Hines²

Houston-based real estate giant enters the coworking space with 2 locations and more in the works

Houston-based real estate investor and developer Hines Interests LP is eyeing a piece of the burgeoning market for coworking space.

Hines just unveiled Hines², a platform for flexible office space at Hines-owned buildings. Hines² already is up and running at two locations: 717 Texas, a 33-story Class A office tower in Houston, and The Kearns Building, a 10-story office building in Salt Lake City.

Justin Boyar, director of market analytics at CoStar Group, a provider of commercial real estate data and analytics, points out that the two Hines buildings where Hines² has launched had vacancy rates of 48.6 percent (717 Texas in Houston) and 32.4 percent (Kearns Building in Salt Lake City) in the third quarter of this year.

Landlords like Hines increasingly are incorporating coworking into their office buildings "as a way to creatively entice tenants to buildings otherwise suffering high vacancy rates," Boyar says.

"Office landlords have been under siege this cycle by new space utilization trends — including increased density and efficiency, open floorplates, remote work, hoteling, and coworking," he says. "Office landlords now not only have to compete with structurally shrinking office demand but also with coworking providers who now offer hotel-like amenities and programming."

On the horizon are Hines² setups in markets such as Atlanta, Boston, Denver, New York City, the San Francisco Bay Area, and Washington, D.C. Eventually, Hines plans to enter other markets in North America, South America, Europe, and Asia.

New York City-based Industrious, a provider of flexible workspace, is Hines' operating partner for the new venture. Industrious runs more than 80 flexible-workspace sites in more than 40 U.S. cities. Additionally, Hines has teamed up with New York City-based Convene to provide event management and meeting services.

"Hines' workplace services offering will serve as a complement to our existing office capabilities, strengthening our position as the preferred partner for tenants and investors around the world, without changing our risk profile or leasing strategy. It's a natural extension of our vertically integrated operating model," Charlie Kuntz, chief innovation officer at Hines, says in a release.

Inside Hines properties, Industrious will operate centers known as The Square, which will supply coworking and flexible-workspace options, meeting and event services, food, beverages, collaboration areas, and community programming.

"The Square is a direct response to the changing needs of our current and future building tenants — our core customers. Hines has a 60-plus-year track record of providing superior space and service, and flexible workspace and office hospitality are a logical progression for us," Kuntz says.

In the coworking sector, Hines goes up against established players like Regus and WeWork. Working to Hines' advantage in the increasingly competitive coworking field is that it already owns the office buildings where Hines² will operate.

Coworking ventures like Hines² continue to emerge, given that flexible workspace and shared-amenity spaces are projected to make up about 30 percent of the U.S. office market by 2030, according to a forecast from commercial real estate services company JLL. Today, coworking accounts for less than 1 percent of the U.S. office market, according to CoStar.

CoStar says Regus ranks first among U.S. providers of coworking space, with about 16.8 million square feet. At No. 2 is WeWork, with 14.8 million square feet. Boyar predicts WeWork might surpass Regus by the end of 2019 to claim the No. 1 spot.

Boyar says that Regus and WeWork still dwarf other coworking providers in terms of lease space, although he notes that Hines partner Industrious is one of the fastest-growing providers in the U.S.

Nearly 47 percent of coworking occupancy in the U.S. is spread among six major office markets, according to CoStar. They are New York City; Los Angeles; Washington, D.C.; San Francisco; Boston; and Chicago.

Paul Leonard, managing consultant at CoStar Portfolio Strategy, says that although coworking is experiencing rapid growth, "it remains a small piece of the office universe and today is more of a collaborator with landlords than a competitor. That may change with time, but operators like WeWork have a far smaller share of office demand compared to other disruptors like Airbnb for hotels or Uber for rideshare and taxi services."

In Houston, coworking represents less than 0.5 percent of leased office space, or about 1.4 million square feet, according to Boyar. An estimated 190 buildings in the Houston area lease space to coworking tenants.

"Surprisingly, even this little amount of coworking space puts Houston in the conversation with the largest coworking markets in the U.S.," he says.

Boyar says it makes sense for Houston-based Hines to break into the coworking market in its hometown and elsewhere.

Hines is "seen by many industry insiders as the gold standard, so their foray into the coworking space represents an acceptance, of sorts, that coworking is here to stay," he says. "Subjectively, I think their partnership with Industrious and Convene represents formidable competition in the coworking space."

That being said, Boyar doubts Hines will embark on aggressive growth in coworking, as WeWork has. But he says Hines² "will allow them the ability to offer more flexible solutions to their tenants. If I were Hines, I would see this a risk worth taking."

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Building Houston

 
 

Houston is hosting a bit of a tech takeover next week. Photo via Getty Images

For the second year, Houston Exponential has tapped into the Houston innovation ecosystem to coordinate a week of events to speak to the city's startups, investors, and startup development organizations.

Houston Tech Rodeo will feature over 160 events between May 16 to 23 both online and all across town. From panels and meetups to office hours and pitch events, there's a lot to navigate in the second annual week. For a complete list of Tech Rodeo events (most of which are free), head to the website.

Here are the events you should make sure not to miss. (InnovationMap is a partner for the event.)

Note: You must register for HTR to be able to register for each event. For that reason, the event pages aren't linked directly. Find the information for each event through the HTR event website under the agenda tab, then sort by the day to find the specific event.

