LOS ANGELES—Co-working companies have made headlines last year for expanding rapidly in Los Angeles. While there are co-working spaces in markets like Hollywood and Burbank, it seems that the majority of co-working spaces have opened on the Westside, according to research from JLL that analyzed the geographic patterns of the office niche.

It isn't surprising that co-working companies would focus on Westside markets, which lead Los Angeles in terms of demand, absorption and rents. “High-rent markets have high rents because they are in highest demand by users, and co-working spaces follow the laws of supply and demand,” Hayley Blockley, a managing director at JLL, tells GlobeSt.com.

The Westside accounts for 667,254 square feet of the total co-working stock in Los Angeles. Downtown Los Angeles is the second largest market for co-working spaces, and has 401,285 square feet of co-working space. Blockley expects the number of co-working spaces to continue to grow in these markets. “I expect to not only see the number of co-working spaces to increase but also an increase in the variety of types of shared space including communal live/work spaces, hotels, performance space, shared conferencing centers and hot-desk concepts,” she says. The third largest submarket for co-working spaces is the South Bay, which accounts for only 205,157 square feet of space.

Both the Westside and Downtown Los Angeles are high rent markets, which is likely why co-working companies are targeting them. However, it is hard to tell if co-working spaces offer a discount to high-priced traditional spaces in these markets. “It's not an apples-to-apples comparison,” says Blockley. “Co-working spaces allow for plug-and-play officing, perfect for rapid expansion or quick move-in while a larger requirement incubates. There's also value in the community, the network and the connections small tenants make in a co-working environment. Similarly, larger tenants are using co-working space to test the waters in new markets before committing long term. We see a lot of Silicon Valley companies using co-working space in Los Angeles before committing to a larger, long-term identity here.”

Co-working spaces will grow in other markets as well, but will focus on areas with a healthy pool of start-ups or entrepreneurs. “Co-working will be most successful in markets where entrepreneurs want to live near the office, like Venice, and in areas where you see small tenants being displaced by larger multi-floor users, like Hollywood,” adds Blockley.

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Co-Worker's Particular Market Preferences

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