As co-working has evolved and its appeal has proved more than a fad, a rush of start-ups has joined the competition, including one from the real estate services industry, which has long had a near monopoly on leasing office space.
The new players are driven both by opportunity and competition: specifically, the ravenous reach of WeWork, the co-working pioneer that has spent freely to lock up market share and shows no signs of slowing.
Locally, the company has gobbled up about half of the 4.5 million square feet now devoted to co-working, said Peter Belisle, Southwest director of real estate brokerage JLL. In addition to the three floors it occupies in the Pacific Design Center’s Red Building, an expensive trophy property in West Hollywood, WeWork recently leased an additional 45,000 square feet in the center’s Green Building.
The emergence of co-working space as a popular office category poses some financial risks for landlords, according to analysts at Green Street Advisors.
“Office landlords will be increasingly forced to react” to competition from co-working companies, Green Street said, by launching their own flexible office offerings, financially partnering with co-working operators or outright competing for tenants.
Hana will provide some traditional co-working space along with private, customized office suites pitched toward rapidly growing companies that may have offices elsewhere in the complex and need extra space.
“The modern co-working companies,” he said, “Are addressing the pain points of traditional office leasing and changing the way people are leasing space.”