by: Madeleine Pauker
original article: https://www.smdp.com/co-working-spaces-flourish-in-santa-monica/172735
The growth of co-working in Santa Monica has accelerated rapidly in the past two weeks as two industry giants, Spaces and WeWork, have announced plans to open more than 180,000 square feet of co-working space near Bergamot Station.
Spaces and WeWork will open their second and third locations in Santa Monica, respectively. Spaces has signed an almost 70,000 square-foot lease at the Water Garden on 26th Street and WeWork is taking over the 116,000 square foot Lantana Campus on Olympic Boulevard. Like other co-working companies, both lease office space that companies or individuals can pay to use parts of on a monthly basis. The industry took off in Los Angeles around 2015.
13 co-working spaces are currently open in the city but that number will soon grow to at least 16. Work Well Win signed a lease for 20,000 on the Third Street Promenade last March and more deals are likely on the way given the demand that Santa Monica’s technology and media generate for flexible office space.
“These important services are integral to supporting the continued growth and success of “Silicon Beach” as they help to nurture entrepreneurs and start-up businesses, as well as provide much-needed space for established companies to operate here in Santa Monica,” said Jennifer Taylor, an economic development administrator with the City of Santa Monica.
Although leasing space to a co-working company might be less profitable for landlords than leasing offices to individual companies, the growth of the industry will bolster the City’s tax base and bring new life to vacant office space, Taylor said.
Co-working will also grow Santa Monica’s economy by lowering financial barriers to starting or expanding a business, said Daniel Rainer, a vice president in the West Los Angeles office of CBRE, a commercial real estate and investment firm that facilitated Space’s lease at the Water Garden.
“We’re experiencing historic rent growth and extremely high construction costs,” he said. “For smaller tenants, it’s become incredibly challenging to build or find offices. We’re seeing a lot of groups willing to pay a premium for short-term flexible space.”
Rainer said it’s no coincidence that Spaces and WeWork are opening near Bergamot Station, in what’s considered Santa Monica’s media district. Most co-working spaces in the city are downtown or in Ocean Park, and the district’s 4.5 million square feet of creative office space is an appealing market for co-working companies, he said.
The proximity of Bergamot Station is also a draw, he said. Many co-working spaces in downtown Santa Monica advertise their proximity to the Expo Line as a selling point and the media district offers the same advantage.
“It’s long overdue,” he said. “There’s a definite need for co-working, and the (Spaces and WeWork) deals represents four percent of that entire market. They will be the only major co-working spaces in eastern Santa Monica.”