Alternative work spaces where living-room décor and Kombucha taps stand in for cubicles and drip coffee-makers are the new normal for San Diego's young professionals, according to a new report on the region's co-working market.
The county is home to more than 1.2 million square feet of flexible workplaces, commercial real-estate brokerage Cushman & Wakefield determined in its first-ever report on co-working locations in San Diego.
Flexible workplaces include both classic-format executive suites and the more millennial-friendly, open-format design promulgated by New York-based real-estate upstart WeWork. Cushman & Wakefield forecasts an additional 200,000 square feet of co-working space will open up locally by year's end as operators such as the veteran Regus and the splashier WeWork expand their local footprints in the downtown and University City areas.
“(Co-working) is no longer a trend; it's a mainstay that allows companies and individuals flexible and collaborative work environments,” said Derek Hulse, managing director of brokerage services for Cushman & Wakefield.
Co-working spots appeal to millennials and tech workers looking for unique office environments. In addition, many small companies are choosing to avoid the one-person-per-desk construct and pick a flexible space instead to save money on rent, he said.
Founded in 1989 and based in Luxembourg, Regus dominates the San Diego market with 18 locations spanning 288,315 square feet of flexible work space. That's more than double the space operated by WeWork. The flashier firm made its San Diego debut in December of 2016 with 1,700 co-working spaces at 600 B St. downtown, and expanded last year with a second location at The Aventine office tower in University City.
The current co-working boom dates back to 2011, as 78% of total inventory has opened in the past eight years, according to Cushman & Wakefield. In the past few years, traditional operators such as Regus, motivated by the rise of WeWork, have embraced creative, open spaces over small offices, Hulse said.
“It used to be ... that operators would lease a floor in a high rise and carve it up into offices,” he said. “Where co-working varies is that operators are looking for unique real-estate properties first and then creating spaces in the interiors where teams can work together in larger spaces.”
Downtown ranks as the county's largest hub of flexible work venues with 20% share of the total market, while Carlsbad and University City rank second and third with 15% and 10% share, respectively. The regions are popular with operators as they're considered urban centres with easy access to restaurants, transportation options and other amenities.
Other top operators in San Diego include Premier Business Centres with more than 128,000 square feet of space, and Boxer Workstyle with the single-largest alternative work space in town, a 103,000 square-foot location at 7220 Trade St. in Miramar.
Beyond San Diego, Cushman & Wakefield has analysed the co-working industries in seven additional markets. New York is the nation's top co-working region with 7 million square feet of flexible work space. No 2 Los Angeles is home to 2.1 million square feet of flexible workplaces. — San Diego Union-Tribune/Tribune News Service