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New Normal Office

For professionals who want to pay only for the square footage they need – whether it be a private suite or simply a desk, coworking has exploded in popularity. Besides a place to work, they may get a ready-made network of office pals and amenities that range from meeting rooms and green spaces, to vast common areas, unlimited coffee and kombucha, craft beer taps, and in-house seminars and socials. The coworking trend shows no sign of cooling off anytime soon. Los Angeles co-working inventory increased 50 percent over the past two years, bringing it to about 4 million square feet, or 1.8 percent of total office square footage, according to research by CBRE Group Inc., while Emergent Research projects that the number of people taking space at coworking companies will reach 5.1 million by 2022. In the Valley region, coworking venues dot the map, as shown on the Business Journal’s first list of Coworking Locations starting on page 14. Regus facilities dominate the region with 15 locations, for a collective 260,000 square feet, from Calabasas to Valencia. Regus’ largest sites are located in Woodland Hills (32,967 square feet; No. 3 on the Business Journal’s list) and in Glendale (32,516 square feet; No. 4 on the list) while its smallest footprints are in Calabasas (9,346; No. 28) and North Hollywood (5,500; No. 30). Other major coworking companies in the region include Barrister Executive Suites with nine locations and Premier Business Centers with five sites. The roster of other coworking players in the region include WeWork in Burbank (No. 2). Defining space Some of the terms in coworking can be interchangeable and confusing. According to CBRE Southern California Senior Research Analyst David Nusbaum, “coworking” involves people paying to rent desks on a daily or monthly basis in a well-designed environment. They can have dedicated offices, dedicated desks or unassigned desks, also called “hot desks.” These spaces tend to come with curated tenants, shared common space and amenities. “Executive offices” are usually private offices for rent on a monthly basis with some common areas, but usually minimal on amenities. There’s also enterprise coworking – space leased by a shared workplace operator but with one enterprise client using the entire space; and service conference centers — purpose-built meeting, event and conference spaces integrating technology, seasonal cuisine and on-site planning and production staff to support events for a fee. One of the largest coworking companies in nation, WeWork, only maintains one facility in the Valley. Since April 2017, WeWork Burbank has occupied four floors of 3900 W. Alameda Ave. with a combined 43,891 square feet of office space. More than 1,000 tenants occupy one of three office formats: private offices, containing two to 150 people; hot desks; and dedicated desks, most ideal for freelancers and graphic designers, according to General Manager Kley Sippel. What WeWork promotes emphatically is the concept of connectivity between its members. Sippel told the Business Journal that WeWork’s month-to-month membership licensing agreements “is basically unheard of” and it gives each member “ultimate flexibility” and access to the company’s extensive online network of WeWork tenants globally. Additionally, at a WeWork site, a community manager stages in-house events that serve as a networking conduit. “There are events where you can organically meet people and have great conversations,” Sippel said. The company stages three to five events yearly, including breakfasts and panel discussions. “We also have the whole digital layer. We have apps to help you with conference and work space.” At the Burbank building, the community team foments individual introductions between business people and companies in the WeWork fold. “We’re taking what chambers and businesses have done for decades and doing it in a physical space,” Sippel said. “When you look at business anywhere, the alternative is a business park, which is not conducive to efficiency. Community and connecting to a broader business world is better out of the gate.” Steven Kao, founder of Zynovo Solutions Inc., a digital commerce agency that helps merchants facilitate e-commerce on their websites, moved from his Sherman Oaks home to the Burbank WeWork when it opened. “We picked the room we wanted in a corner,” he said of his four-person private office, where he employs 12 full-time employees and four contractors. Kao has no regrets about his situation. “So far, we love it,” he said. “We’re so lucky we found it.” Zynovo entertains clients, from locals to the East Coast to Asia, and when they visit WeWork Burbank, they are impressed with the environment and amenities, as well as the area’s restaurant choices. “We have a client coming in bi-weekly meetings,” Kao said. “Our clients, they’re like, ‘Wow.’” Trevor Smith also runs a business — Vector is Love, an advertising and brand development agency — out of WeWork Burbank. After founding his agency in 2011, he moved his business last year into the Burbank facility, where he occupies a three-person private office and employs about a dozen employees. “It’s really the perfect scenario for a small business like us with the flexibility to scale up and scale down (depending on the assignment),” Smith said. “I’ve been a creative for a very long time. I’ve watched the history of creative houses built and torn apart in just a few years because they build out (and invest too much) capital.” Smith said spatial agility is “absolutely crucial to keep me in business.” Social vibe Colliers International North Los Angeles Executive Vice President Jacob Mumper champions the co-working model from his Encino office. “In many cases, growing companies face the dilemma of outgrowing executive spaces, and the economics no longer make sense,” Mumper said. “The appeal for young and developing companies, startups and entrepreneurs is you don’t have to commit yourself to a long lease (and) it can be used as incubator space for companies who need that flexibility to scale their business.” In recent months, the gap has narrowed between WeWork and rival brands Regus as competing companies adopt the type of innovations and service WeWork has built its reputation on. Mumper mentioned how some WeWork locations provide beer on tap on a kind of honor system. For example, WeWork Burbank holds monthly ping pong competitions, where one of Kao’s co-workers won a tournament prize. Kao at Zynovo enjoys the building’s social rituals. Moreover, he commends the professional connectivity offered, both in-person and online. If a client needs to find a marketing hub, the client can quickly get responses from businesses across the WeWork network. “There are a lot of benefits for our company,” Kao said. “Down here, people are more of a community. You don’t feel lonely. You hang out with other people.” However, coworking may not work for every business, even during the entrepreneurial phase. Florence Chung, founder and chief engagement officer of Hetty Group, a community engagement strategy firm working on corporate and government agency projects and campaigns, ran her business from a hot desk at a WeWork in New York City, while also occupying a suite at WeWork La Brea. “If you’re a creative, it’s great,” Chung said of three years of coworking, but ultimately, she decided to end it. Her disenchantment had more to do with her “more conservative” clients than personal taste. “I’m 40 and they’re in their 50s and 60s,” she said. “I would’ve stayed at WeWork. I loved it. However, it’s not for everybody…They see my co-workers of 20 years in a T-shirt walking a dog – well, I don’t know if this is the image I want to project.” Economics also played a hand in her decision: Chung currently sublets two offices for the price she paid for a WeWork suite. “The company was growing, and I needed more space,” she said. Free food and coffee were nice perks, Chung reflected, yet “I was willing to give up those amenities for more space.” Fad or forever? Colliers’ Mumper believes that co-working is not a flash-in-the-pan trend but the new millennium way of working. “Is this the way of the future? It’s too soon to tell,” he said. “Right now, I see no signs of WeWork, Industrious and Regus slowing down.” He said he wouldn’t be surprised to see more WeWork locations in the West Valley — including potentially at Warner Center — and more Regus and Industrious locations. Since WeWork made its L.A. debut in Hollywood in 2012, 17 more sites have opened around L.A. While the company’s footprint is not as substantial in the Valley as the combined square-footage of other players, WeWork’s Sippel promised, “we’re not slowing down in the L.A. area.”

Michael Aushenker
Michael Aushenker
A graduate of Cornell University, Michael covers commercial real estate for the San Fernando Valley Business Journal. Prior to the Business Journal, Michael covered the community and entertainment beats as a staff writer for various newspapers, including the Jewish Journal of Greater Los Angeles, The Palisadian-Post, The Argonaut and Acorn Newspapers. He has also freelanced for the Santa Barbara Independent, VC Reporter, Malibu Times and Los Feliz Ledger.
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