Novel Coworking is continuing its Chicago expansion, bulking up its location on Wacker Drive to a full seven floors with another office condo purchase.
Chicago-based Novel paid $2.1 million March 8 for a 17th-floor suite at 211 West Wacker Drive, at least its eighth office condo purchase in the building, Cook County property records show. The company immediately began developing the new space to be used as co-working suites, it said in a press release.
With the recent purchase, the company now controls seven floors in the building, paying at least $10.7 million in six separate purchases, property records show. Novel also recently refinanced its Wacker Drive acquisitions with an $11 million loan provided by STC Capital Bank, records show.
In January 2017, Novel added three floors in the building, which are now fully leased, according to the company. Its footprint in the building now totals over 58,000 square feet, a spokesperson said.
Unlike many of its co-working competitors, Novel only operates out of spaces the company owns. The model allows it to better invest in infrastructure and keeps rent costs down, it said in a press release. Most co-working companies lease office space from landlords, but industry giant WeWork is getting into the property investment business, raising millions to help buy the buildings it leases in.
Bill Bennett, founder of Novel, said the company is expanding locally to meet an increasing demand for co-working space in what is a growing and increasingly competitive portion of the local office market.
“We have seen huge demand for flexible, customizable workspace from small to mid-sized businesses, as well as enterprise companies needing full floors of customizable office suites,” Bennett said in a statement.
Novel, which rebranded from Level Office, recently opened its fifth location in Chicago at 405 West Superior Street. With that location and the expansion of the Wacker office, Novel now has five Chicago locations totaling 320,000 square feet. The company controls 2 million square feet of office space in 28 locations throughout the country.
Led by WeWork, Chicago’s co-working space has tripled in four years, with shared-office firms now controlling about 2 percent of the Downtown office market. Its rapid expansion could soon hit a wall, however. The industry’s use of non-competes to keep competitors from setting up in the same building severely limits where the firms can lease, with only 22 out of 86 Class A office buildings available to lease to co-working companies.