TailoredSpace was recently featured in the Orange County Business Journal for its coworking and office space rentals! We’ve provided an excerpt from their article below:
CREDIT: KATIE MURAR, ORANGE COUNTY BUSINESS JOURNAL, 7/17/2023
Orange County’s coworking industry is facing a new wave of consolidation.
The latest shakeout is led by a new round of struggles for New York-based WeWork Inc. and other large, shared space operators. At the same time, several smaller, suburban players are growing through the turmoil.
It seems like déjà vu for WeWork, which went into retrenchment mode prior to the onset of the pandemic after abandoning plans to go public via a blockbuster IPO, and either shuttered or nixed plans to open nearly 300,000 square feet of space in Orange County.
It’s now giving back additional space, recently closing its 60,000-square-foot location at the Boardwalk office campus in Irvine, brokers tell the Business Journal.
The coworking outpost, which was once reported to be occupied by PepsiCo., is no longer listed on the company’s website.
The closure comes about a month after WeWork closed its 75,000-square-foot Lakeshore Towers location, a move first reported by the Business Journal.
It’s not known if any additional local closures are in the works, sources indicate.
WeWork’s recent retrenchment also comes amidst news that Sandeep Mathrani, who took the reins of WeWork in 2020 from Adam Neumann with plans to right size the ship, would step down as CEO, with one analyst noting it appeared Mathrani was “abandoning ship.”
Shares of WeWork (NYSE: WE) were trading around 20 cents and a $191 million market cap, a far cry from 2019 when investor SoftBank valued the company at $47 billion.
WeWork used the special purpose acquisition company or SPAC route to go public at a stock price around $10 in 2021.
Consolidation, Bright Spots
WeWork isn’t alone in its struggles within the industry.
Regus, at one point the second-largest coworking operator in Orange County, is also shedding locations throughout Orange County—such as locations in Newport Beach and Costa Mesa—after reporting significant losses in 2020 and 2021.
As a whole, OC’s coworking space is significantly smaller—in terms of spaces and players—since the onset of the pandemic, which only exacerbated the issues of struggling operators.
For operators on more solid footing, the industry is looking brighter than ever before, with demand outpacing supply in suburban markets like OC.
“Any shared workspace operator that has a good business model will flourish in this environment,” Jeff Reinstein, chief executive of OC’s largest coworking company, Irvine-based Premier Workspaces, told the Business Journal. “It’s those that are unable to continue to raise capital that are continuing to have problems.
“It’s a great time to be in our business.”
Stable Growth
Premier Workspaces has grown in size in recent years, with a local portfolio topping 500,000 square feet across 21 offices. It has found opportunity during the recent downturn that closed many coworking sites, often taking over shuttered spaces and stabilizing them.
In the company’s 21 years of business, it has opened 135 locations, 80 of which were taken over from other coworking operators.
Premier counts companywide occupancy of 93% and says it is completely debt free after its initial investment from Irvine-based Bascom Group.
“We haven’t had to borrow any funds since 2003. Our own cash flow from operations has been able to fund our growth,” Reinstein said.
Where some larger coworking operators go wrong, Reinstein notes, is “spending money just to get more dots on the map,” and focusing on supply over demand.
The consolidation that’s occurred in recent years has helped existing operators by providing a more balanced market.
“There was a saturation issue, and the business model suffered,” Reinstein said.
Landlord Leases
A bulk of Premier’s business is done through direct leases, though about 25% of its spaces are managed on behalf of landlords.
“Our intent is to convert those partnerships into a direct lease, which differentiates us from our competitors,” Reinstein said.
The pandemic has prompted many coworking operators to strike management partnerships with landlords rather than direct leases to mitigate risk, such as New York-based Industrious, which in 2021 partnered with landlord Granite Properties to take over a nearly 53,500-square-foot coworking location at 100 Bayview that initially served as the first Newport Beach spot for WeWork.
Premier opened two new local coworking sites this year in Irvine and Aliso Viejo.
Last month, it took over a 24,200-square-foot space from Carr Workspaces at the 100 Spectrum office tower; earlier this year, it was tapped to take over a former Industrious space at The Heights office campus in Aliso Viejo spanning 30,000 square feet.
Industrious previously took over that space when it bought locally-based TechSpace.
“We have had so many opportunities to reopen failed centers and we continue to look for additional opportunities,” Reinstein said, adding the company is expected to further grow its OC footprint over the next few years.
TailoredSpace
Suburban properties have outperformed urban sites for Premier, with other operators looking to grow in more in-demand markets like Orange County.
West Covina-based TailoredSpace is one such firm, with a specialized focus on suburban markets in Southern California. It counts one OC location in Brea and is currently building out its second local outpost in San Juan Capistrano, which will mark the first of its kind in the city.
The 14,000-square-foot location is within the Capistrano Business Center at 27131 Calle Arroyo, set to open in September.
“We’re the first amenitized coworking space in the city,” founder Drew Sanden told the Business Journal.
The location will be the eighth in the company’s portfolio, which nears 100,000 square feet in Los Angeles, Orange County and San Diego.
Its customer base is typically one to four person offices, focusing on smaller, independent users.
Sanden has a commercial brokerage background with a 15-year career at CBRE and Newmark, during which he noticed growing demand for more flexible, amenitized office offerings in suburban markets.
He founded TailoredSpace in 2019 and has not seen that demand let up.
“We will probably open an additional three or four more by the end of the year because there’s so much opportunity in our markets,” Sanden said.
The TailoredSpace team is proud to have been recognized as one of the top coworking spaces in Southern California, and thanks the Orange County Business Journal for its feature piece.
Try TailoredSpace For Your Coworking and Office Needs Today
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Discover the perfect fit for your work style. Check out the ever-growing list of TailoredSpace locations today to sign up, or contact our team about a coworking partnership agreement.
