CBRE Slashes Growth Plans For In-House Coworking Platform
CBRE is pulling back on the rollout of its in-house coworking brand as the coronavirus pandemic clouds the immediate future of office usage.
After spending $40M last year on expanding Hana, CBRE plans to operate 10 Hana units this year, CEO Bob Sulentic said on the company's quarterly earnings call last week. The firm planned on operating 20 units this year originally, Sulentic said.
The global brokerage giant debuted Hana in late 2018 to compete against the then-growing influence of WeWork, IWG and Knotel in the flexible workspace market.
“We believe we are well-positioned to take advantage of the dislocation in the flexible workspace market and have positioned Hana to serve enterprise clients that desire private workspaces,” Sulentic said. “However, in the short term, we will slow the pace of expected Hana unit openings in 2020 until we have more clarity around COVID-19 impact on occupier demand.”
CBRE currently operates five existing Hana locations globally, including Park Place in Irvine, California, and at 245 Hammersmith and 70 St. Mary Axe in London, as well as four more planned but unopened Hana locations at 3 World Trade Center in New York and National Landing in Arlington, Virginia. CBRE officials said the firm plans to open one additional Hana location that is not yet listed on the website.
CBRE officials remain bullish overall on the flex office industry, though. In a report it issued last year, CBRE officials predicted that the U.S. market for flex space should expand by as much as 22% of all occupied office space by 2030, even with a recession. Today, flexible offices make up less than 2% of the office market.
Sulentic said Hana is positioned around the flexible-office suites model versus the membership model pioneered by other coworking operators, which he said may position it better with bigger corporations. He also sees more building owners looking to partner with CBRE to operate flex offices within their own buildings.
“They aren't going to have the scale to do that,” he said. "So we're hopeful that that could be one of the good opportunities for us coming out of the COVID-19 situation."
CORRECTION, MAY 12, 3:40 P.M. ET: A previous version of the story incorrectly stated CBRE would spend $10M on Hana this year. CEO Bob Sulentic actually indicated CBRE would open 10 units, down from a planned 20. The story has been updated.
UPDATE, MAY 12, 6:14 P.M. ET: The story has been updated to reflect further clarification by CBRE on the Hana rollout this year.