Co-working firm CTRL Collective files for bankruptcy

Down Pasadena location from five across SoCal, Denver

CTRL Collective CEO Charles “Duke” Runnels with 45 South Arroyo Parkway (LinkedIn, Loopnet, iStock)
CTRL Collective CEO Charles “Duke” Runnels with 45 South Arroyo Parkway (LinkedIn, Loopnet, iStock)

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.

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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.