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How Co-working Is Working in Portland


Portland, Ore., has had more than its fair share of trouble from the current recession. It has seen the biggest drop in employment of any metro area in the country, with the jobless rate a dismal 12.2% in June.

Mixed with that gloom, though, are some sunny spots—notably the city's co-working spaces, or shared offices.

It's too early to tell if co-working spaces can be profitable, but the company founders I spoke with in Portland say they learned a valuable lesson from Portland's first co-working space, Cubespace, which closed its doors last month. The company reportedly made several business missteps, including its expensive monthly lease.

Cubespace's successors say that by balancing real estate costs, unearthing additional revenue streams, and serving individual communities' needs, their co-working spaces will be around for many years to come. Here's a look at three of them:

Souk: Co-working Basics

The now-defunct Cubespace was Portland's first co-working spot, but Souk wasn't far behind. Opened by Julie Duryea in January 2007, the event- and meeting-friendly space caters to what Duryea describes as "varied and colorful a community" as the open-air markets from which Souk takes its name. This broad-market approach has slowly borne fruit: Last year the company broke even, with revenue from memberships ($275 a month, full-time), drop-in desk use ($35 a day), and meetings. While the economic downturn has pinched meeting revenue to the point that the company is likely ro slip back into the red for 2009, Duryea says she's seeing a slight rebound in meeting-space use.

For workers, Souk offers most of the standard services of its Portland peers. In addition to the co-working basics—power, Wi-Fi, water, coffee, and snacks—Souk hosts events, workshops, and classes for its members and helps them access local resources. "I can see how it's easier in this city to start up such a thing," says Duryea. "It's more manageable size-wise, and there's a big community of creative class workers."

NedSpace: Co-working as an Incubator

Futurist Anthony Townsend told BusinessWeek in June that the explosion in Web working is creating new kinds of "knowledge ecosystems," and an ecosystem is a good metaphor for the model being pursued by Josh Friedman and Mark Grimes. The founders of aix-month-old NedSpace aim to separate their co-working space from the Portland pack with a focus on fostering collaboration among high-growth, early-stage startups rather than independent contractors and freelancers. Currently, NedSpace has 40 companies (encompassing 64 individuals) sharing one 7,500-square-foot space, with a mixture of open-area and dedicated desks ($275-$375 a month), as well as open- and closed-door offices ($575-$975 a month).

In addition to memberships, NedSpace generates revenue from partnerships and sponsorships. Friedman says he's negotiating with a wireless Internet provider to sponsor free bandwidth for NedSpace; when companies "graduate" out of the co-working space into offices of their own, the provider would offer discount services for their new location. The model is an ingenious way to attract companies that hope to someday graduate, while also appealing to sponsors who want early access to future paying customers (sort of a B2B version of advertising to children).

Friedman, who says access to investment capital is a major limitation of doing business in Portland, also hopes to attract investor partners to NedSpace. Both Friedman and Grimes have experience starting and raising funding for businesses, and Friedman says they have successfully connected four member startups with angel investors. "I know who works hard," he says.

According to Friedman, the company has been profitable since its third month and will open its second Portland location in August. NedSpace is also seeking to expand its efforts further, with plans to open a third Portland location and a Seattle space in the months ahead. In the future, Friedman envisions NedSpace as a YCombinator-meets-co-working arrangement and is currently seeking an Entrepreneur-in-Residence to staff the Seattle location and provide advice to member companies.

The Hive: Co-working as Culture

The latest addition to the Portland co-working scene, the Hive, is set to open on Sept. 1. Other co-working spaces are independent businesses, but the Hive is part of the Leftbank Project building in which it's located. A new green building in Portland's Rose Quarter district, the Leftbank features a wide range of office spaces for sustainability-minded businesses, such as software startup FMYI, Upright Brewing, consulting firm Blue Tree Strategies, and several green-design firms. The building is a veritable rabbit warren of like-minded businesses, and the Hive is an attempt to capitalize on that, says small-business consultant Christian Allen.

"It wasn't started as a business idea; it was more of, how can we feed this vision? How can we create more community?" says Allen. "I think it will definitely be challenging." Still, the Hive is well-positioned to compete in the Portland market. It provides the basic co-working amenities, with a green twist and competitive rates: Individual dedicated desks, which include access to community tables and conference rooms, go for $350 a month.

Allen says the community will also play a large role in establishing a long-term business model for the Hive. As needs arise, Allen says members will collaborate to create self-sustaining solutions for themselves.

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