Ready, set, scale: how coworking spaces help LA companies grow

by: vincent | posted on: 24th June 2016
John Siegel
When people think of Los Angeles, they often think of Hollywood, the traffic or the beach. But as the LA tech scene continues to grow, either by attracting companies to the area or nurturing local startups, the problem of rent — both in terms of office spaces and housing — can adversely affect a company’s ability to scale.
In the last several years, workers and companies alike have turned to coworking spaces like WeWork, BLANKSPACES and Cross Campus for the flexibility they offer. As this continues, it’s becoming more apparent that the way we are used to thinking about offices and desks is obsolete.
According to a report by The Instant Group, an independent global flexible workspace specialist, there’s more than just a buzz surrounding the coworking trend. Driven by the explosive growth of contingent workers, which the US Government Accountability Office estimates as representing over 40 percent of the US workforce, coworking has grown more than 10 percent in the US. Combination centers offering both executive suites and coworking spaces have expanded by 12.9 percent in the last year alone.
“I think the trend toward coworking spaces is changing the way landlords build buildings, as well as where companies put their employees and the environment into which they put them,” said WeWork’s GM of West & Central USA, Jon Slavet. “We have companies coming to us saying they don’t want to be in the business of real estate, they just want our employees to work in the best place possible.”
As neighborhoods continue to develop and as rent — both commercial and residential — continues to increase, the options for many startups shrink. Coworking spaces offer freelancers, small companies and medium sized companies a way to work in a great area for a cheaper rate. The spaces are managed by designated community teams and are stocked with the amenities one would expect when stepping into a tech company’s office.

It’s this flexibility that draws many startups to consider a coworking space over signing a lease somewhere.
“When you’re in a high growth startup, it’s helpful to have ultimate flexibility and simplicity of use,” said Helpr Co-Founder Kasey Edwards. “With WeWork, we popped in on a month-to-month lease with no cost for furniture. As we’ve evolved, they’ve been able to accommodate our needs for space.”
Sherif Higazy, founder of Nuclear Creative, discovered the flexibility of working in a coworking space particularly benefitted his startup. “We started in a three man office in Hollywood, and then we found that we could move to a location closer to our production partners,” said Higazy. “Then we moved into a six person office, and then a six person office plus two. This all happened over the course of a week, and our capacity doubled. That’s huge; it’s not like I have to wait until my lease breaks and I’m in an empty warehouse.”

Higazy’s first startup saw his living room double as an office, something he found to be stressful for not only the company, but also himself. “It’s super stressful, and you don’t know what the future holds. With a coworking space, you have these visible markers of your success, of the infrastructure coming into place, and the minute that we got to move out of the living room was great.”
The range of options coworking spaces offer startups means companies can add desks or offices as the company needs them, not before. Scaling a company, therefore, can be done to coincide with a new hire coming onboard.
“I see one of the biggest advantages at working at a coworking space as the ability to scale,” said Austin Kim, former general manager at WeWork Gas Tower resident LUXE and current general manager of Managed by Q. “It’s hard to predict what office and staffing needs will be beyond a quarter or two because things can really deviate up or down, and we don’t want to be locked into a five year lease.”
As coworking spaces become more prevalent in the area, the industry will inevitably adapt to the number of options available. Currently, WeWork has six LA locations with four slated to open before the end of the summer. BLANKSPACES has offices in Mid-Wilshire and Downtown, with a location in Hollywood set to open shortly.
“I think [the coworking industry] is barely getting started,” said Jerome Chang, owner and architect of BLANKSPACES. “The industry is just entering phase two, where you might see some mergers and acquisitions, and of course some failures, but there will be more consolidation.”
Originally posted on Built In Los Angeles: