An under-construction skyscraper in London was the battleground for a trio of well-capitalized flexible office space firms in growth-mode.
New York-based Convene, a startup that partners with commercial landlords to offer meeting spaces and amenities in office buildings, ultimately won out. The firm signed a 100,000-square-foot lease at 22 Bishopsgate in central London, the firm’s chief executive Ryan Simonetti told The Real Deal. It will be the firm’s first international location.
Simonetti said negotiations for the space began early 2018, and that Knotel, WeWork and U.K.-based The Office Group were among the firms vying for the location. The Office Group, which is majority owned by Blackstone Group, “looked at 22 [Bishopsgate] a couple of years ago,” but “didn’t bid or make a proposal,” its chief executive Olly Olsen said in an email. Knotel and WeWork declined to comment.
“We’ve realized that things in London take a little bit longer than they do in New York to get done,” Simonetti said.
Securing space in premier buildings has been a favored move by co-working and flexible-space firms seeking to establish themselves in a new market. In New York, an early location locked in by Dutch firm Spaces was a 110,000-square-foot space at the Chrysler Building. When The Office Group sought to open its first New York location, it was reportedly in a bidding war with Knotel and WeWork at the Flatiron Building.
London has become a hotbed of co-working activity, with almost 12 million square feet leased to flexible office space companies (about 4.6 percent of the office market), according to a Cushman & Wakefield report published in April. It has become center stage for both European and American firms to prove their mettle. Last year, WeWork became the largest office tenant in central London with almost 3 million square feet, and Knotel has 13 locations there, spanning 160,000 square feet. The Office Group, based in London, has 32 locations there.
Convene’s new location — a 1.3 million-square-foot tower being developed by Lipton Rogers and a subsidiary of AXA Investment Managers — is abundant with amenities, including a rock-climbing wall that overlooks the city and lobby that doubles as an art gallery. Rents in the building range from $85 to $100 a square foot, the Financial Times reported in June.
Under the lease terms, Convene will provide a 50,000-square-foot space across two floors for meetings and conferences and another 50,000 square feet will be allotted to its flexible workspace product, known as WorkPlace, for small- and medium-sized companies.
AXA will be a major tenant in the building, along with Nasdaq and law firm Cooley. In January, insurance firm Aspen withdrew its lease from the building, as it sought to downsize its operations, according to London-based Estates Gazette, a real estate industry magazine.
Since it launched in 2009, Convene has raised $260 million, and is backed by some of the most prominent U.S. office landlords, including Brookfield Asset Management, RXR Realty and the Durst Organization.
In July 2018, Convene raised $152 million in a series D funding round, which valued the company at more than $500 million. Simonetti said the firm is currently in negotiations for another funding round, which he expects to announce in coming months.
Convene has rolled out locations at a rapid rate, and expects to have 30 locations by the end of 2019. Seven of those locations will include the firm’s WorkPlace offering, which pits the company against other co-working firms that primarily offer office space.