Development Magazine Summer 2015

Development - Ownership

Coworking at the Mall

Bespoke at Westfield San Francisco Centre in Union Square will offer a unique blend of coworking, technology and event space on the mall’s fourth floor.

The latest workspace-on-demand ecosystems are coming to a shopping mall near you.

A TRIP TO THE LOCAL MALL used to be about shopping at your favorite store, then catching a movie or a meal. Lately, it’s become one of the more unconventional places for startups, freelancers and road warriors to plug into affordable workspace, network with like-minded peers and access resources not usually found in a traditional office.

Just as the Internet revolutionized how people buy goods and services from retailers, mobile and cloud technologies are reinventing where and how people work. Today, many people carry their offices with them — in their pockets, briefcases and backpacks — and can be productive anywhere, anytime, as long as they can access an ample supply of power and online connectivity. Entrepreneurs, independent contractors and particularly millennials find the freedom to untether from walled office boundaries and work autonomously appealing. So do many full-time employees with conventional jobs whose companies allow them to telecommute.

Enter the era of the coworker. What began as an alternative for home-based professionals seeking a more social, collaborative environment has given rise to a global coworking movement that has doubled in size since 2006. (See “Workplace Innovation Today: The Coworking Center,” by Andrea P. Foertsch, NAIOP Research Foundation, 2014.)

For mall owners, the growing coworking trend, advancing technologies and changing shopper habits are coalescing into a perfect storm of opportunity to turn empty space into flexible, innovative “ecosystems” that cater to the needs of today’s tech-savvy, nomadic workforce.

Coworking Space and More

Westfield Corp., which operates 40 upscale malls that generated $17 billion in retail sales worldwide last year, is repurposing more than 34,000 square feet of its Westfield San Francisco Centre into a unique blend of coworking, technology demonstration and event space called Bespoke amid 200 retailers and restaurants, a theater and a day spa. Developed in partnership with Forest City Enterprises, this multimillion-dollar project in the heart of Union Square is the first to include coworking space in a U.S. shopping mall.

“Two years ago, we saw a convergence of the digital and physical all over the world, and retailers who were looking to do business in ways they hadn’t before,” says Antony Rich, chief operating officer of Westfield Labs, a global digital arm of Westfield Corp. “San Francisco has an enormous amount of innovation. People are working and interacting differently here. And the companies within this environment are looking to solve challenges for the retail community.”

Bespoke’s tenants are a carefully honed mix of entrepreneurial and established retail and technology brands. They offer immersive 3D design, user-generated content platforms, analytics and data optimization, mobile payments, e-commerce and crowdfunding.

“We are specifically curating regional tech, dot com, venture and fashion — companies that are disruptive enough to create categories that don’t exist yet,” adds Lindsey Thomas, vice president of marketing and communications at Westfield Labs. “In some cases, it’s really small startups. In others, it’s large brands that aren’t able to build a presence in San Francisco but need a unique environment in which they can cowork.”

interior office space with chairs and desks

The GTP Group opened the Space&Co. coworking center at Rouse Hill Towne Center in Sydney, Australia, in 2014. The company also operates another coworking center in Melbourne.

Bespoke’s 18,000 square feet of coworking space is designed to be fun as well as functional. Among the dedicated desks, open workspaces and private offices are a rock climbing wall and bocce ball court. Members will pay fees ranging from roughly $385 per month for a shared desk and $595 for a dedicated desk to $1,450 or more for a private office. About a half dozen conference rooms face the mall so they can quickly transform into large, on-demand event spaces or small pop-up stores for retailers who need just a few hours or days to test the real-world reactions of shoppers to their prototypes.

A Global Phenomenon

The coworking-in-a-mall concept already has taken off in other parts of the world. Multispace at the Astana Mall in Kazakhstan, the world’s largest mall-based coworking facility, boasts 70,000 square feet of ultramodern workstations, open collaboration areas, private offices, meeting rooms, presentation areas, lounges and conference halls that attract its target market: expatriates and diplomats.

“Our community is made up of open-minded, creative people, mostly entrepreneurs, freelancers and subject matter experts,” says Faraz Majidulla, development manager for Multispace. “We have multiple events every day to help them get to know each other and potentially collaborate on ideas.” Multispace also hosts diplomatic events such as “Internations” so that expatriates can feel at home while abroad, network and learn about the area.

Majidulla adds that retail sales and foot traffic at the Astana Mall have increased since Multispace opened last year, partly because retailers are promoting the coworking facilities in marketing their own stores.

Mall-based coworking is also popular in Australia, where Space&Co. has centers in Sydney and Melbourne.

“We identified the need to respond to today’s changing work dynamics, then reviewed other centers and their business models within Australia,” says Daniel Stiffe, national director of flexible workspace solutions for The GPT Group, an office, logistics and retail REIT that owns and manages both properties. “We also attended a study tour in the U.S., particularly in the Bay Area, for insights into more established coworking centers.”

Space&Co.’s 5,059 square feet of meeting rooms, offices and workstations at Rouse Hill Towne Centre are situated above a shopping mall GPT also owns and operates. Its community consists largely of small business owners, freelancers, startups and flex employees who work full time for companies based elsewhere.

The 7,136 square feet of coworking space at Melbourne Central Tower is part of a mixed-use hub in the city’s central business district that encompasses a train station, offices and a shopping mall with over 300 stores, restaurants and entertainment uses.

The coworking-in-a-mall trend is also flourishing in Europe, the Middle East and Asia. Among the best examples are Hub Vilnius in Lithuania; “express” coworking spaces operated by Regus and British Land in the U.K, such as Meadowhall Shopping Centre, Broughton Shopping Park and Fort Kinnaird Shopping Park; the Kingdom Centre Work Hub in Saudi Arabia; Mall del Sol in Ecuador; and the Harbor Mall in Thailand.

The sense of community and individual engagement that underpins the coworking movement is borne out by the growing numbers of mobile, flex workers worldwide. Creating workspace ecosystems that incorporate high-tech with high-touch may very well be the hallmark of shopping malls of the future.

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