Coworking Companies Seek Fresh Start in LA

Coworking Companies Seek Fresh Start in LA

BumoWork is bringing a new kind of coworking to L.A.

The membership-only workspace, which combines coworking and child care, is scheduled to open its first location in the Westfield Century City mall this spring.

“We’re not just trying to make the lives for working parents easier but make parenting easier in general,” said Joan Nguyen, who came up with the concept for BumoWork with company co-founder Chriselle Lim.

BumoWork isn’t the only coworking company offering a fresh approach in the L.A. market. After being hit hard by the impact of the Covid-19 pandemic for the past year, the once-hot industry is starting to show fresh signs of life.

West Adams-based Yoube Inc., for instance, plans to open its first coworking popup in West Adams this spring. And Union Cowork, which has several locations in the San Diego area, opened in the Arts District last fall.

Even old guard operator WeWork Cos. Inc., which has endured slowdowns and contraction, recently opened a location at 9830 Wilshire Blvd. in Beverly Hills. Amenities include a movie theater and podcast studio.

Newmark Group Inc. Executive Managing Director Ryan Harding said “Coworking 3.0” is coming into play. The new iteration combines elements of the initial version, which was more about executive suites, with aspects of the second wave, which focused on open, creative spaces.

Newmark recently acquired flex office space provider Knotel Inc.

“People do want that flexibility going forward,” Harding said. “Flexibility is going to be the key. Coworking is going to lend itself very well to that.”

Landlords, he added, still see benefits to coworking as tenants may grow into larger office spaces in the same building. And coworking companies often sign large, long-term leases.

Peter Belisle, Southwest region market director for Jones Lang LaSalle Inc., agreed that there is still interest in coworking spaces.

“A number of clients envision having some form of coworking as part of their portfolio strategy,” he said, adding that some companies may have one large office space and a few coworking outposts closer to where their employees live.

“Flexibility is one of the key hot points for clients today. We think the demand side is not only from the individuals who are popping into these, but large organizations are looking at incorporating flex office space in their portfolio,” CBRE Group Inc. Executive Vice President John Zanetos said.

But it’s not all good news on the coworking front. During the pandemic several operators have shuttered locations or paused plans for additional outposts.

“A number of coworking providers have been restructuring what their square footage is and where their locations are for sure,” Belisle said. “They have been using this time to think about what markets we should be in and … aggressively restructuring.”

New opportunities
Still, as vaccination rates increase and businesses figure out next steps for workers, companies like BumoWork are hoping to take advantage of new opportunities.
The company’s Century City space was originally set to open last year, but “because of the pandemic we had to pivot pretty quickly,” Nguyen said.

It already has people signed up for the location, including a roster of celebrity clients. To become a member, parents apply online, then participate in a family interview before being officially invited to enroll.

Fees range from $300 for weekend-only care to $4,000 a month for a full care and coworking membership. Children must be under 6 years old.

In addition to weekday coworking and child care, BumoWork offers weekend camps. There’s also outdoor space at the location.

The company’s child care component is not just a playroom set aside for kids. Rather, it occupies one side of the floor and is staffed by licensed child care professionals. The coworking space takes up the other half of the floor.

“When you’re on the child side, you won’t even know the coworking side exists, and when you are in the coworking space you don’t know the child care space exists,” Nguyen said.

The licensed professionals also help kids learn while they’re in the space. Nguyen said the company has teachers who are trained in chemistry and foreign languages.

Century City is the company’s first location, but Nguyen aims to grow BumoWork. She has been in talks with other buildings and companies about additional outposts.

“With Covid, there’s been a bigger highlight on working parents,” Nguyen said.

Other operators
For Yoube, the planned location in West Adams is just the first of many. As the company looks to a national expansion, it expects to open roughly 50 outposts around L.A. in the next few years.
Yoube was founded by Jenny Berglund Castro, Stephan Agerman and Babak Kheshti. It is looking to take advantage of empty retail and office spaces in desirable areas.

