The new corporate workplace: Beers on tap, bring your dog to work and a short-term lease
When co-working firm Cross Campus opens an office in downtown Los Angeles next month, its tenants will include the typical start-ups looking for collaborative work environments, shared coffee bars and the flexibility of a short-term lease.
But the 33,000-square-foot location on Wilshire Boulevard also will house businesses of a less typical variety, including real estate developers, legal firms and FactSet Research Systems Inc., a publicly traded financial data company out of Connecticut with more than 8,000 employees worldwide.
Long the domain of tech start-ups and individual workers, large companies such as FactSet, Delta Air Lines and home builder Lennar Corp. are now leasing co-working offices. And many are looking to do so for the same reason start-ups find the concept attractive: a hip environment and the lack of commitment a short-term lease offers.
“The corporate world is starting to look at this,†said Ronen Olshansky, chief of executive of Cross Campus, a Santa Monica-based co-working company. “They value the flexibility.â€
The growing demand has helped companies like Cross Campus expand across Los Angeles and the nation, filling vacancies and lifting rents for all players in the commercial real estate market.
The companies offer tenants a private, often glass-walled office on a floor with other firms that share amenities such as pool tables, coffee bars and meditation rooms. They also might host events such as Bloody Mary brunches and speeches from business leaders.
A firm, or individual entrepreneur, can also simply rent a desk, if they don’t need or can’t afford an office of their own.
Co-working — which has exploded in the past decade amid the latest tech boom — has given new options to large companies that have contract jobs or are launching operations in new cities.
Typically, they would have hunted for short-term deals or put employees in executive suites — a more corporate version of today’s co-working hubs, said John Zanetos, a senior vice president with real estate services firm CBRE Group Inc.
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Elizabeth Brennan, a vice president at FactSet, said co-working allows the company to enter a market without making a big financial commitment in an area that’s often unfamiliar. At the same time, employees get a “hip, cool†place to work.
The Cross Campus location in Santa Monica that FactSet is currently in, for example, offers on-tap complimentary craft beer, artisanal coffee and the ability to bring your dog to the office.
“Those are all key to keeping employees happy,†said Brennan. “We are interested in workspaces that not only allow us to do great work and innovate, but also places where you want to go to work.â€
In coming weeks, the data firm plans to move from its Santa Monica space into Cross Campus’ upcoming downtown location, where it will have about 10 employees, who will still have access to the Westside conference rooms and communal space should they want to hold a meeting there.
“That is very helpful, because we have clients downtown; we have clients closer to the beach,†Brennan said.
Indeed, the region’s vast distances and distinct business districts make the L.A. Basin prime for co-working growth, said Jamie Hodari, co-founder of Industrious, a firm that plans to open a downtown co-working location this summer and counts Lennar as a tenant in other parts of the country.
“More than anywhere else to have offices in multiple parts of the city, is just too appealing,†he said.
The costs can be less than a typical office lease, because less direct space is needed, conference rooms can be shared and amenities and furnishing are typically packaged into the price.
For example, a report by CBRE estimates a traditional lease for 10 employees in Washington, D.C., would require between 1,400 to 1,900 square feet and would cost between $72,000 and $97,000 a year on average, including configuring the space to the tenants needs. A co-working office for 10 people, meanwhile, would run between $52,000 and $84,000.
The same dynamics are at play in the Los Angeles area.
At Cross Campus’ Santa Monica location, a 10-person office starts about $4,500 a month and includes desks, drinks, valet parking and access to shared conference rooms.
With an average lease rate of $4.53 per square foot a month on the Westside, a 1,500 square-foot office would run $6,795 a month — and that’s before a company pays for desks and any changes to the configuration, such as installing a conference room.
Meanwhile, the co-working firms can turn a profit, because they can charge more on a per-square-foot basis than the market rate, while packing multiple tenants onto a single floor, Zanetos said.
Among the leading co-working company nationwide is New York based WeWork, a venture backed company valued at $16 billion that has more than 75 locations across the United States and worldwide.
WeWork opened a 91,000 square-foot location in downtown’s Gas Company Tower in February, adding to another hub downtown, two in Santa Monica and one in Hollywood. Offices in Pasadena, Culver City, Playa Vista and Irvine also are on the way.
In Santa Monica, WeWork tenants include Delta and cloud storage firm Dropbox Inc., said Jon Slavet, WeWork’s West Coast general manager.
Elizabeth Wolf, a Delta spokeswoman, said the company is using WeWork as a “temporary†home for a “few members of our team while we grow in LA and look for new permanent office space in the city.â€
Another new wrinkle in co-working is tenants that are signing multi-year deals because they like the atmosphere of working amid other companies – something that can’t be created by the tenants themselves, Slavet said.
“People historically viewed us as a month to month community and that is changing,†he said.
Brennan of FactSet said the firm will likely outgrow Cross Campus one day as well, but she doesn’t expect to soon given the co-working firm’s size.
“Even with the most robust growth, I expect we will be there for several years.â€
By that time, the company will have a better idea where in Los Angeles it wants to put down roots.
Twitter: @khouriandrew
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