Re-loved warehouses: creative, cool and in demand

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Warehouse conversions for apartments have been popular for decades but the rising appetite for co-working and shared office space is seeing a new wave of conversions.


The business case for turning a neglected warehouse into a beautiful shared office space is a good one, according to Grant Philipp, chief executive and co-founder of Office Hub, which specialises in shared, co-working and serviced office space.

He says co-working spaces in towers, such as conventional serviced offices, don’t have the appeal or the same commercial fundamentals as a groovy space in a converted warehouse.

[The creative industries] want the “X-factor”, which is easier to create when rebirthing a neglected warehouse.

“It’s hard to get the right creative feel in an A-Grade tower,” he says.

The creative industries, start-ups and entrepreneurs are looking for more than just a box with a desk and a door. They want the “X-factor”, which is easier to create when rebirthing a neglected warehouse.

The market for shared commercial space is a competitive one, so industry players are vying for who can create “the coolest space”.

Engine House, Melbourne – a repurposed 19th century tram depot. © Office Hub

Warehouse building features such as the high ceilings, character, history and materiality all provide a solid basis for making an attractive co-working environment.

High CBD rents strengthen the business case, Philipp explains. Older, dilapidated properties are scarce, so locations in the wider metropolitan area, including CBD-fringe suburbs, are becoming popular.

Rents are lower – at around a third of the price of the equivalent CBD floorspace – so more money can be spent on the fitout to create the right look and feel.

“The eyeballs talk” when it comes to how potential tenants respond to a space.

Philipp says rebirthed warehouse buildings are also “more forgiving” if a desk doesn’t have a window view; the original materials – aged brick and sandstone – are themselves visually interesting.

“In a serviced office [in a tower] you are more likely to be staring at gyprock – and no-one wants to do that.”

He says “the eyeballs talk” when it comes to how potential tenants respond to a space.

“That’s the power of finding the right distressed and run-down shack and rebirthing it.”

He says smart shared office providers also “grab the story” of the building and display it in the whole theme of the space – another element you can’t get in a high-rise.

Warehouses also offer the “wow factor” of a ground-floor entrance, and the big trend is creating a public space at street level, such as a café that attracts foot traffic. That foot traffic often includes the kinds of people who convert to tenants in these spaces, Philipp says.

By contrast, “trying to get the public to come up 30 floors is not easy”.

“You’ve got to make the space feel like it’s always had the heritage feel.”

The fashion and design sectors are especially attracted to buildings with character, Philipps says. About 30 per cent of Office Hub’s target market are creative companies wanting to move into a building that reflects their own brand.

And the more those tenants hear “Oh, I love your office!” from their clients – the more months they are likely to add to their lease.

The right architect and the right building are key ingredients in any recipe for “happy days”, Philipp says. “You’ve got to make the space feel like it’s always had the heritage feel.”

MUSE, Sydney © Office Hub

There are some challenges to making it work. If a building’s shell, flooring and walls are sound, a conversion will cost a lot less. But the high ceilings so many people love can create a challenge for HVAC. It can be difficult to properly seal off zones and ensure acoustic insulation.

“A critical part when you choose a location is HVAC – if you can’t get ducts in, walk away.”

Other fitout elements might incur greater costs compared with a conventional new building. For example, it might not be possible to run floor-to-ceiling glass without investing in framing that will suit the space and building’s story and era.

“Everything has to be done with more thought,” Philipps says.

New industries don’t want to set up in industrial parks because they lack character.

That includes elements like doors and door furniture. A standard contemporary hollow-core door with ordinary contemporary handle could clash with a building’s inherent character. Phone and data cabling also need to be blend in.

Staff facilities, such as bicycle storage and showers, are important too, as are breakout areas for workers, and common areas such as a parent’s rooms, kids spaces or even meditation rooms.

Co-working spaces attract many people who want to ride their bike to work or fit in a trip to the gym. And if the building you’re considering isn’t within a short walk of a train station, Philipp says “forget it”. Being close to public transport is a major priority for many of the businesses using co-working spaces, he says, especially because warehouses seldom have basement car parking, or significant and cheap on-street parking. 

But the cost of a fitout should be balanced against cheaper rent, he says. It is possible to do some clever negotiating with owners.

“It’s a matter of trying to find a landlord that can think outside the box,” he says.

Landlords also need to have a “long term plan that is a long-term play”, rather than thinking short-term about selling the site for demolition and development as soon as possible.

Philipp says there are a large number of buildings suitable for this type of conversion but many owners and landlords haven’t caught on to the benefits of converting the building.

But with CBDs facing rental capacity, those attitudes may soon change, with landlords in metropolitan areas predicting high growth in demand for co-working spaces over the next 12 to 18 months.

New industries don’t want to set up in industrial parks because they lack character, and are often a long commute from where workers in these industries live.

 “We are going to see a surge [of co-working] spaces, and it will be a matter of who can play the game best and build it best.”

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