When WeWork early next year opens its fourth Portland location, near the Lloyd Center mall, it still won’t have the largest coworking presence in the city.

That title goes to Regus, a foreign-owned company with 257,500 square feet of office space in the Portland area, according to Jones Lang LaSalle. WeWork ranks second with 227,000 square feet.

WeWork’s upcoming initial public offering, expected in September, will offer the best gauge yet of how investors value the coworking industry. The coworking giant has rapidly spread across the country and internationally.

But some analysts have raised red flags about WeWork’s financial prospectus, pointing to $17.9 billion in long-term lease obligations and less than $2.5 billion cash on hand. WeWork’s parent company, The We Company, released the prospectus Aug. 14 in preparation for the IPO.

In Portland, flexible space amounts to 1.4 percent of total leasable space, including buildings under construction, according to JLL. That leaves a lot of room for growth, said Jeff Arthur, co-founder of CENTRL Office, a competitor founded in Portland.

“I think there’s still more room,” Arthur said. “There’s a lot of supply. Part of it’s dependent on the overall vacancy in the market.”

Arthur pointed to industry estimates that coworking could total 25 percent of office space a decade from now.

“Depending on the market, that sounds right to me,” he said.

Many employers have adopted more flexible expectations of where employees can work. That can mean working from home, having in-office “hot” or shared desks, moving teams of employees to a coworking space, or all of the above.

“Companies of all shapes and sizes are seeking out a more turnkey office solution than they have in the past,” Arthur said.

WeWork’s breakneck pace of expansion has been reflected in Portland. Most recently, the company signed a lease for 55,395 square feet at American Assets Trust‘s Oregon Square development. The company is expected to take occupancy in the first quarter of next year.

WeWork had the Portland-metro area’s largest office deal of 2018, taking 70,000 square feet in the Power + Light Building. That added to its earlier locations at the U.S. Custom House in the north Park Blocks and the top floor of Pioneer Place downtown.

CENTRL Office has sought cracks in the market, including Lake Oswego and Hood River. The company will have seven locations when the Hood River office opens early next year. It has also established offices in larger cities: the one in Dallas opened recently, joining Los Angeles. Arthur said the San Francisco Bay Area may be an underserved market. Those cities are “markets where we continue to see a lot of demand from corporate America,” he said.

WeWork would be the first coworking company of the tech-economy era to go public. Regus, based in Luxembourg, was founded in 1989 and has been publicly traded since 2000; it has moved into coworking in recent years. Regus did not return a phone call seeking comment.

Arthur said he did not want to comment on WeWork’s financial details ahead of the potential IPO.

“I think it’ll be interesting to see if and when it goes forward, and what the market response will be to it,” he said.

New entrants into the business are focusing on submarkets that may have been overlooked by larger firms. Vida, a coworking space that markets itself as “designed by women, for women” opened July 1 with about 15,000 square feet in the Jantzen Building at Sandy Boulevard and Northeast 19th Avenue. And Knack, a coworking startup that opened in Seattle’s Belltown district recently, markets itself as a resource for all entrepreneurs, but particularly LGBTQ+, women and people of color.

“What we’re seeing happening is coworking spaces are really niche-ing down into being able to offer very curated services to a group that wants those services,” Vida founder Melanie Marconi said. “What WeWork did is set the stage for coworking in general, but they’re too big to offer the specific services we do.”

Vida offers its members drop-in child care and a daily fitness class. Plans are in place for more lunch-and-learn events as well as a health and wellness program.

The Sandy Boulevard location has attracted more than 60 members, including a number of investors who moved in with their businesses, Marconi said. Private offices were first to sell out.

Marconi’s initial round of “friends and family” fundraising raised $101,000. With Vida’s first location up and running, she’s looking to expand with a second round of fundraising, perhaps in January. “We’ll probably go out to proper angels (investors) and bigger pots,” she said.

Marconi mentioned Vancouver, the Southwest Portland suburbs and the Slabtown area of Northwest Portland as possible expansion opportunities.

Like everybody else in the industry, Marconi said she’ll be following WeWork’s offering.

“It’s fascinating to watch, honestly,” she said. “It’s such a monster scale.”

Flexible space in the Portland-metro area

Regus                          257,500 square feet

WeWork                      227,000 square feet

CENTRL Office         102,000 square feet

Spaces                         76,500 square feet

Industrious                  28,500 square feet

Vida                            15,000 square feet

CommonGrounds       14,000 square feet

sources: JLL, 91��Ƶ archives

The post Coworking startups seeking niches in Portland area appeared first on Daily Journal of Commerce.