WeWork Rival Ramps Up With Big Push Into North America
(Bloomberg) -- IWG Plc’s co-working unit Spaces is making its biggest expansion in North America with deals to rent large chunks of office space in Toronto and Vancouver.
In its largest-ever lease in the continent, Spaces is taking 127,158 square feet (11,813 square meters) at The Well, Allied Properties Real Estate Investment Trust and RioCan Real Estate Investment Trust’s office project in the heart of Toronto’s technology district. In Vancouver, the Amsterdam-based company will rent 120,393 square feet at a building under development by Allied and Westbank Corp. Both locations would be open by 2022.
“On the Canadian side, we’re seeing an incredible surge of demand when it comes to the desire for collaborative workspaces,” Wayne Berger, chief executive officer of IWG Canada and Latin America, said by phone. “Toronto and Vancouver are two cities that are not just leading that demand in Canada, but some of the fastest global leaders in terms of cities when it comes to collaborative workspace.”
Spaces, which in a span of 10 years has opened 137 locations in 94 cities globally, is expanding to help feed an increasing appetite for flexible offices -- a segment of the real estate industry that’s dominated by fast-growing companies such as WeWork Cos. Brokerage Cushman & Wakefield estimates that “in the foreseeable future,” co-working space will represent as much as 10 percent of the office inventory in many markets.
Switzerland-based IWG, which unsuccessfully tried to sell itself in recent months, also owns the serviced-office provider Regus, its longstanding brand aimed at more-conservative tenants. IWG has been investing heavily in the expansion of Spaces as it seeks to revitalize its portfolio and capture a younger, hipper market. Spaces locations have trendier design touches, like glass walls and warm color palettes, and offer such perks as coffee from local roasters.
“Our competitors have driven a great increase of exposure to a product and solution that people for the most part weren’t aware of even five to 10 years ago,” Berger said. “Competition has helped us become better, and the opportunity out there is very healthy.”
By the end of this year, Spaces aims to have 68 locations in North America and 197 worldwide. On Sept. 26, it’s opening Spaces Hudson Yards in Manhattan, part of a plan to double its New York City footprint.
Spaces is growing rapidly in Canada, where its first location opened just this past November. The new leases in Toronto and Vancouver are the fourth and fifth, respectively, to be announced for those cities. In Toronto, the company plans to move into The Well in 2022. The Vancouver project, 400 West Georgia, will open in early 2021.
The growth of a workforce that includes startups, entrepreneurs, freelancers and consultants makes the two cities ripe for Spaces’ expansion, Berger said.
“Very innovative, collaborative, disruptive industries are growing at such an accelerated rate,” he said. “At the same time, we’re seeing this growth of international interest and enterprise companies either coming to Toronto and Vancouver or expanding their presence, and what’s interesting is both of those core groups want to actually work together.”
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