Novel Coworking is leasing space at the former Art Institutes International Minnesota building at 15 S. Ninth St. in downtown Minneapolis.
Chicago-based Novel Coworking opened its first location in Minneapolis, a sign that competition among shared office space providers across the country amid rapid expansion is taking hold in secondary U.S. cities.
Novel is occupying the entirety of a 78,600-square-foot building on the west side of downtown. It’s one of the five largest locations for the growing company and the largest single-building coworking space in Minnesota. Novel is also planning a second location in Minneapolis, where competition among coworking firms including national heavyweights WeWork and Industrious is intensifying.
Novel’s business model is distinct in that it owns the buildings it inhabits — in this case a 102-year-old structure at 15 S. Ninth St., the longtime home of Art Institutes International Minnesota. Novel says its status as a real landlord by owning its buildings rather than lease them as competitors such as WeWork do gives it an economic edge and allows it to charge its members less.
“We buy the building because it gives us the ability to provide more amenities at a lower cost to customers,” said Novel founder Bill Bennett. “It also gives us more flexibility. As long as what a client wants to do makes sense, we’re able to serve them however they want, whether the customer wants their name on the building or a logo in the lobby, or is looking for self-storage, bike rooms, showers, we can give them that.”
Novel paid $7.95 million for the Minneapolis property in March, not long after the former arts and culinary school that owned the building closed for good in late 2017. Since then, it transformed the five-story building into a coworking hub with a full spectrum of space for rent: 69 private offices and 10 large office suites, for companies up to 100 employees, in addition to open-format, lounge-like work areas.
Novel also provides conference rooms, event space, an espresso bar, beer on tap, internet and mail service.
So far, seven private offices and one office suite have been leased, and six coworking members have moved into the shared space, according to the company. Novel declined to disclose how much it spent on the renovation.
Between its 22 other locations across the U.S., Novel has more than 5,000 members and 1.3 million square feet of space.
It will have plenty of competition in Minneapolis. In addition to WeWork and Industrious, a robust roster of homegrown coworking businesses have a presence as well.
New York-based Fueled Collective, a franchise coworking, lifestyle and fitness business, joined forces with one of the earliest coworking startups in the Twin Cities, CoCo Co-Working, in January. CoCo was founded in St. Paul in 2010 and expanded to include four locations in the Twin Cities and another in Chicago.
At the time of their combining, CoCo had the largest presence in Minneapolis/St. Paul proper, with the most locations and more square footage than WeWork, which opened its 50,000-square-foot space in downtown Minneapolis’ Capella Tower in October 2017. Between the four co-working spaces, CoCo covered 74,500 feet and had 1,050 total members, according to TechdotMN’s “Ultimate Guide to Coworking” for 2018.
CoCo’s rebranding as Fueled Collective was simultaneous with the unveiling of a prototype location in Cincinnati, which looks very much like a country club in the Adirondacks, circa 1950. The gym/bar/office is meant to have a “James Bond” feel, according to Jeff Herr, co-inventor of the concept.
Fueled Collective told Cincinnati media outlets that it hoped to build as many as 250 locations.
WeWork will soon be the biggest coworking firm in the Twin Cities by square footage. The company has leased 46,000 square feet in MoZaic East, a new 8-story office building in Minneapolis’ Uptown district that is nearing completion.
Novel also faces a long list of smaller rivals, some of which are specialized, like The Coven, which is for women only, and Glitch, which caters to developers of digital games and virtual reality products.
Novel’s pricing starts at $99 a month for basic coworking memberships, $199 for a dedicated desk, and $425 a month for a private office for two. By contrast, users pay $250 for a “hot” desk at WeWork’s Capella location, $350 for a dedicated desk, and $520 for the smallest private office.
Meanwhile, Fueled Collective’s memberships at its downtown Minneapolis location technically begin at $99 a month, though that only gets a member five days of access to a Fueled Collective site. It costs $375 a month for 24/7 access to a member’s home Fueled Collective location and $505 for a dedicated desk. Office suites for up to 20 start at $1,665 a month.
Novel’s Minneapolis location is one of a spate of recent openings. In April, Novel expanded into Cincinnati, and in late August it opened a location in Richmond, Virginia.
The location of Novel’s second Minneapolis space will be announced in early October, according to the company.