CRE Costs Force Trade-off Between Flexibility, Privacy
Breather has focused its offerings to address the trend toward longer-term hybrid real estate solutions that provide the flexibility of co-working with the privacy of traditional leases, adding 11 spaces in San Francisco and LA.
SAN FRANCISCO—Since the close of an $85 million Series C funding round in 2018 and the appointment of Bryan Murphy as CEO in January, flexible workspace provider Breather has focused its offerings to address the trend toward longer-term hybrid real estate solutions that provide the flexibility of co-working with the privacy of traditional leases. And, in the first half of 2019, Breather added 11 new spaces in San Francisco and Los Angeles totaling 30,245 square feet, bringing its West Coast portfolio to more than 110 spaces. Breather operates a global network of more than 500 private on-demand meeting spaces and offices in 10 cities.
“The rising cost of commercial real estate in San Francisco and Los Angeles is forcing businesses to make a trade-off between flexibility and privacy. As epicenters of the country’s tech and entertainment industries, the high value placed on original ideas and intellectual property makes this trade-off an especially difficult one,” said Jenny Hahn, breather’s director of real estate. “As we grow our portfolio of flexible private spaces for long- and short-term use, we’re helping eliminate this risk and unlock business growth.”
In San Francisco, Breather operates 70 spaces for the Bay Area tech community, with customers including Lyft, Candid and Airbnb. In 2019, the company added nine additional spaces in some of the city’s most sought-after neighborhoods: 225 Bush St. suites 370 and 1820 (Financial District), 250 Sutter St. (Financial District), 564 Market St., suites 305, 314 and 150 (Financial District), 893-895 Folsom St. (SoMa), 650 5th St. (SoMa) and 329 Bryant St. (South Beach).
All of the new West Coast spaces are configurable for hourly, daily, monthly or yearly use.
“Signing a direct lease is a huge financial undertaking for a company. Direct leases require huge security deposits, massive costs to build out someone else’s building and the long-term leases that require a company to commit for longer than it wants to,” Mark Frackt, Breather chief financial officer, tells GlobeSt.com. “Breather simplifies the entire process for companies of all sizes and we’re seeing equal interest from startups just exiting co-working for their own offices as well as global giants seeking a flexible and cost-efficient way to diversify their real estate portfolio. We provide a beautifully designed turnkey productive space on flexible terms that is fully serviced by our team so companies can focus on running their business and not on managing real estate.”
Breather also bolstered its leadership and customer insights teams with the appointment of Frackt as chief financial officer, Glenn Felson as chief sales officer and Anja Jamrozik Otto as director of research. Frackt joined Breather from BuzzFeed where he was the company’s inaugural CFO. He first came on as Breather’s interim CFO in late 2018 and has now been appointed to the position permanently, with a focus on Breather’s growth strategy.
With 16 years of experience leading sales teams in the real estate industry, Felson joins Breather from Kastle Systems North East. He will lead sales to prospective clients and landlord partners.
As a neuroscientist and behavioral researcher, Otto has spent her career studying the impact of the built environment on health, work and happiness. As Breather’s new director of research, she is leading a full research program to guide key decisions across the business, using quantitative and qualitative data to improve the overall customer journey and the design of new Breather spaces. Otto was previously a research consultant for Breather and other brands.
“Breather has seen 300% year-over-year growth in our private office product, and our expansion in San Francisco and LA is in direct response to the demand we’re seeing from the businesses in these markets that are driving the innovation economy,” said Murphy.
The rapid growth of co-working provides a variety of options for all types of users seeking flexibility. It provides smaller companies and startups with the ability to have office space in a price-restrictive market. It also allows larger, more established companies the flexibility to maneuver employees into offices while waiting for bigger blocks of space to open up in tight markets, according to research by Savills.