Luxury Co-Working Concept To Make U.S. Debut At Posh Atlanta Shopping Center
One of the world's largest operators of temporary office spaces is debuting its private-club-like co-working operation in Atlanta.
Switzerland-based International Workplace Group, the parent company of Regus and Spaces, signed a 32K SF lease with OliverMcMillan to open the first U.S. location for its No18 co-working brand. The high-end, flexible workspace operation will sit among the luxury retail shops of OliverMcMillan's The Shops Buckhead Atlanta development in the Buckhead Village district. It is slated to open this fall.
In its 2017 annual report, IWG described No18 as a “cosmopolitan members' club for businesses,” designed with high-end lounge furnishings that are a “blend of workplace and residence.” The division, which started in Stockholm in 2012, now has more than 170 member companies, according to its website. The Buckhead Atlanta location will be the brand's third worldwide, and first outside of Sweden.
In the heated world of co-working, No18 is the latest example of operators beginning to niche toward particular demographics and groups, Cushman & Wakefield Director Lawrence Gellerstedt said. Gellerstedt also represents WeWork's leasing initiatives in Metro Atlanta.
“I certainly think the niching concept is something we'll continue to see,” Gellerstedt said.
While the Buckhead office market has been a nexus of financial service and other professional service firms, the Buckhead Village area has more been a cluster of smaller professional, wealth management and family office operations, he said.
The Shops Buckhead Atlanta has aimed for an uber-luxury niche ever since it opened its doors in 2014, with such retailers as Hermès, Cacao, Dior, Jimmy Choo and Brunello Cucinelli. The mixed-use project also made headlines when it lured the headquarters for Spanx.
In all, Buckhead Atlanta encompasses more than 800K SF, including 300K SF of upscale retail, restaurants and cafés, more than 100K SF of office and 400K SF of high-rise residential on six city blocks.
“The demand for flexible workspace options continues to rise, and there is an increased desire for environments that offer thoughtful design and elevated work experiences,” OliverMcMillan Marketing Manager Anneliese Reid wrote in an email. “We want The Shops Buckhead Atlanta to be more than just a retail and dining destination. Our goal is to pursue new tenants that we know will strongly resonate with the Buckhead community.”
Between 2012 and 2017, the number of co-working spaces worldwide jumped from just over 2,000 to 15,500, according to Statista. This year, that number is projected to grow to nearly 19,000. And the biggest player in the industry, WeWork, hit a valuation of $20B last year.
To say IWG is banking on the co-working revolution would be an understatement. The firm added 314 new office buildings to its network of various brands last year, totaling 5.5M SF, more than 30% higher than in 2016, according to its annual report. In all, IWG operates more than 50M SF in more than 3,300 locations across the globe with brands like its flagship, Regus, its creative co-working brand, Spaces, its ultra-luxe Signature co-working flag, Basepoint and Open Office.
According to its annual report, IWG plans to open 230 new locations totaling 5.5M SF this year. It did not specify which brands will grow.
“Businesses around the world are increasingly recognizing that flexible workspace can create competitive advantage, cut costs, boost productivity, and help attract and retain talent,” IWG founder and CEO Mark Dixon said in a release last month. “The revolution is driven by technology and the increased ability for people to plug in and work from anywhere.”
More and more co-working operators are venturing out of office buildings and into shopping centers worldwide, especially as the list of major retailers going bankrupt continue to grow.
Recent examples include Bespoke, a 40K SF co-working operation that is a joint venture between Westfield and Forest City at Westfield San Francisco Centre, and MindShare Workspace, which opened a mall location in Mississauga, Canada. WeWork is also opening co-working locations in retail spaces in Hudson's Bay stores as part of a partnership the two companies reached last year.
While it wasn't clear what type of space No18 is taking at The Shops Buckhead Atlanta, the address listed for the location is a retail building. A spokesperson for OliverMcMillan said No18 would take a ground-floor and second-floor space.
No18 enters a local market that is seeing ever-increasing competition from other co-working operators, especially Industrious and WeWork. IWG also operates Spaces and Regus in Metro Atlanta, with Spaces most recently nabbing an operation at 715 Peachtree in Midtown.
More than 1.6M SF of Atlanta offices — a 224.5M SF market across all Metro Atlanta counties in all class types — are being occupied by co-working operations, according to Colliers International Atlanta. Officials said IWG plans to roll out additional U.S. locations for No18.
While co-working's footprint is still relatively small, it is a fast-growing segment in the overall office industry, with both national and local players dotting spaces around Atlanta. Co-working growth both locally and nationally has caused some commercial real estate pros to express concern.
“We'll see some of the bigger guys still around and some of the smaller guys not,” Colliers International Atlanta Senior Vice President Jodi Selvey recently told a Bisnow audience. “I don't think they're all going to survive.”
Gellerstedt echoed those concerns, adding that the small operators — those in less than 30K SF — will be most vulnerable to fallout in the future.
“I think there's going to be a lot of losers that come out as this market matures,” he said. "But I don't think it's going to be at the very top."