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Innovation economy

Are we facing a bubble in shared office space?

Tablelist employees at WeWork in Boston include, left to right, Brin Chartier, Alex Johnson, and Andrew Barba. WeWork offers workspace to small firms.Jonathan Wiggs/Globe Staff/Globe Staff

Most people work in a cubicle. The lucky ones have an office with a window and a door that can be shut.

But a new kind of office is popping up in neighborhoods from Newton to Chelsea to Boston’s Leather District: communal spaces where you can rent a desk or three on a month-to-month basis, and mingle with other businesspeople around the kitchen’s beer tap at the end of the day. (Unlimited brewskis — or cups of coffee — are included in the rent.)

And unlike the generic, all-beige business centers of the past, these workplaces have a cachet that appeals to young entrepreneurs as well as established companies like Facebook and Amazon.com setting up local offices.

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So many of these shared offices are opening that it can be tough to keep track. The granddaddy of them all, Cambridge Innovation Center, will open a branch next month in Boston’s Financial District big enough for about 1,200 people. NGIN Workplace in Kendall Square opened in March, Back Bay’s Idea Space in January, and Chelsea’s Commoncove last fall.

WeWork, a New York company creating an international network of communal offices, will manage about 175,000 square feet in Boston by the end of this year — and they’re still hunting for additional locations in Cambridge and the Back Bay.

Zefr employee Doug Hogan at his firm’s Boston location at WeWork.Jonathan Wiggs/Globe Staff

This may be the future of the workplace for individuals, small companies, and satellite offices of the Fortune 500. (Shell, No. 1 on Fortune’s latest list, has a growing team based at the Cambridge Innovation Center in Kendall Square.) But it’s hard to not wonder whether the current enthusiasm will lead to over-building.

Talk to people building and promoting these shared spaces, and you hear about three benefits most often: flexibility for growing companies that don’t want to be locked into a lease; interaction with other entrepreneurs and professionals, and the absence of most of the hassles of managing a traditional office, from stocking the fridge with creamer to keeping the WiFi running. Rent ranges from $100 to $1,200 per worker, based on the location and amenities.

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Pritesh Gandhi runs a consumer electronics startup, Ambient Devices, that is based at Cambridge Innovation Center. “I compare the set-up here to being in a dorm and having a resident adviser who is on location to help you with all your problems,” says Gandhi. At CIC, there is not only a Thursday night schmooze-fest with free craft beer, but also organized running groups and meditation classes. CIC founder Tim Rowe says the company is exploring new locations in Europe, and may expand to Baltimore, too.

WeWork is making a massive bet in Boston. It opened two shared spaces — one in Fort Point Channel, and another in the Leather District — this year, and is already adding seven floors to the Leather District location, which has one floor open today. The company, which has raised at least $6.8 million from the same venture capital firm that brought you eBay and Uber, says Boston will soon be its second-biggest footprint after New York. The company also has offices in San Francisco, Los Angeles, Seattle, and Washington, and plans to expand to Chicago, London, and Tel Aviv.

That will create the office equivalent of a frequent flier lounge for jet-setting movers and shakers, who will be able to rent space at one WeWork location, but lay their laptop down at any of the others when they travel. WeWork tenants also have access to a mobile app that allows them to post questions or needs, and get replies from other tenants. That app serves as a business development tool for some tenants, connecting an entrepreneur with a graphic designer, for instance.

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WeWork chief strategy officer Noah Kerner says the company looks at a variety of data when deciding which markets to enter and how much space to build. “We look at Census Bureau data, and we do our own market research internally,” he says. “But there is also some art to it.”

More shared spaces are coming. Harsh Mehta, cofounder of OfficeLinks, which operates in New York and Chicago, says he is scouting for a Boston location. “I believe the ‘workspace as a service’ model is a fundamentally good one and is here to stay,” Mehta writes in an e-mail.

David Townsend, a senior director at the commercial real estate firm Cushman & Wakefield, observes that “a very small percentage of the Boston market is this kind of co-working space today.” But other realtors are stunned by the sudden boom. Very young startups can be frugal — working out of a friend’s office, campus lab, or Starbucks — and once they grow to about 10 people, they often want to lease their own space.

“I just don’t know how they’re all going to survive,” says Jon Frisch of the realty firm T3 Advisors, noting that the shared offices all deal with a fairly high turnover rate.

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We’ve seen at least two smaller shared spaces vanish. Betahouse, in Central Square, shut down in 2010 when its lease ended and the managers couldn’t find another suitable location. StartLab Allston, which charged $100 per desk, lasted about a year, closing last summer.

StartLab cofounder LV Randolph III says he has decided to focus on his consulting business, as opposed to being a landlord. “There’s less overhead,” he says.

Some other smaller shared spaces will likely find that overhead dwarfs revenue. But WeWork and CIC seem to be emerging as leaders of this new pack. And as CIC’s Tim Rowe notes, the explosion of shared space is not just a Boston thing: “It’s a global phenomenon.”


Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.

Due to a reporting error, an earlier version of this column misidentified Noah Kerner, the chief strategy officer of WeWork.