Life Time Work’s Downtown Gamble
“We believe in cities,” Life Time Work president James O’Reilly declared from the deck of the company’s new downtown Minneapolis coworking space overlooking Hennepin Avenue and Ninth Street, where these days, it’s not difficult to snag a meter at high noon on weekday. Row upon row of desks separated by dividers sit ready and waiting.
Located in the former YMCA building at 30 S. Ninth Street, the 54,000-square-feet coworking space is Life Time’s largest yet, featuring two-level floor-to-ceiling views of downtown, more than 100 private offices for two or more, 10 conference rooms, quiet rooms, and meeting spaces, and two outdoor patio spaces furnished with work tables, lounge chairs, and sofas. This is Life Time’s third Twin Cities coworking space; its eighth nationwide, and only the second to be located in a downtown. The other, in Houston, also opened during the pandemic.
O’Reilly can’t say how it’s going. When Life Time Work opened in Edina and St. Louis Park, the company boasted more than half of the available coworking memberships were sold before opening day. This time is different because Life Time recently announced plans to go public—for a second time—and is in the midst of a mandatory pre-IPO quiet period.
What O’Reilly can say, by way of demonstrating excitement around downtown coworking: More than 100 people rsvp’d for last week’s opening of Life Time Work downtown Minneapolis.
“We know there is excitement around returning to shared spaces, and Life Time Work is a fantastic addition to our downtown office scene at this important time,” said Steve Cramer, president and CEO of the Minneapolis Downtown Council.
Chanhassen-based Life Time, which counts the suburbs as the target market for its large athletic clubs, didn’t set out to blaze a post-pandemic trail back to downtown officing. The Ninth Street lease in Minneapolis was signed in early 2020 and announced days before companies shuttered their doors and sent their workers home. Only 20 to 30 percent have returned thus far, although Cramer says the number is growing every week, along with the return of events and restaurants.
It may not be the launch Life Time envisioned, but O’Reilly says coworking offers just the sort of temporary space that companies currently in flux are seeking. Without naming names, he gave the example of a public company that downsized its office space in the past year and signed a one-year lease for three private offices at Life Time Work downtown along with memberships for 18 employees. “They see coworking as a great near-to-medium-term solution that could be ideal forever,” O’Reilly said. “Coworking plays really well to uncertainty.”
After years of steady growth, flexible office space took a major hit during the pandemic. Life Time Work previously reported a 40 percent plunge in memberships. But commercial real estate experts already predict a quick rebound. One study estimated the number of coworking spaces nationwide could double by 2024 as more companies move to a flexible work model. Suburban spaces are expected to grow the quickest with people looking for work options closer to home. In July, prior to Life Time’s quiet period, O’Reilly said that Life Time Work was “performing significantly better than pre-Covid on all important metrics: revenue, member counts.”
“We’re finding many more individuals joining our lounge membership, using LTW as a compliment to their corporate office space, because they’re in need of somewhere that’s not home and is professional,” O’Reilly said. “We also see more companies looking to offer their employees a variety of workspace alternatives.”
Life Time Work memberships start at $435 per month and include access to all Life Time athletic clubs and other coworking spaces. Half of the Life Time Work locations, including the one in Edina, connect to a Life Time fitness center.
With employees reluctant to return to offices and hiring a challenge, more companies are thinking about offering elevated, inspirational spaces. O’Reilly believes the downtown Life Time Work offers that in spades, thanks to its soaring city views and multiple outdoor gathering spots. With its emphasis on private office suites, Life Time tends to attract a slightly older coworking membership than some of its competitors in town, and more small companies and corporate groups than startup founders.
“Companies like the look and feel,” O’Reilly said of the new downtown space. “It matches their need for elevated, flexible space. The work experience needs to be engaging and enticing. There needs to be a reward for leaving home.”