Coworking’s Growing Footprint in Malls

Coworking “still has a place in malls,” one CRE expert says, especially as America heads back to an office that’s been radically reimagined post-pandemic. 

Earlier this fall, Saks owner Hudson’s Bay announced that it will partner with WeWork to open SaksWorks coworking spaces in existing department store footprints. The deal will see SaksWorks move into several Saks locations and some that were previously occupied by Lord & Taylor.

JLL research from 2018 examined 75 coworking spaces in more than one million square feet of retail space and noted that 21.3% of those locations were in malls.  And “when the pandemic hit, I questioned how much longer we’d be able to use this report since the past year and a half has upended how and where we want to work,” said JLL’s Taylor Coyne, in a new brief. “My outlook on coworking has already boomeranged and I think there remains a strong case for coworking in retail space as flexibility remains central to how we want to work.”

Many of the SaksWorks locations are in residential areas and will likely appeal to workers who want an alternative to the home office without a long commute, JLL’s Taylor Coyne said.

“For WeWork, this is an opportunity for physical growth without adding to its existing lease liabilities,” Coyne said. “In this partnership, WeWork will not pay rent but will manage and staff the coworking spaces while sharing the revenue with Hudson’s Bay.”

Five SaksWorks locations will open next month in New York, including one in the now-shuttered Sak’s men’s store in Lower Manhattan and a former children’s store in the Saks flagship in Midtown.  Three more locations will open in Manhasset, Scarsdale, and Greenwich.

Saks has indicated plans to expand the SaksWorks concept to Los Angeles, Seattle, Philadelphia, and Boston.

New players are entering the flex workspace and coworking fray as remote work becomes more mainstream. Earlier this year, WeWork and Cushman & Wakefield announced an exclusive partnership to allow C&W to market landlords and businesses on WeWork’s management experience platform, as well as on new jointly developed solutions.

In a joint statement announcing the partnership, the firms said the deal will “provide landlords and businesses with the ability to create a differentiated workplace experience for tenants and employees in the new hybrid world of work where flexibility remains at the forefront.”

And in May, WeWork announced it had tapped JLL to market and lease co-working and flex spaces in 38 locations in seven cities nationally in a deal that would see JLL acting as what the firms called “an extension of WeWork’s in-house sales team” in New York City, Boston, Atlanta, Dallas, Denver, Phoenix and San Francisco. 

JLL research from earlier this year shows that as landlords reposition real estate strategies, demand for flex space has surged. The survey of 2,000 office workers showed that two thirds want to work from different locations post-COVID. In turn, office owners are responding by “actively increasing” the space in their buildings devoted to flex work.