Dallas Flexible Office Interview with Charlie Morris, Principal, Avison Young
This Dallas Flexible Office Interview is from a conversation with Charlie Morris of Avison Young. If you’re a CRE professional and want to inquire about an interview, please email us.
Dallas is a rising star in the commercial real estate world. Dallas’ relatively recent rise to stardom comes as no surprise given the city’s affordability, job market and diverse economy. We had a chance to speak with Charlie Morris the broker to know in the Dallas flexible office market. Charlie Morris is a Principal at Avison Young. Market demand has led the LiquidSpace team to dive into the trends and publish the Dallas Flexible Office Report. Take a look to get insights into the market, economy, business trends. Plus insights from our flexible office data and coworking, building and broker partners.
Charlie Morris is a LiquidSpace network partner who has leveraged the power of flexible office for both tenants and landlords. Charlie brings years of Dallas market knowledge to his clients. Here are the insights from our Dallas flexible office interview with Charlie.
Charlie Morris, Principal, Avison Young
What trends are driving Dallas flexible office growth?
Corporate Relocation (Toyota, JP Morgan, Liberty Mutual, etc) continues to drive the overall commercial real estate market in DFW(Dallas–Fort Worth metroplex). While these are large in scale, these mega relocations are also being followed by other smaller service providers seeking to support them and take advantage of the central location of DFW, quality talent pool, business friendly environment & high quality of living.
With all of the growth and low unemployment rate comes high occupancy in the commercial sector. Plus a record occupancy costs in the DFW market. Many companies need to be very smart about their growth plans. Since they are negotiating at a time of record lease prices in the metroplex. Many are seeking more efficient spaces to counteract these rate increases.
DFW had a steady growth in the Coworking sector in recent years initially driven by local/regional players (Common Desk, Foundry Club, Frontier, etc). Over the past few years, we have seen a lot of the large national operators entering the DFW market (WeWork, Serendipity, Industrious, etc).
Many entrepreneurial & corporations are embracing this sector. The “Enterprise” sales divisions of these companies are helping spread the flexible office concept even further. They see what is happening on a global scale with large corporations such as Amazon, IBM, Salesforce, etc utilizing these concepts for their occupancy needs.
How has the adoption of Dallas flexible office by small and large tenants changed in recent years?
Growth of the tech/entrepreneurial community in Dallas has contributed to the growth of the flexible office trend. These entities are exploring these opportunities ahead of the “corporate” users which have historically dominated the DFW business landscape. Dallas has always had an entrepreneurial spirit. The growth of this sector has begun to influence the large corporations. Large corporationswould typically follow the status quo of longer term leasing strategies.
Larger Corporations who view Dallas as a growth market are hesitant to commit to longer term leases. Commitments that could prove risky as they seek to understand their growth needs in Dallas. This provides opportunity for Coworking operators and concepts such as LiquidSpace. An opportunity for these companies to gain flexibility as they figure out what they are going to be when they grow up in this market.
Building owners were originally reluctant to embrace the Coworking industry as it went against the status quo. But I think most understand that this trend is here to stay. The acknowledgement of Coworking as a viable competitor will only grow as they see corporate occupiers utilizing these concepts and other flexible leasing platforms more in the future.
How are companies like LiquidSpace, and others, helping to shape the core vs. flexible usage in Dallas?
Owners & the brokerage community are dependent on the goals and expectations of the end user. The tenants and the landlords. As these entities continue to demand flexibility and mobility to achieve their occupancy goals, the CRE community will need to offer opportunities that provide these objectives. The opportunities go well beyond the Core/Traditional leasing standards…If they don’t, they will be left behind.
Dallas institutional owners are often followers when it comes to new technology/platforms. As early adopters gain traction through LiquidSpace, others will follow suit. In an effort to provide options for these flexible users to take up occupancy in their buildings.
LiquidSpace has a unique opportunity to provide occupiers solutions for their flexible office requirements. Whether within a coworking company or assisting them in finding their own space. The only thing that will slow this down is the impulses of the Dallas CRE community to maintain the status quo. As more corporate users get on board, owners and the brokerage community will be forced to adapt.
Any other trends do you see emerging?
Investors value the flexible office sector.
Eventually, I anticipate that the capital markets/investment sales professionals buying/selling office buildings are going to have to put some value on shorter term transactions. Instead of simply only placing value on 5+ year transactions. As corporations continue to seek flexibility in their occupancy needs and utilize concepts like LiquidSpace and coworking operators. As more credit worthy tenants demand flexibility and utilize LiquidSpace, the capital markets will have to figure out a way to place a value on these shorter term commitments. Similar to how they did in the hospitality and multi-family sectors of the industry.
Institutional owners are going to embrace the Dallas flexible office environment.
Invest in flexible office operators (Craig Hall is a large RE Investor in DFW and has invested directly into Serendipity who is opening up a location in one of his buildings).
Get an established operator into their building under a long term lease. However, this will lead to increased CapEx and underwriting risks depending on the level of securitization being provided by the operator, etc. Plus, I think many are finding that coworking is not acting as an “incubator”. Most operators are simply gobbling up more space in buildings as their space gets filled. Instead of tenants outgrowing these locations and moving into traditional leases directly.
Initiate their own flexible office strategy within their buildings. Buildings can achieve this by using LiquidSpace in lieu of trying to operate their own coworking company. Operating a coworking company goes outside of their core competency.
Thanks Charlie Morris for your deep insights into the trends behind flexible office, specifically around Dallas Flexible Office! As a market Network, LiquidSpace benefits from sharing diverse thought leadership. We bring in thoughts from a breadth of operators, from coworking to building owners. We elaborate on these trends with deep data and qualitative insights in our Flexible Office Reports. To get an immediate dose and sign up to receive future installments, head to the LiquidSpace Flexible Office Hub.