How Does Co-Working Stack Up in San Diego & OC?
San Diego and Orange County have only recently seen a rise in co-working activity and demand—but as it has come, it has come quickly.
Flexible office space providers came later to the Orange County and San Diego markets, after focusing on primary West Coast markets, like San Francisco and San Diego. The demand, however, has spread rapidly. In San Diego, the market has already expanded to 90 operators and 1.2 million square feet. While Orange County has only recently seen the presence of co-working, several operators, including WeWork, announced plans to expand last year. For 2019, local experts expect the co-working niches to continue to grow.
“Last year, San Diego saw expansion of large international players WeWork and Spaces, in addition to dozens of new hyper-local flexible office space locations. This sharp increase of supply has been linked with a steady increase in demand for flexible office space, motivating more and more local real estate leaders and advisors to open new boutique locations through the county,” Scott Schindler, a senior associate at JLL, tells GlobeSt.com. “Large corporations are now entering the flexible office space world to take advantage of the flexibility, test new markets, or reduce capital expenses. As VC funding grows and enterprise companies continue to adapt to the modern workforces needs of flexibility and creativity, Flexible office space’s growth seems poised to continue.”
San Diego’s co-working market has been growing for years, much earlier than the neighboring Orange County. While both are secondary markets, San Diego has a larger presence of tech and media companies. As these industries have grown in Orange County, the co-working market has grown as well. “To see flexible office space initially gain more traction in San Diego than Orange County is peculiar,” says Scott Wetzel, VP at JLL, tells GlobeSt.com. “Both are secondary markets, emphasize lifestyle, and have similar cost of living. That said, we have seen tech companies skip over Orange County as they make their way south down Southern California’s version of Silicon Beach PCH.”
Still, Orange County’s co-working market has grown tremendously in the last 12 months, positioning it for further growth this year. “WeWork cautiously opened one location in the Irvine Spectrum in 2016, but after reaching full occupancy there, quickly started looking for additional locations. Since then, the flexible office space magnate has signed leases for four additional locations totaling nearly 200,000- square feet and shows no sign of slowing,” says Wetzel. “The firm is allegedly in leases for 3 more locations—Costa Mesa, Tustin and Irvine—totaling roughly 350,000 square feet. The San Diego market also saw significant growth in 2018, both in terms of leasing activity as well as expansion of brands. “On the horizon are two SPACES openings in Little Italy and East Village, and WeWork is rumored to be looking for expansion in the Northern Coastal markets and Carlsbad,” adds Schindler. “Compound this with Common Grounds recent $100m capital raise and it’s clear that the market is Bullish on flexible office space.”
SPACES is also expanding in the Orange County market. According to Wetzel, it has plans to open three locations in 2019, totaling 100,000 square feet. “Industrious, CommonGrounds and a slew of copycats continue to enter or assess the Orange County market as well,” he adds. “So yes, Orange County was a little late to the party, but it is active.”
While neither Orange County nor San Diego have made the list of the top co-working markets in the country, as L.A. did at number 10, this rapid growth could put them on the map in to time.