Commercial real estate firm CRBE has decided to scale back on its in-house co-working brand, Hana, due to the recent Coronavirus pandemic, Bisnow reports. The company plans to operate 10 units in 2020, as opposed to the originally planned 20, company CEO Bob Sulentic said during CBRE’s quarterly earnings call. CBRE spent $40 million in 2019 to expand its co-working concept.
“We believe we’re well-positioned to take advantage in the flexible workspace market and have positioned Hana to serve enterprise clients that desire private workspaces,” Sulentic said during the call. “However, in the short term, we will slow the pace of expected Hana unit openings in 2020 until we have more clarity around COVID-19 impact on occupier demand.”
There are currently five existing Hana locations—Park Place in Irvine, CA 245 Hammersmith and 70 St. Mary Axe in London and four more planned, but unopened locations at 3 World Trade Center in New York and National Landing in Arlington, VA. There are also plans to open another Hana location that isn’t on the CRBE website yet, Bisnow reports.
CBRE officials remain optimistic about the flex office industry’s prospects, despite the scale back of Hana. Company officials forecasted the U.S. market for flexible office space should expand by more than 20 percent of all occupied space by 2030—even if a recession occurs. Flexible offices currently comprise two percent to the office market.
Hana was initially conceived in 2018 to compete then industry giants like WeWork and Knotel. Sulentic said Hana is positioned around the flex-office suites model rather than membership model its predecessors have employer. Hana’s flexible-office suite model could be a better fit with larger corporations, according to Sulentic.
“It’s not going to be co-working as we’ve known it with membership type circumstances, but we think suite type high-quality with real data security very professionally managed is going to be quite attractive to some subset of occupiers as they serve their people working from home, maybe smaller populations, permanent populations in offices, and our Hana product, we think, is well positioned to take advantage of that if that happens,” he said.
The CBRE CEO also said he believes more CRE owners will want to partner with CBRE to operate flex offices within their own buildings.
“They are not going to have the scale to do that,” Sulentic said during the earnings call. “So we’re hopeful that that could be one of the good opportunities for us coming out of the COVID-19 situation.”