Co-working spaces have thrived in Orange County for years among entrepreneurs who desire a more casual, open work environment and perks such as beer on tap and monthly networking events.
Now a major player with a global presence has arrived on the scene: WeWork.
It opened its first location in 2010 in New York City, where it keeps its headquarters, and now has 100-plus facilities in 29 cities, including far-flung locales, such as Amsterdam, Tel Aviv and most recently Shanghai. It got a beachhead in Southern California in Los Angeles, and its first expansion into Orange County comes at the much-photographed new 21-story Irvine Company office building at 200 Spectrum Center Drive.
WeWork on July 1 opened two floors of co-working space there. It was attracted to Orange County because of what it calls the “deep-rooted” creative and tech communities, especially in the hardware and healthcare sectors, said Jon Slavet, WeWork’s San Francisco-based western region general manager.
“And in recent years, the culture of creativity and innovation in the OC has only continued to gain momentum,” he said by email. “With WeWork Spectrum Center, our goal is to help foster this tremendous creative energy and connect the community to a network of global creators.”
Fertile Field
One of the first co-working spaces to open its doors—and beer taps—in OC was Newport Beach-based Real Office Centers. It opened its first location there in 2011.
“We decided to start in OC because there was nothing similar to what we were envisioning, and we thought the office landscape in OC was a bit stale,” Chief Sales Officer Pat Ryan said. “We thought there would be a market for a more collaborative, open and more inspiring workspace.”
Real Office Centers wasn’t designed solely for millennials but rather to provide an alternative to the “stuffy office space that dominates the market,” Ryan said.
“People want to feel good about the space that they work in, and that sentiment rings true outside the millennial generation,” he said. “What we’ve found is that many of the more traditional professionals, such as lawyers, CPAs and Fortune 500 [employees], are attracted to an open and collaborative work space that inspires them to mingle and create with their co-workers.”
Real Office Centers now has six locations in OC and 13 altogether, including in San Diego, Los Angeles and Honolulu. Any member of one of the facilities can use any of its other facilities when traveling.
Companies at Real Office Centers’ co-working space at The Vine in University Research Park include tech startups and commercial real estate firms.
The Vine is a collaboration between Real Office Centers, incubator EvoNexus and Irvine Co., which owns the building. Real Office Centers occupies two-thirds of the first floor and uses an outdoor area in the back for networking events, pitch contests, investor forums and social events. Its entry-level membership, which includes resources, such as a mailing address, access to events, and as-needed space rental, begins at $75 per month, Ryan said. The cost of a co-working space at all of its locations starts at $125 month. Private offices start at $500 per month.
Co-workers can mingle in spacious lounge areas equipped with a bar and big-screen TV after daytime working hours.
“Instead of going to get a drink and watching the game at a bar down the street, people congregate and have a few beers,” Ryan said. “It’s not just their friends. It’s people from all the different companies, and it really helps facilitate collaboration.”
Other co-working venues in OC include the nonprofit PeopleSpace in Irvine and the for-profit Eureka building in Irvine. PeopleSpace Executive Director Melinda Kim said that WeWork’s arrival in town is a good thing for the entire entrepreneurial ecosystem.
“The more people who know about co-working, it only benefits our entire community.”
Spectrum Space
WeWork occupies the third and fourth floors of 200 Spectrum Center, which has gained local renown and the attention of amateur and professional photographers alike with its distinctive profile and reflective interplay with the light outside its doors. The building also has begun to land a roster of prominent tenants, including Mazda North American Operations, Jackson Lewis LLP and Pacific Mercantile Bank. Its location—handy to the San Diego (I-405) and Santa Ana (I-5) freeways, Irvine Co. apartments and the Spectrum retail center—appealed to WeWork, said Irvine Co. spokesman Bill Lobdell.
WeWork was able to customize its space to its own standards, said its community lead, Kate Dehnel. All of its buildout and designs were completed by its internal design teams working closely together with local companies, such as Irvine-based Turelk Inc., “so that any WeWork you walk into around the world will have a familiar, homey feeling,” she said.
Its Spectrum Center building space is split evenly with 22,000 square feet on each floor, where glass windows stretch from floor to ceiling.
A membership that provides access to events, benefits and the ability to book space as needed is $45 per month, which buys one free day at any location. It’s $50 a day from there on out.
A “hot desk” membership is $350 per month, which provides access to any available desk in a common area. A dedicated office starts at $600 per month and can accommodate up to 50.
There also are nooks to pop in and out of for privacy that are similar to phone booths, complete with land lines. Members also have access to the building’s ground-floor patio area.
WeWork plans on hosting monthly events that are open to the public, Dehnel said.
Slavet said he anticipates the mix of co-workers will include Fortune 500 companies, consulting firms and tech startups. One startup whose staff was eagerly awaiting moving into WeWork is Candy Lab, which has developed an augmented reality product intended to help businesses attract consumers.
Candy Lab’s founders believe that WeWork’s operating model is “superior” to any other communal working space—and it’s convenient, said co-founder and Vice President of Business Development Andrew Kirkland.
“The location of their new space in Irvine is the perfect location for us, as the officers of Candy Lab live within walking distance,” Kirkland said by email. “The ability to walk to work is key for us, as it enables us to stay free of unnecessary expenditures like personal transportation. Combined with their proven model and the opportunity to be surrounded by like-minded entrepreneurs, WeWork’s space was a ‘no-brainer’ for Candy Lab.”
WeWork has partnered on a national scale with San Francisco-based TriNet to offer discounted rates on human resource services and healthcare benefits to its members. It also partners with Chicago-based Chase to offer members low rates on payment processing.
A mobile app enables WeWork members to register guests and book conference rooms, among other things.
WeWork’s global community includes tens of thousands of members, and its app allows members in different cities to communicate with each other.
“What’s special about WeWork is our ability to connect creators both locally and globally,” Slavet said. “From Atlanta to New York to the U.K. and Shanghai, creators and business leaders in Orange County can now collaborate, learn from and share insights with more than 60,000 members across the globe. Whether you have a challenging legal question, want feedback on an idea, or are just looking for local travel insights, our member network is an invaluable resource.”
Under Pressure
WeWork is in the midst of reducing its revenue projections and looking for ways to cut costs, according to an internal company document and video recordings that Bloomberg News said it “obtained” but that WeWork said were “stolen,” according to a July 15 Bloomberg article. It reported that, “After securing more than $400 million at a $16 billion valuation in its most recent financing in March, WeWork produced in late April an internal financial review document that slashed a 2016 profit forecast by 78 percent, cut its revenue estimate by 14 percent and disclosed a 63 percent surge in projected negative cash flow.”
Dominic McMullan, WeWork’s senior director of corporate communications, declined to comment on anything in the Bloomberg article, except to say that any delays in openings are not specific to one location. The article states that WeWork has “referred this corporate theft to the U.S. Attorney’s office.”
McMullan also declined to comment on that statement. In a prior article in June, Bloomberg reported that WeWork planned to cut 7% of its staff.
Also, in an effort to cut costs, WeWork dropped New York City-based marketing firm Edelman and is now doing most of its public relations in-house, according to an Edelman source.
