Five new Spaces locations encompassing 173,500 square feet will soon be open across Canada, as increasing labour flexibility has increased demand for co-working spaces.
IWG Americas chief executive officer Wayne Berger told RENX his company — which operates the Regus, Spaces, No18, Basepoint, Openoffice and Signature brands, among others — had its two biggest demand months ever in January and February 2020 before COVID-19 began spreading widely.
Those previous record numbers have been surpassed during the pandemic and continue to increase.
“It’s growing still in core CBD markets, but it’s actually growing to a greater extent in a number of suburbs and tertiary markets,” said Berger, citing Belleville, Barrie, Kingston, Sarnia and Windsor in Ontario and Kelowna in British Columbia.
“Eighty-three per cent of companies are instituting a flexible working or hybrid working policy for their workers, so people are able to actually work differently today than how they were working prior to the pandemic,” said Berger.
“This notion of travelling to one office five days a week and working from 8:30 to five and dealing with long commutes on both sides of that work day are really becoming a thing of the past.”
New Canadian Spaces locations
Spaces just opened the 26,000-square-foot Zibi Ottawa cross-provincial facility. It’s in a revitalized four-storey former paper mill building at 4 Booth St. on Chaudière Island, which connects Ottawa and Gatineau, as part of the 34-acre Zibi mixed-use development.
It joins the 29,000-square-foot Spaces Zibi Gatineau which opened in spring 2021.
Also slated to open in coming months are:
– The 42,000-square-foot Spaces The Permanent will take up five floors at 320 Bay St. in downtown Toronto’s financial core when it opens this month.
– The 14,000-square-foot Spaces Burnside will offer 60 large and small private offices, fully equipped meeting rooms, dedicated desks and collaborative co-working space on the first and second floors of a newly built building at 2 Ralston Ave. in the Burnside Business Park in Dartmouth, N.S. It’s scheduled to open in May.
– The 40,000-square-foot Spaces West 8th Ave. is scheduled to open at 525 W. 8th Ave. in Vancouver’s Broadway Corridor, a medical and government corridor that’s on the boundary of the Mount Pleasant technology hub. It’s scheduled to open in May.
At 123,982 square feet, Spaces The Well will be the largest North American Spaces location and is expected to have eight to 10 different working environments when it opens in July.
“When we have space that size, we want to be able to build it out where it provides all the amenities that not just workers need in that neighbourhood, but residents in that neighbourhood as well,” said Berger.
Reasons for flexible workspace growth
Increasing attention on health and wellness in attracting and retaining talent has been a driver of the move toward flexible work options as people may not want to spend all of their time in either a corporate or home office, so co-working spaces can offer an enticing alternative.
IWG has accelerated its growth to cater to such users and now has 135 Spaces locations comprising more than three million square feet of space in 52 North American cities.
Berger said IWG partners with 83 per cent of the Fortune 500 companies globally and invests $150 million in marketing annually.
Flexible workspace currently represents 1.9 per cent of commercial real estate and some analysts forecast it could rise to 30 per cent by 2030, Berger added.
Co-working location expansion is also being fuelled by companies looking at their real estate footprints differently and rationalizing their portfolios as a cost-saving measure.
Meanwhile, Berger said landlords are approaching IWG to see if they can incorporate flexible working spaces into their buildings and portfolios, because tenants are demanding it.
“They’re seeing it as an opportunity for growth because they can diversify their incomes and drive a premium in that space because flex space usually drives a higher profit in the space versus a traditional long-term lease.”
Most building owners don’t have expertise in creating their own flexible spaces, which is where IWG and other firms in the space come in.
“It’s more than just building a bunch of small offices and collecting some rent across a larger collection of tenants,” Berger said. “It actually is activating and providing hospitality in the space.”
Spaces Burnside partnership
Spaces just signed a partnership agreement with Office Interiors and Cabco Communications Group to open Spaces Burnside. It will be the first Spaces location in Atlantic Canada and Office Interiors would like to expand into other East Coast regions in coming years.
So would IWG, which has three Regus operations in Halifax and Dartmouth. Berger said it’s talking with potential partners to roll out locations in New Brunswick, Prince Edward Island and Newfoundland and Labrador.
Office Interiors and Cabco will invest in building out the Dartmouth location and hire outside staff, while Spaces will furnish, manage, market and provide back office infrastructure.
IWG wants to move more into the franchise business with all of its brands. Berger said it’s working on agreements with potential franchise partners but wasn’t ready to provide details.
Subscription service and consolidation opportunities
Another growth area for IWG is a subscription service which companies pay on behalf of their employees so they can access locations of any of IWG’s brands around the world. IWG has signed two million subscription memberships in the past year, according to Berger.
“It’s moving corporate real estate towards this true gig economy where it’s about network presence,” he said. “It’s about complete convenience and flexibility for a company to give their employees ability to work ubiquitously.”
While the co-working sector as a whole is growing, it’s fragmented and Berger said some providers have rationalized during the pandemic. That presents consolidation opportunities for operators like IWG, which is already the world’s largest flexible workspace and office provider.
Regus expansion and new brands for Canada
Regus is IWG’s core heritage brand, and its largest and most recognized, with locations in approximately 125 countries. It will continue to add more locations in Canada.
“People know the experience they will receive when they go to a Regus, regardless of the city, province or country they’re in,” said Berger. “It’s also a great brand that supports mixed-use real estate space as well as your traditional corporate building with a 15,000- to 20,000-square-foot plate.”
IWG is looking to launch its lower-cost HQ, upscale Signature and female-centric The Wing brands in Canada.
“Enterprise organizations really leverage the HQ brand for back-office teams, customer service organizations, data centres, et cetera,” said Berger. “Signature is very opulent, higher-end, and usually located in iconic or the best-built buildings in the country or city.”
IWG acquired The Wing in 2020 and sees plenty of growth potential for the brand that started in New York City and has spread across the U.S.
“It’s obviously all-inclusive, there’s no doubt about it, but it’s more geared towards female leaders and female workers,” said Berger.