Whether they’re home to small startups, teams within large companies or individual entrepreneurs, shared office and coworking spaces are steadily gaining ground in San Mateo’s commercial real estate landscape.
Providing workers with a clean desk and quiet room where they can take calls, conference rooms where they can meet with their boards of directors and a kitchen where they can make that much-needed cup of coffee, these spaces are offering an alternative for Peninsula workers and companies that might not need a longer term lease at an office building.
In announcing its lease at a four-story office building at 400 Concar Drive in July, the coworking space company WeWork is the latest addition to the clustering of coworking spaces in San Mateo. With locations in San Francisco, San Jose, Oakland and Berkeley, the company’s reach into San Mateo — where it is set to make 1,650 desks available by December — was part of the company’s Bay Area expansion, which includes locations recently announced in Mountain View and Mill Valley, said Elton Kwok, the company’s general manager for Northern California.
Situated near the crossroads of Highway 101 and State Route 92, the complex’s proximity to major freeways and Caltrain stations made it prime spot for the company’s next location, said Kwok, who added San Mateo had long been pegged by WeWork members as a city where an increasing number of them are working and living.
“We’re always getting feedback from our members in terms of where they work, where they live and where they want to be,” he said. “There’s just a lot of good synergy in that building and it made a lot of sense to be there.”
Though WeWork’s new San Mateo location will add hundreds of members to the 14,544 the company has already amassed at its Bay Area locations, it’s not the first to offer flexible office spaces in San Mateo. Having offered office space in a suite at 1900 S. Norfolk St. since 2003, Pacific Workspaces CEO Laurent Dhollande said the emergence of companies like WeWork highlights the growing demand for coworking spaces as companies of varying sizes turn to alternatives to taking out long-term leases with traditional office spaces.
“The workplace and the service industry has really exploded in the last five or six years … it’s changed quite a bit from what it was when we started,” he said. “And it looks like the growth is going to accelerate even more.”
By offering private offices, meeting rooms and opportunities for those at Pacific Workspaces suite to collaborate through events and training sessions, Dhollande said he has seen companies like the real estate website Trulia get their start, grow and eventually be sold, noting what Pacific Workspaces offers are aimed at providing a variety of spaces startups can grow into as they increase in size.
Though some 100 workers use space at the company’s San Mateo location full time, Dhollande estimated 200 individual entrepreneurs — some of whom are attorneys, financial advisors and software developers — are using the company’s “virtual office” plan at the San Mateo location, which means they periodically use space as well as amenities such as mail and phone services provided there for $200 to $300 a month.
Dhollande said he left a career as an executive at high-tech companies to explore how he could make on-demand office space available as a service to companies and, after opening Pacific Workspaces first location in San Mateo, eventually opened 19 coworking spaces across the state.
Newer to San Mateo is the coworking company Spaces, which opened the four-story, 31,600-square-foot Clocktower building at 3 E. Third Ave. in April. Owned by the International Workplace Group, or IWG, the building offers open coworking space, private offices, meeting rooms and common spaces where workers can relax or collaborate on work, said Spaces area manager Luna Duarte.
Having worked at the Spaces locations in Menlo Park and San Jose, Duarte has seen growing interest from larger companies in taking out leases at Spaces coworking locations. Ranging from month-to-month to up to 24 months in length, the short-term leases, combined with the set of reception, beverage and facilities services offered at Spaces locations, are attractive to those running large and small companies alike, said Duarte.
“That’s huge because a lot of people don’t want to get locked in,” she said, of the short-term leases offered at the Spaces Clocktower in San Mateo. “You can get bigger, you can keep the same address and you can move up to a bigger office.”
With comfortable seating clustered around several small tables and phone booths offering workers quiet space, the first floor of the Clocktower building is open coworking space offered on a first-come, first-served basis, explained Duarte. A portion of the building’s fourth floor is a roof deck where workers can relax or work in fresh air, and private and shared offices — where two or three people can share a smaller space — fill the rest of the fourth, as well as second and third floors.
As home to small startups and satellite offices of larger companies like Staples, the Spaces Clocktower building showcases the wide array of businesses turning toward flexible spaces. Michael Berretta, vice president of Network Development at IWG, said coworking spaces offer companies financial flexibility to move into a new market quickly or adjust up and down as needed. Though Spaces has two locations in San Francisco as well, Berretta said the Clocktower building offers a unique experience in that those who work there will be able to walk to the cluster of restaurants, retail stores and entertainment venues.
“We picked San Mateo due to its steady job growth, customer demand and stream of innovative companies that have decided to call this city home base,” he said in an email. “Downtown San Mateo was a natural fit in our expansion plan with its proximity to Silicon Valley and its pride in supporting the rise of local businesses.”
Kwok also acknowledged the role the environment just outside a WeWork location can play in its members’ experiences, and noted the company analyzes data and feedback from its members to create an interior design for the space that’s unique to each city and allows for creativity and collaboration among those who work there. Though the company aims to customize its spaces to the cities where they are located, Kwok said the layout of the conference rooms, meeting spaces and common areas where workers can hold events are known to be beneficial to the businesses and employees who work there.
“There’s a sense of collaboration,” he said. “All these things integrate and … they’re excited, they’re energized, they’re motivated and inspired.”
Having opened an 11,000-square-foot coworking space on the second floor of an office building at 2 Waters Park earlier this year, Newdo Venture associate Bill Bong knows from experience that a minimalist space where one-person teams can work and meet with potential clients may be all that’s needed. He said the East Coast-based venture capital fund opened the space with the goal of offering it at-cost to small startups and individual entrepreneurs in response to complaints that office rent can take up a significant portion of the early-stage funding startups are able to raise.
For the financial technology, blockchain, internet security and data analytics companies that have found space at the fund’s coworking space, the mixture of unassigned open workspace, desks dedicated to specific companies and private offices offered there at rates of $300 to $400 a month are aimed at providing a more affordable option for coworking space than alternatives in San Francisco and Palo Alto, said Bong.
“It’s still not cheap but … it’s much more affordable,” he said. “You don’t have to waste a huge chunk of your series A or seed funding.”
Bong added the movement of companies to San Mateo to be closer to where their workers live is also a trend the fund is following as it continues to monitor the types of businesses expressing interest in the space.
Jennifer Chen, the city’s economic development manager, said coworking space has been gaining momentum in San Mateo over the last several years and is likely indicative of a national trend toward smaller businesses and a freelancing economy. Drawn to San Mateo because of its central location and vibrant downtown, Chen said those using coworking spaces have cited the possibility of collaborating with others in similar industries and making client referrals among the benefits of these types of office environments.
Though Chen noted Hero City at Draper University at 55 E. Third Ave. has been a coworking fixture for downtown San Mateo, she said it’s taken other forms, such as the shared kitchen facility known as KitchenTown at 1007 Howard Ave. where food entrepreneurs can share use of expensive kitchen appliances. She also noted larger companies with extra office space have also eyed renting out excess space out to related startups or entrepreneurs.
“I just also think that these type of spaces create a certain type of structure for freelancers that they like and it keeps their costs low,” she said. “In some ways, I … think the trend of coworking spaces isn’t going to go away.”
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