitchen, make social distancing nearly impossible.

Demestihas says Industrious differs from its competition in a key philosophy, which could explain in part the divergence from other platforms’ performance.

“People think of co-working as incubator space or open space, but what we are is a supplier of private offices,” he says. The vast majority of our revenue comes from renting private offices, not just a seat or a desk.”

At the same time, Industrious has differentiated itself through its approach to tenancy.

“We’ve focused for the past several years on partnership agreements with landlords, rather than being simply a tenant,” Demestihas says. “We approach our business as being in partnership with our landlords, and that model has proved to work well.

“We provide the opportunity to unlock a co-working potential in their locations, and we think landlords appreciate that because they, too, are often in partnerships,” he says.

In downtown Tampa, Industrious’ landlord at the SunTrust Financial Centre is Raleigh, N.C.-based Highwoods Properties Inc. At Sparkman Wharf, Industrious will occupy space being redeveloped by Strategic Property Partners, the developer behind the $3.5 billion Water Street Tampa project.

COURTESY RENDERING -- Sparkman Wharf, part of the $3.5 billion Water Street Tampa, will be home to a new Industrious office next year.

In St. Petersburg and in Ybor City, Industrious will team with Third Lake Capital.

Kelmer says the heightened safety and janitorial measures already are having an impact at Industrious’ existing location at 401 E. Jackson St.

“People are telling us that they feel Industrious, because of what we’ve done, has become the second safest place in their lives behind their own homes,” she says. “Our members are breathing sighs of relief as they get back to more business.”

Kelmer adds that the Tampa location has seen a steady influx of “dozens” of new members drawn to short-term leases since Spring.

“We haven’t had a week yet where we haven’t added new members in the past several months,” she says. “It’s definitely livelier than it was in April, when there was so much uncertainty surrounding the virus and what could be done to combat it.”

Demestihas says the company will maintain the newly instituted safeguards well into the future.

COURTESY PHOTO -- Industrious occupies two floors in Highwoods Properties Inc.'s SunTruist Fiancial Centre in downtown Tampa.

“The number one important thing to our business is the health and safety of our members, staff and vendors,” he says. “It’s something that we’ve taken a long time studying and we take it very seriously. And on the real estate side, it’s a great feeling to have partners that you know want to work with you.”

 

 

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