Monday: Gettin' in the Game with Master P: A Fireside Chat

The second annual Houston Tech Rodeo kicks off with hip-hop mogul, actor, producer, entrepreneur, and philanthropist, Percy (Master P) Miller on Monday, May 17, at 8 pm. "Gettin' In the Game with Master P" will be an exclusive fireside chat with the legend himself, interviewed by A-List Angels author and former Forbes editor, Zack O'Malley Greenburg. Hear about Master P's journey going from an international rap artist to a CEO, avid investor, and founder of Nemesis RR-- adding diversity in the automotive industry and empowering a culture of dreamers.

The event is free and available online. Register online.

Other Monday online events not to miss:

  • 11 am — HTX: Building a Thriving & Inclusive Innovation Ecosystem — join leaders from across the region's startup ecosystem, including Halliburton Labs, DivInc and The Ion, as they discuss how Houston has become a thriving hub for digital technology while fostering a culture of inclusive innovation.
  • 3 pm — All Roads Lead to Houston - Cross Industry Collaboration, the Intersection of Innovation — this event will focus on the "how" rather than "why", systemic barriers to collaboration, and available resources to analyze, de-risk and solve technology problems through meaningful collaboration.

Tuesday: Unleashing Innovation for Resilience in Disaster and Risk Mitigation

Tired of the hurricanes, snow and ice, COVID and just about every other disaster affecting Houstonian's businesses, homes, communities? Join risk mitigation experts for an in-person and virtual panel on May 18 at 2 pm. The panelists will address how Greater Houston becomes an innovation hub for pre-disaster and risk mitigation across droughts and floods, spills and leaks, fires and explosions, health and pandemics...and engages diverse populations for inclusion as entrepreneurs and mitigated locations.

The event is free and available online. Register online.

Other Tuesday online events not to miss:

  • 11:30 am — Demystifying Med Tech & Digital Health InvestmentsAttend this event to learn from the experts on what investors are seeking in digital health and med tech.
  • Noon — Made in Houston: Building Houston's Digital FutureHouston is on a mission to lead the way in digital transformation. How governments and corporations should accelerate the use of tech solutions and services while balancing the concerns of individuals on the adoption of such tools?
  • 5 pm (hybrid) — HTX Sports Tech: Panel & Happy Hour — HTX Sports Tech is hosting an in-person and online happy hour discussion between Houston's esports and sports industry leaders as we'll discuss the landscape of the esports and sports tech industry, share ideas on the role the industry can impact Houston's developing tech ecosystem, and opportunities to shape the future of the industry through innovative and collaborative efforts.

Wednesday: How Will Innovation Create a Diverse Rising Tide Within Houston's Ecosystem?

Houston is building a thriving innovation ecosystem, but innovation itself won't advance diverse economic prosperity given the status quo. So the question is…how will Houston leverage the city's biggest asset — its diversity — to maximize our potential? Panelists discuss at the online event on May 19 at 11 am.

The event is free and available online. Register online.

Other Wednesday online events not to miss:

  • 11 am — The Big Deal with EsportsDid an esports tournament really sell out the Staples Center? Did the winner of the Fortnite World Cup really make more than Tiger Woods in the Masters? Is esports really bigger than Major League Baseball? Join the discussion on how esports is transforming the business of competitive entertainment.
  • 3 pm — How 3D Printing Can Transform Houston's Manufacturing LandscapeJoin Houston 3D printing experts as they discuss the changing manufacturing landscape of the city and highlight the importance of innovation, economic impact, and sustainability through the adoption of industrial 3D printing technologies.
  • 4 pm — Rice Business Entrepreneurship Association Presents: Throw Your Wild Idea into the Arena First Pitch Competition Have you identified a problem space and a tech-enabled potential solution? The Rice Business Entrepreneurship Association wants to hear your early-stage wild idea. Come make your 90 second pitch and seek advisors, team members, and helpful feedback on your concept. Submit your info here.

Thursday: Female Founders' Tough Lessons Learned

Have an idea for a startup, already launched and building your startup, or just want to hear from those who've already been there? Join a powerhouse panel of female startup founders on May 20 at 9:30 am. Listen as the panelists share their journey and entrepreneurial struggles, and what it really takes to launch and run a startup.

The event is free and available online. Register online.

Other Thursday online events not to miss:

  • 11 am — BORN GLOBAL — Houston Tech Rodeo's International track will offer thoughtful discussions on the hour beginning at 11 am with a keynote.
  • 2 pm — Creating Space (and Tech) for DiversityA diverse panel of experts in space and technology will speak on their experience in these fields.

Friday: $50k Houston Investment Challenge

The Capital Factory challenge will occur on May 21 at Houston Tech Rodeo in partnership with Houston Exponential and will feature five technology startup finalists from greater Houston that will be evaluated by a panel of successful entrepreneurs and venture capitalists. One will walk away with a $50,000 investment.

The event is free and available online. Register online.

Other Friday online events not to miss:

  • 11 am — FemTech Panel — Join a virtual discussion with femtech leaders brought to you by FemTech Focus.
  • 1 pm — Innovation at Scale: Boosting Climatetech and Clean Energy Startups — Join Greentown Labs Houston for a virtual panel on incubating and supporting clean energy startups. The panel, featuring leaders from the regional climatetech innovation ecosystem and moderated by Greentown Houston Launch Director Juliana Garaizar, will discuss how to best set up startups for success and scale.

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