Co-working market grows with Spaces deal
The co-working company Spaces has completed deals to add three large communal office spaces to Vancouver.
The company is setting up locations in Gastown, Granville Street and Mount Pleasant, adding 145,000 square feet of new coworking space to the market, the company announced on March 20.
Spaces will open its first location in Gastown this summer in a fivestorey, 35,000-square-foot building at 151 West Hastings St.
On Granville Street, Spaces has signed a lease for 70,000 square feet in the Tom Lee Music Building, occupying the entire office component of the building along with main floor retail space. It is scheduled to open in October.
The third announced deal was signed in False Creek Flats at the Great Northern Way Campus at a new building by PCI Developments and Low Tide Properties. Spaces will occupy two floors and 40,000 square feet of the building. It is scheduled to open at the end of this year.
Spaces is a brand of IWG plc., a global workspace company that operates organizations such as Regus, No18, Basepoint, Open Office and Signature.
Spaces and Regus have roughly 500,000 sq. ft across 20 locations in the Lower Mainland, not including the newly announced deals, said Wayne Berger, an executive vice-president with Spaces.
“In downtown Vancouver, we currently have 10 locations, and these three new spaces ... would take us to 13 locations and roughly 400,000 square feet of co-working space,” he said.
The additions come as Spaces’ competitor WeWork continues to add new space in Vancouver.
The seven-year-old New Yorkbased startup took over six floors at the Burrard Station tower at 595 Burrard St. late last year. The co-working giant also has another six floors in the nearby Burrard II tower.
WeWork is also set to take over and convert into co-working space the top two floors of the downtown Hudson Bay’s Company store, according to reports the company declined to confirm when asked by Postmedia.
“It may feel like a (co-working space) arms race, but what’s interesting is the demand continues to (surpass) the supply (of office),” Berger said. “We continue to hear about more need for space, not just in downtown, but in areas like the Tri-Cities, and Langley and Burnaby.”
Berger estimated that about 30 per cent of the workforce in North America now works in startups or as self-employed freelancers, consultants and contractors.
“Co-working is not going anywhere,” said Colin Scarlett, an executive vice-president with Colliers International, who helped Spaces secure their Vancouver leases.
He said communal workspaces are now being sought after, not just by freelancers and the selfemployed, but by established companies looking to set up flexible branch operations.
“I would wager a guess that, in the future, about a third of most large enterprise companies’ ... office or space footprint will be coworking,” Scarlett told Postmedia.
“Co-working just offers something that most landlords have a difficult time offering, which is short-term flexibility without any capital investment whatsoever,” Scarlett said. No 10-year leases required, he added.
It’s also much cheaper and quicker for a company to set up in a co-working space, he said.
“The cost to build out space today is at an all-time high,” he said.
Most co-working spaces are available on a month-to-month basis, Scarlett said. “You have no capital that gets put into the space. The furniture is there and ready to go and you’re off to the races. Your ability to move in and out of a market is faster.”
The furniture is there and ready to go and you’re off to the races. Your ability to move in and out of a market is faster.
Berger said Spaces is still hungry for more space in Vancouver. “We are negotiating other leases and looking to grow in the market.”
He said co-working appears to be accelerating as a choice more in Vancouver and Toronto than other similar-sized North American cities.
“I would say Vancouver and Toronto are more advanced in this approach to choosing co-working, not as an interim solution, but as their primary solution and their primary commercial real estate plan,” he said.
An explanation for that could be Vancouver’s plummeting downtown office vacancy rate, Scarlett said.
The current downtown office vacancy rate is five per cent and the downtown core has now entered into a lull in new office construction.
“Most of the new buildings are going to come online in 2022 and later,” Scarlett said. “Provided there’s not an economic incident that happens between now and then, the vacancy rate is going to continue to go down.”