A co-working firm in Los Angeles has filed for bankruptcy after bringing its locations down to a standalone space in Pasadena.
CTRL Collective filed for Chapter 11 bankruptcy, declaring about $4.2 million in liabilities and $529,300 in current cash, according to filings with the U.S. Bankruptcy Court for the Central District of California. The company did not respond to a request for comment.
The bankruptcy comes amid a rollercoaster period for the co-working industry. In 2020, JLL predicted in 2020 that one in five co-working locations in the U.S. would close, due to pandemic-related office closures and a propensity to avoid shared working environments. In November, WeWork posted a $802 million loss in its first earnings report as a public company, after a botched IPO in 2019.
Still, as traditional office leasing has waned across the U.S., commercial real estate players are reimagining the co-working space and cashing in on flexible office spaces — betting on private offices or suites that a firm can rent on a month-to-month basis rather than wholly shared areas.
Maurice Marciano, one of the co-founders of contemporary fashion label Guess and brother of Paul Marciano, owns more than a 10 percent stake in CTRL Collective, according to bankruptcy court filings. Pacific Capital Management and CTRL Collective’s former CEO, Robert Walston, also own a stake of at least 10 percent.
Founded in 2015, CTRL Collective started with a 23,000-square-foot facility at 12575 Beatrice Street in Playa Vista, according to court and property records. Over time, the company grew to five locations — Playa Vista, Downtown Los Angeles, Huntington Beach, Pasadena and Denver, Colorado.
But the firm never made a profit. In 2017, CTRL Collective reported a $8.7 million loss, according to tax returns filed with the court. The year after, the company’s loss ballooned to $16 million. The company reported a $9 million loss in 2019, the same year it planned to spend $850,000 on renovating its co-working space in downtown Denver.
CTRL Collective reported a $7.1 million net loss at the end of 2020.
By midway through 2021, the company was facing a lawsuit from NSB Associates, the owner of the property in Playa Vista, claiming CTRL Collective owed more than $650,000 in rent and had failed to pay for more than 12 months, court records show. The lawsuit is still pending.
NSB, through an affiliated entity, is named as a creditor in CTRL Collective’s bankruptcy case, with a claim of $1.2 million.
It’s not the only lease CTRL Collective is in a dispute over. Mass Equities, the owner of 3060 Brighton Boulevard in Denver, where the co-working firm leased space, says CTRL Collective owes $916,700 related to termination of the lease. CTRL Collective is disputing the claim, according to bankruptcy court filings.
JLL, Jonathan Glaser of JMG Capital Management, CoStar, Savills and Mansueto Ventures — which owns media outlets Fast Company and Inc. — have all filed claims with the bankruptcy court. CTRL Collective has disputed a number of claims.
The bankruptcy filing comes as CTRL Collective continues to burn through cash. From January to February, the company has reported about $390,000 in expenses and a net loss of $279,800.
At its Pasadena office location, it collected $137,500 in membership income for the first two months of this year, plus around $24,400 in parking income and about $8,200 in other income from events, bookings and services.
The company is still taking inquiries for its Pasadena location at 45 South Arroyo Parkway, a 23,000-square-foot building
Not all co-working spaces are looking to shrink. Industrious, a firm that has pivoted to month-to-month and yearly contracts for private office space, is opening its ninth location in Los Angeles at a 28,000-square-foot facility in Hollywood this May.