A WeWork location in Downtown San Francisco. Bisnow/Julie Littman
Two to three years ago, landlords were less willing to consider this type of tenant, but now they are actively seeking to partner with coworking providers to create a better tenant mix within their portfolios.
While many landlords have been actively leasing large blocks of space to the likes of WeWork, which is now the fourth-largest San Francisco tenant, many are seeking high-end boutique providers that target specific demographics. Coworking sites also double as a building amenity and service.
Some building owners, such as Rubicon Point Partners, have started offering turnkey offices. Rubicon created a spinoff company to provide these options within its properties and is planning to work with additional landlords as well.
“None of [the landlords] are willing to put all their eggs in one basket — or lease a tremendous amount of space in one building, but they are not as anti-coworking as they have been previously,” Newmark Knight Frank Regional Workplace Manager, West Coast Lead Evelyn Lee said.
She said landlords aren’t going whole hog, and they are spreading out coworking within their portfolios. Since coworking providers spend a lot of time and money on tenant improvements, even if the provider goes belly up, the landlord is left with a high-end spec office it can re-tenant easily.