IWG Replacing Spaces With Luxury-Minded New Brand At Star Metals District
The world's largest flex office operator is pivoting a planned Spaces location at a prominent Westside Atlanta location into a new luxury brand.
Swiss giant IWG plc — the parent company of Regus and the Spaces coworking brand — is pivoting the planned 56K SF Spaces location at the Star Metals District office building into its second domestic Signature by Regus product.
Signature, which debuted in the U.S. in Dallas, is a coworking operation with what IWG describes as five-star hotel-like services in "the world's most exclusive places to work, inspire and impress."
The company is preparing to build out the space at the amenity-laden mixed-use Star Metals project once the Allen Morris Co. completes construction on the office component later this month, said W. Allen Morris, CEO of the development firm. The project in West Midtown off Howell Mill Road comprises the 267K SF Star Metals office building, the 409-unit Star Metals Residences apartments and a pad site for a future hotel.
IWG made headlines last year when it placed numerous Regus and Spaces locations across the country in bankruptcy, including Atlanta locations, as the economy tanked in the coronavirus pandemic. IWG's Star Metals location was not placed in bankruptcy, but the developer did renegotiate its lease with the company last year, Morris said.
Morris called the arrangement with IWG a joint venture. The coworking operator signed a lease with minimum rent payments, but the developer shares in a percentage of the total location's revenue.
“It originally was a straight lease and it included ground-floor [space]. A lot of the economics remain the same,” Morris said. “We've had a long relationship with Spaces and IWG in other places. And we're working on multiple other locations with them as well.”
Signature will be located on the eighth and ninth floors of the 14-story office building, with open-air collaborative spaces on each floor as well as a 9K SF rooftop restaurant and bar.
IWG, in its 2020 annual report, described Signature as a “premium working environment, with custom designs reflecting the quality and nature of the building. Signature locations are already open in “iconic, desirable buildings” in London, Hong Kong, Singapore and Paris, according to an IWG press release.
“As the world slowly emerges from the pandemic, the need for high-quality flexible workspaces will continue to soar as hybrid working becomes the new normal,” IWG Vice President Michael Berretta said in a statement. “Star Metals Offices is truly the premier office project in the Atlanta market, and our Signature brand is a fitting best-in-class workspace that marries quality and convenience with style and sophistication.”
Luxury coworking brands are a newer trend beginning to emerge in the coworking universe, said Austin DuBois, assistant director of Savills' Workthere Americas flex office consulting arm. These operations tend to be more focused on small professional services or one-off professionals, DuBois said.
“Luxury coworking is a very interesting niche and often struggles to bring in corporate occupier business. Luxury brands rarely execute 100-plus desk transactions, a key revenue driver for WeWork, Spaces [and] Industrious,” he wrote in an email. “There is absolutely still demand there. It's just a smaller portion of the overall market.”
IWG CEO Mark Dixon said on a Bisnow podcast last week that the company has more locations now than it did before the pandemic, and it plans to vastly increase its geographic coverage.
"It's about being everywhere people want to be," Dixon said on the Make Yourself At Home podcast.
Dixon said the company does very few direct leases anymore, and it plans to grow with a focus on franchising, joint ventures and management agreements with landlords.
“Discussions have restarted on several master franchise deals. We are seeing increasing levels of openness and interest from partners wanting to work with us to grow the platform,” IWG's annual report reads. “Interest is at a level unseen in our history.”