“The type of locations we are looking at are nontraditional office spaces. We are taking over retail spaces,” Agerman said.

He added that this could even be spaces in malls.

“We’re really solving a great problem for them. In the mall space, it’s hard to get people to come back to a mall every day, but if you work there, it’s great,” Agerman said.

Castro said she saw the need for spaces that could be used for just a few hours that were a step up from a coffee shop but not an office that you go to every day.

Clients can sign up, buy credits for an hour, for a day or a package and can then book a workspace. The group is focused on hot desks and meeting pods, not private offices.

“It’s really meant to be a super flexible solution,” Castro said.

Eventually, she said, the West Adams location could have space for 68 people but will launch at reduced capacity due to the pandemic.

The property is owned by CIM Group. Agerman said his goal is to replicate it at other buildings owned by the company, adding that Yoube is interested in management agreements and revenue-sharing options as well.

“We are looking for white boxes to come in and set up our model,” Castro said, referring to blank-slate areas. “We are not expecting to do a lot of buildout.”

Union Cowork is also new to town. Its Arts District location has private offices, open desks, podcast rooms, conference areas and a full kitchen. Rates start at $400 a month and grant access to the company’s seven locations.

Union Cowork Chief Operating Officer Stephanie Lawrence said the company offers “boutique-style coworking.”

“We are really just focused on stabilizing, but the hope is to get back on track to expanding all throughout Southern California, but mostly in L.A.,” Lawrence said.

The old guard
Although some coworking spaces may be closing or not opening, coworking giants are still interested in L.A.

Elton Kwok, territory vice president for California at WeWork, said the company has been working on “rightsizing and optimizing our portfolio” during the pandemic and “focusing on Class A locations.”

Despite Covid, Kwok said, the company’s new location in Beverly Hills was seeing a lot of interest.

“We offer flexibility in office space when other traditional commercial office space operators don’t necessarily provide that,” he said.

Kwok added that people have liked the company’s “All Access” membership model that allows people to use any WeWork location for $299 monthly.

The company recently announced plans to become publicly traded through a SPAC merger with BowX Acquisition Corp.

For other big coworking companies, management contracts have become key.

Anna Levine, chief commercial officer of New York-based Industrious, said she has seen some companies interested in allowing employees to go to the location nearest to their home.

Industrious has eight locations in L.A.,  and Levine said she thinks the market could support another 15 to 20, including four to six in the next two years.

All of the locations will be management contracts where the company runs the coworking floor or floors and related amenities for a building landlord. Industrious stopped signing leases, Levine said, about four years ago.

“We believed that a management contract structure was better for everyone,” she said. “It de-risks the business.”

The company is even shutting down a location in Costa Mesa that could not be converted from a lease to a management contract.

“I think there’s going to be a big push for coworking companies to look at management agreements versus traditional leases,” CBRE’s Zanetos said.

Belisle agreed. “There’s no reason most landlords wouldn’t look at a solid operator and say that’s a viable option,” he said.

Convene, which has a location at 333 S. Grand Ave. in downtown, also does some work under management contracts.

Reid Weppler, head of real estate at Convene, said that the company was looking at expanding its footprint pre-Covid, but put plans on hold and will instead look at them again when the market recovers.

“We are still seeing the impacts on demand but are starting to see some green shoots in terms of increased leads and opportunities,” he wrote in an email. “A lot of companies are still unsure of when and how they plan to return to work, but they see us as a viable solution for collaboration and flexible term space needs.”

Zanetos added that while there is certainly demand for flexible workspace offerings, coworking operators have had to make adjustments to their portfolios.

“At this moment in time, we’ve experienced some right-sizing in coworking in general,” he said. “We’ve seen a few operators shed some of their existing locations in the Los Angeles area, which has created the right size of coworking for L.A. moving forward. There was probably a lot of supply coming into the market as we headed into Covid.”

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