When Gateway Technical College announced this month the closure of its Launch Box coworking space, it was an anomaly.
The funding for the space dried up this year, so its 147 members will have to find a new office option come November. A free coworking space was no longer financially sustainable, said Thalia Mendez, who ran the Launch Box.
“The people who were really active and engaged and using the space, I think they’ll figure out, ‘Yeah, it’s been a sweet ride of two-and-a-half years of having no fees, but everybody’s charging now,’” Mendez said. “This is becoming a for-profit business.”
Spurred by players large and small, southeastern Wisconsin has experienced a surge of new coworking spaces over the past several years, which cater to the needs of entrepreneurs and sole practitioners with reduced rental rates for shared workspace and amenities.
According to commercial real estate firm JLL, flexible space has been growing at an average annual rate of 23 percent since 2010, making it the primary growth driver in the office market nationwide.
In Kenosha, The O coworking space opened in the renovated Kenosha Orpheum Theater in January. It’s the city’s first coworking space.
In Milwaukee, national coworking players Office Evolution and Spaces are planning significant projects.
Spaces, a coworking subsidiary of Jersey-based International Workplace Group plc (formerly Regus) plans to open its first Wisconsin location in a 43,000-square-foot space at 1433 N. Water St. in downtown Milwaukee this fall.
“(Milwaukee) is an up-and-coming tech hub with a strong private-sector financial community, and an established network of venture capitalists, angel investors and economic development agencies that offer numerous choices for entrepreneurs,” said Michael Berretta, vice president of network development for IWG.
Louisville, Colorado-based franchisor Office Evolution has 50 coworking spaces in 17 states, and plans to open seven to 10 locations in the Milwaukee market.
Office Evolution’s coworking spaces are about 7,000 square feet and include 30 private offices, with a lounge and conference room, but less shared space overall than other coworking spots. The company caters to independent white collar professionals like lawyers and accountants, said Mark Hemmeter, chief executive officer.
“We don’t have the keg of beer and the pingpong table,” Hemmeter said. “I think one thing for people to realize is coworking’s not monolithic. It’s not one-size-fits-all.”
On the smaller end, Phelan Development recently opened a micro-coworking space called Work Lofts on Milwaukee’s East Side. The 3,700-square-foot space at 2140 N. Prospect Ave. has a 16-person communal work table surrounded by a work room with 12 custom work stations and four private offices.
The Hive is another smaller coworking space, located at 720 N. Milwaukee St. in downtown Milwaukee.
The 5,000-square-foot, entrepreneur-focused space opened in September 2017. It has five dedicated members and 15 to 20 daily hot desk members, with room for a few more, said Mo Crosby, general manager. The members are an eclectic mix of beauty studio, contemporary art gallery, media agency and nonprofit.
Since it opened, The Hive has started hosting events, including a podcast meetup and a “Milwaukee Does” series about successful entrepreneurs, Crosby said.
In Glendale, Ironwood Office Park in December opened a 5,500-square-foot coworking space that offers fully furnished offices, licensed to businesses on a month-to-month basis. Ironwood now has six tenants in the space.
“When we bought the building in April of 2017, that was the business plan going into it,” said Ray Balfanz, president of Muskego-based Outlook Management Group, which owns the office park. “We saw it as a trend in the office building sector and they thought it’d be a great location for it, being on the North Shore.”
Some coworking communities have found success from targeting a particular niche.
MalamaDoe, targeted to female entrepreneurs, opened just more than a year ago in Shorewood and has grown to 34 members and expanded its space, said founder Sheila Long.
“I think that people understand it more, what coworking is, especially with all the new coworking spaces in Milwaukee,” Long said. “Also, the acceptance that women need more support. It just really helps us all…deal with whatever might be holding us back to be able to talk about it in a safe setting.”
Oasis, a 1,000-square-foot coworking space targeted to water-related startups, opened in January at the Global Water Center in Milwaukee’s Walker’s Point neighborhood.
Dean Amhaus, president and CEO of The Water Council, said the most interest so far has come from international companies that are collaborating with other firms in the Global Water Center.
“The uniqueness is if you’re interested in water, you know you’re going to have access to everybody else that’s in water, too,” Amhaus said. “It’s more trying to meet demand of companies that are trying to get into the ecosystem. It’s really geared towards companies that are outside of the region.”