QuadReal Property Group has become the latest Canadian pension fund to beef up its co-working portfolio, with an equity investment in a second flexible office company.
QuadReal, the real estate arm of British Columbia Investment Management Corp., has made an investment in U.S.-based Convene. Earlier this year, QuadReal invested in another U.S. flexible office company called Industrious.
QuadReal would not disclose the amount. But the B.C. pension fund, along with other investors such as global real estate owner Brookfield Property Partners, helped Convene raise US$152-million. Convene said it now has US$260-million through several rounds of fundraising.
Convene, like other co-working businesses, signs long-term office leases and then subleases the same space at a premium. The latest fundraising effort is designed to help Convene expand outside of the United States, where it has about 20 locations, most of which are in New York.
Although Convene has chosen the British capital of London as its first foreign location, it has identified Vancouver and Toronto as places ripe for expansion.
“Toronto, in particular, we have actually actively been looking at some projects,” said Ryan Simonetti, Convene’s co-founder and chief executive.
However, Convene does not expect to set up shop in Toronto until after 2020 when some of the city’s new skyscrapers start opening their doors. Currently, Toronto office vacancy rates are the lowest in Canada and the United States, and Convene said it typically leases space in new buildings or properties that are being overhauled.
Convene could eventually lease from QuadReal in Toronto. The pension fund owns some of the most-sought-after office towers in Toronto. Convene already leases from one of its other equity investors, Brookfield.
Property owners such as QuadReal are witnessing the proliferation of shared offices, which has became popular with tech startups and other workers seeking temporary office space.
WeWork, the highest-profile co-working company, is now the biggest corporate occupant in London and one of the largest in Manhattan. At least eight co-working companies have set up offices in Canada, including WeWork and others such as Workhaus, IQ and Workplace One.
Convene offers meeting spaces for as short as one hour and its flexible offices cater to large companies that will commit to a minimum of one year. Canadian organizations that rent space from it include CBC Radio-Canada, McGill University and the federal government to house some of its consulates, according to Convene.
Most co-working companies offer items such as coffee, kitchens and meeting spaces. Convene offers a dedicated kitchen and chef.
“It would be no different than working in a boutique luxury hotel,” Mr. Simonetti said.
Other Canadian pension funds have been experimenting with co-working. Oxford Properties, the real estate arm of Ontario Municipal Employees Retirement System, is operating its own co-working office in Calgary called “OxWorx.” It already leases to WeWork in Toronto and Boston.
Ivanhoé Cambridge, the real-estate arm of the Caisse de dépôt et placement du Québec, leases to Convene and recently made an investment in domestic co-working firm Breather. The pension fund is also exploring a revenue-sharing model that would allow it to hire a co-working operator to run the space instead of leasing the space directly to the co-worker.
Rachelle Younglai