When Sam Rosen and Pat Griffin started The Coop four years ago, Chicago’s first co-working space, the venture was more a hobby than a business pursuit.
Years later, it’s no longer a dalliance. Rosen has agreed to sell The Coop to NextSpace, a shared workspace chain with eight locations in California. He declined to provide financial terms of the deal.
The River North location, set to rebrand in mid-September, is the first in NextSpace’s plan to expand in Chicago and the Midwest, says NextSpace CEO Jeremy Neuner. Chicago prices haven’t been finalized, but basic memberships in NextSpace’s original Santa Cruz location begin at $215 a month.
There are 106 co-working spots in Chicago, according to DeskTime, Rosen and Griffin’s platform that manages shared workspaces. But that number is changing fast as companies like NextSpace move to town to sell shared office space memberships to Chicago’s entrepreneurs, consultants and freelancers.
It’s easy to see why corporate interests would have their eyes on co-working spaces like the Coop. By 2017, 40 percent of the world’s workforce is expected to work away from the office at least two days a week, according to corporate real estate research firm CoreNet. That’s up from 26 percent in 2012.
“This is a very young industry and it’s evolving very quickly,” says Benjamin Dyett, founder of New York-based co-working chain The Grind. “[Scaling] is one of the ways of that evolution.”
Dyett’s firm will open a 11,000-square-foot spot at LaSalle and Madison in early September. The space will have an open floor plan and no private offices or designated desks. And if Grind’s first location fills up, Dyett says the company plans to open more locations in town.
Meanwhile, New York-based Serendipity Labs is finalizing a lease for 20,000 square feet in the West Loop. The company offers corporate co-working locations with meeting spaces, open work areas and private offices. The Chicago incarnation of Serendipity Labs is slated to open in January, and CEO John Arenas expects to open one or two more company-owned spots in the city, then franchise more in the suburbs.
In addition, the WeWork and MicroOffice chains have plans to open co-working spots in the next year, which, among others, will account for an estimated 150,000 square feet of new co-working space, Rosen says. But Dan Lyne, senior vice president at commercial real estate firm CBRE, says space can’t be the only offering at new co-working spots.
“The challenge that those new entrants into Chicago [have] is how well they’re going to be able to find the partners that will lift them up beyond just real estate,” he says.
Mahrinah von Schlegel, whose incubator co-working space Cibola opened in Pilsen late last year, thinks the market could reach saturation quickly.
“I get really worried about a lot of people entering the market at this same point. You’re going to overload the capacity for it to exist,” she says. “Demand is only going to increase, but it’s very important to stay wary about increasing too quickly.”
Some co-working spots seek out specific communities — Panzanzee in River North is a spot for social enterprise entrepreneurs, and Greektown-based Gowhere Hip Hop rents out desks for creatives.
Others draw in as many different industries as possible.
“[At] one of our spaces in San Francisco, we have a sex therapist, a stand-up comic and an ordained minister who are all NextSpacers,” Neuner says. “We’re trying to create as broad and as deep a talent ecosystem as we can.”
Lyne says in many ways that’s an integral part of the success of a community.
“I think cross-industry partnerships or riffing is going to be the key,” he says. “That’s where we win.”
Photo by Sara Mays
