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Tuesday, Dec 5, 2023

OC’s Coworking Consolidation Continues

Premier, Industrious link with landlords

A select few Orange County coworking firms remain on solid footing and are looking to expand, despite ongoing challenges in the office market and remote work trends.

Irvine-based Premier Workspaces is one such firm, with plans to partner with landlords to take over coworking spaces from distressed operators.

It did just that during the summer, when it took over management of the former Encore Offices space in Aliso Viejo, a 23,000-square-foot flex hub with 86 individual private offices.

“We are actively looking for growth opportunities, and in this case, an operator was not doing well and was looking to get out of its lease. So, we met with the landlord to take over the center seamlessly on a management basis,” Michael Pollack, Premier vice president and director of real estate, told the Business Journal.

The office was the lone remaining location for Encore, which was previously Orange County’s 10th largest coworking operator, according to a 2021 Business Journal ranking.

Premier Workspaces, previously known as Premier Business Centers, counts 87 locations in the U.S., totaling about 1.5 million square feet.

In Orange County, it has long been the largest shared space operator with nearly 460,000 square feet here now.

Management Model

The Aliso Viejo location marks Premier’s 21st spot in Orange County. The office where it is located, at 120 Vantis Drive, runs some 181,000 square feet and is owned by Costa Mesa-based Brookhollow Group.

Premier currently oversees the former Encore space for a fee, with a plan of converting to a lease once the space is stabilized.

Prior to Premier’s involvement, the coworking space was about 50% leased; today, it’s approximately 80% occupied, Pollack said.

Rates start at $800 a month for a private office, according to Premier.

“A lot of coworking firms are looking at landlord partnerships as a good long-term solution as we continue to see consolidation in the industry,” Pollack said.

New York City-based Industrious is another coworking firm using such a management model. Last year, the firm paired with Plano, Texas-based Granite Properties to take over a shared space location in Newport Beach left vacant by national operator WeWork.

The nearly 53,500-square-foot location at 100 Bayview initially served as the first Newport Beach spot for WeWork; it shuttered that location in early 2021 as part of a larger companywide consolidation caused by long-standing internal issues, which was exacerbated by the pandemic.

“We added 1.2 million square feet in 2021, and our strategy of partnering with landlords is a huge part of that success,” said Jerome Fried, senior director of real estate in California for Industrious.

TechSpace Giveback

Industrious has four locations in Orange County that operate under its own name, including one former TechSpace location in Costa Mesa, across the street from South Coast Plaza. It acquired TechSpace, OC’s longest-running area provider of flexible workspace—in 2019.

Industrious hasn’t been immune to contraction; it will close TechSpace’s original, 55,200-square-foot location at the 65 Enterprise office in Aliso Viejo’s Summit campus at the end of this month.

Mixed-Use Expansion

Industrious says it is still scouting local opportunities, including through a new type of landlord partnership.

The company last month announced it would bring its flexible office offerings to residential communities through a deal with Arlington, Va.-based AvalonBay Communities Inc., an apartment real estate investment trust (NYSE: AVP).

Second Space powered by Industrious—designed to bring a professional workplace setting closer to home—will launch this year on the ground floor of two AvalonBay apartment communities, in Brea and Monrovia.

The 2,400-square-foot Orange County location is expected to open by the end of the year at Avalon Brea Place.

Companywide, Industrious has seen more usage from enterprise business, or large companies that use coworking as a flexible office option for employees.

Memberships for those companies are up 127% year-over-year, according to Industrious.
“Flexible offices are now being seen as a more long-term solution for companies, especially as those firms shift to a more hybrid office model,” Fried said.

Flex Workspace+

Newport Beach-based Irvine Co. is also noticing strong demand for its slate of flexible office offerings.

The company said it leased more than 10.4 million square feet of office space in California from September 2021 to August 2022; nearly 20% of that leasing was for the company’s Flex Workspace+, a flexible leasing model launched in 2019 to offer employers turnkey workspaces with shorter-than-normal lease terms, running as little as six months.

“If we continue on the same growth trajectory, then we can upgrade within Irvine Company. That flexibility made [the landlord] very appealing,” said Vince Curcie, founder of Orange County Solar, who moved into a Flex Workspace+ office in Irvine.

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