Boston Business Journal: Flexible office concept Knotel coming to Boston
As published in Boston Business Journal
Flexible office company Knotel Inc., which launched in 2015 and has expanded to a global portfolio of nearly 4 million square feet, is shopping for space in Boston.
A typical Knotel deal is for a full floor of office space for at least a year, rather than a coworking space that offers space by the individual desk on a weekly, daily or hourly basis,according to Eugene Lee, chief investment officer and global head of real estate for the New York-based company. Knotel will, however, do deals as small as 3,000 square feet.
“All of the companies that have spaces at Knotel — they value their own brand, they value their own culture, and I’m just there to support it,” Lee said. Knotel is exploring several of Boston’s neighborhoods, but has not finalized where it wants to set up first, Lee said.
“I would expect to have a number of locations in Boston probably in the next three months,” Lee said. “For us to give companies flexibility, we need to have a variety of product. ... What we are really offering companies is just a menu of options for them to choose from. That clearly is the value to the companies.”
Knotel joins a number of flexible office and co-working concepts launching in Boston, which has seen a surge of WeWork growth as well as concepts including The Wing, Industrious, and Workbar. Tishman Speyer and Boston Properties have developed their own flexible office concepts, dubbed Studio and FLEX by BXP, in buildings including 125 High St. and the Prudential Tower.
Lee expects Boston to follow a trajectory similar to other Knotel markets. In New York, Knotel has grown from five locations to 100 and from 100,000 square feet to 2.5 million square feet in three years. Eighteen months ago, Knotel had one location in San Francisco — now it has 50. And in the past six months in Los Angeles, Knotel has grown from one spot to 10.
Of course, Boston’s office market has limited amounts of vacant space available. Lee said many of Knotel’s Fortune 100 and Fortune 500 companies are increasingly asking for offices of 50,000 square feet to 100,000 square feet — of which there are limited amounts available now in Boston.
Lee said finding the larger space blocks will be tough, but that he understands the market realities. However, he posits, landlords and owners find options like Knotel attractive because of the lack of transience that comes with a flexible office versus a month-to-month co-working space. “They think of us as an amenity,” Lee said. “It is difficult and annoying to work with lots and lots of companies of different sizes, but we do it for them, so the ownership groups don’t have to worry about it.”
Beyond New York, San Francisco and Los Angeles, Knotel is located in London, Paris, Berlin, São Paulo and Washington, D.C. The company has raised $160 million during two fundraising rounds, with investors including brokerage Newmark Knight Frank and Norwest Venture Partners.