Regus Spaces signs lease on first Midwest location in Chicago
Spaces is entering the Chicago market, leasing 27,110 sq ft over three floors in a four-storey loft office block on Halsted Street, which is owned by developer Newcastle Limited. The location is expected to open in Q1 2018, and the firm plans to open six to 10 locations in the Chicago area over the next 18 months. While data from Newmark Knight Frank and Chicago Creative Space predicts co-working firms in Chicago will occupy over 1.5 million sq ft by year end, up from 1.1 million sq ft in 2016, smaller operators are said to have found it difficult to scale and compete with larger firms, and consolidation in expected. Spaces members can also use Regus' offices for meetings, including the firm's 46 Chicago area locations.

 

 

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This four-story brick building on Halsted Street, which is across from the NewCity development, will be the site for a Spaces co-working office. Amsterdam-based Spaces has leased three floors in the building, in the Goose Island neighborhood. An Ethan Allen furniture store is planned for the ground floor. (SVN Chicago Commercial )

Amsterdam-based co-working company Spaces has leased three floors of a North Side loft office building, the first of as many as 10 Chicago-area locations it plans to open in the next 18 months.

Spaces has leased 27,110 square feet in the building on Halsted Street, the company said. The space, which is in the Goose Island neighborhood, will open in the first quarter of 2018, according to Michael Berretta, vice president of network development for Americas Spaces.

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The Netherlands firm is looking at other potential locations in Chicago's suburbs and in other areas of the city including the Fulton Market district, with plans to have six to 10 offices open in the area by the end of 2018, Berretta said.

Spaces is the newest entrant to a Chicago-area co-working market that continues to expand, even amid an expected consolidation of the industry.

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Co-working providers typically sign long-term leases with office landlords, and then lease out smaller portions — which can range from a single desk to a dedicated office for dozens of workers — on short-term deals.

Led by the industry behemoth WeWork, co-working firms have gobbled up Chicago office space in recent years.

There was more than 1.1 million square feet of Chicago-area space occupied by co-working firms in 2016, a number expected to rise above 1.5 million by the end of this year, according to data from Newmark Knight Frank and Chicago Creative Space. The total was just 48,619 square feet in 2007.

But as larger, well-capitalized providers have grown to provide vast networks of spaces throughout the country and world, some companies have scaled back. Already this year, New York-based Grind has closed down its space in the Loop, and California-based NextSpace shuttered its River North spot.

"The larger operators offer a scale that's hard to compete with," said leasing broker Matt Ward, a senior managing director at Newmark, who is not involved in the Spaces deal. "We think consolidation will continue to happen, and eventually there will be two or three large providers."

The Halsted Street deal is the first in the Midwest for Spaces, which plans to expand from 14 to 40 North American spaces by the end of 2018.

The brick building, where an Ethan Allen furniture store is planned on the ground floor, is across the street from the NewCity retail and apartment complex. It is just south of the intersection of Halsted and Clybourn Avenue, where there is a Red Line CTA station and an Apple store.

The four-story building is owned by Chicago-based developer Newcastle Limited. Newcastle bought the building from TASC for $8 million in 2014 and redeveloped the building. TASC is a nonprofit that provides services for people with substance abuse and mental health issues.

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Newcastle was represented in the lease by Chad Schroedl of SVN Chicago Commercial. Spaces was represented by Bill Rogers and Kerry Gilar of Jones Lang LaSalle.

Spaces is controlled by the same holding company that owns Luxembourg-based Regus, which acquired Spaces in 2015. Regus also provides short-term offices, but it provides corporate-style suites rather than the open, loft-style feel found in most co-working spaces.

Spaces members also can use Regus offices for meetings in other areas of Chicago, or when visiting other cities. Regus has 46 Chicago-area locations, Berretta said.

"What differentiates us from other co-working companies is, we've already got a network of 3,000 locations globally, and almost 1,200 in North America alone," Berretta said. "We've found our customers, whether it's a large corporation or a small startup, want the flexibility to utilize spaces in several locations."

rori@chicagotribune.com

Twitter @Ryan_Ori