CBRE is entering the co-working business.
The brokerage announced on Wednesday that it is launching Hana, a subsidiary that will enter property management agreements with landlords to provide flexible office space to large corporate clients.
In getting into the co-working business, the world’s largest real estate services company is betting that landlords want co-working components in their buildings but not the hassle of managing them or the prospect of competing with their own tenants. CBRE’s model has the company co-investing the cost of building out co-working spaces, managing them and taking a portion of the revenue, but not collecting rent.
New York City will be a key focus for the brand’s launch, where 4 percent of the office market is taken by co-working companies, according to Crain’s. Office space has been leased to co-working companies in recent years at a startling rate — WeWork announced last month that it had become the largest leaseholder in the city with 5.3 million square feet.
“We have already generated significant interest from building owners who are looking for a trusted partner to help deliver flexible space offerings, and have a robust deal pipeline,” CBRE president and chief executive Bob Sulentic said in a statement.
Hana will launch at the start of 2019 under CBRE’s Real Estate Investments business, and will be led by Andrew Kupiec, who joined CBRE from Zipcar in 2017, and Scott Marshall, who previously led CBRE’s investor leasing service line in the Americas.
In addition to its primary service for large corporates, known as Hana Team, the new company will also cater to the traditional co-working models. Hana Meet will offer conference room and event space on an hourly basis — a service provided by New York startup Convene — and Hana Share will cater to the traditional co-working model for smaller-sized clients, by providing shared amenities and technology in a communal space.
CBRE’s move into co-working comes as the exploding industry shifts away from freelancers and startups and instead targets large corporate clients with flexible office fit-outs. Many landlords are leery of leasing space to co-working companies, so as to avoid competing with their own tenants.
In addition to competing against WeWork and Knotel for office space and new clients, CBRE’s new company will enter the space alongside other real estate companies. RXR Realty led a $152 million funding round for Convene in July, and partnered with the co-working brand to manage an exclusive penthouse club at 75 Rockefeller Plaza. And next month, one of the world’s largest private landlords, Tishman Speyer, will launch Studio, a flexible office space at 600 Fifth Avenue. Tishman said it plans to expand the brand to offices in Chicago, Beverly Hills, Boston, Washington D.C. and Germany.