CBRE, the world’s largest real estate services firm, is jumping into the growing business of flexible workspace.
The $13.75 billion company has launched Hana, a workspace provider that aims to compete with major coworking firms including WeWork, Regus and Knotel.
Unlike many other flexible office companies that primarily lease their spaces and operate them independently, Hana will instead focus exclusively on partnership agreements with landlords in which the brand will co-invest in the cost of building out workspaces, manage them, and then share in the revenue—forgoing rent.
“We think that as the flexible workspace market becomes more attractive to owners, they’ll view our model as superior,” said Andrew Kupiec, the chief executive officer of Hana. “There are a lot of landlords who want to tap into the growth in the flexible workspace market but don’t want to operate these spaces themselves.”
CBRE plans to grow Hana across the globe, but Kupiec said New York City, where coworking has expanded rapidly to encompass about 4% of the office market, will be a focus for the brand. About 1% of the global supply of class A office space offers flexible terms, Kupiec said, and he and other stakeholders in the coworking business see room for more market share.
“We see it expanding to 15% or 20% of the market,” Kupiec said.
He said Hana is close to deals to open locations in the city, although he would not yet disclose where. He estimated a typical space will be about 50,000 to 60,000 square feet and cater to larger office users who want partitioned, private space while also enjoying access to communal amenities, conference facilities and networking opportunities.
“Sophisticated occupiers want private space, but they also want the traditional coworking amenities,” Kupiec said.
The partnership concept that Hana offers may win over some landlords who have been hesitant to lease to coworking companies, which may compete against them for tenants.
“There are owners who will like the transparency this arrangement provides, including the idea that flexible tenants may want to eventually graduate into conventional spaces when it’s time,” Kupiec said.
The brand will operate within the company’s real estate investment business, which manages about $100 billion and also develops real estate on behalf of clients. Kupiec said it was important to create a separation between Hana and its real estate services arm to minimize the perception of bias if a CBRE commercial leasing broker were to steer a tenant to a Hana-operated space.
“It’s a separate wholly owned subsidiary,” Kupiec said. “The reason for that is we want Hana to be an option for our brokerage network.”