2019-05-05 — nytimes.com
Westside Pavilion, a dying mall in Los Angeles, ticked all of the boxes for Hudson Pacific Properties... as Hudson Pacific started planning to outfit the mall, along came Google, a Hudson Pacific tenant elsewhere in the city. "The stars kind of aligned," said Alexander Vouvalides, the developer's chief investment officer.
The old mall would become new office space. The 584,000-square-foot Google complex, to be called One Westside, is projected to be finished in 2022 at a cost of up to $410 million.
The Westside Pavilion redevelopment is one of the latest examples of a nationwide trend in commercial real estate: the conversion of malls into office space. Offices are less risky than retailers, and in some cases they can generate foot traffic for the mall's remaining stores and restaurants.
The biggest beneficiaries of the conversions are co-working enterprises, like WeWork, which provide shared work spaces primarily to entrepreneurs, freelancers and start-ups. The highest concentration of co-working spaces in retail nationally is in malls, according to an August study by the global property company Jones Lang LaSalle. The same study predicted that co-working space in retail in general would grow at an annual rate of 25 percent through 2023.
"It used to be you wanted to be kind of a purist, and if you built a mall you just wanted specific mall tenants. In fact, mall tenants used to state things like that in their leases," Mr. Karp said. "In today's day and age, you've got to create a different experience."
Unibail-Rodamco-Westfield has co-working spaces in two of its malls. In Manhattan's Fulton Center, it has a partnership with WeWork, and it opened its own co-working concept, Bespoke, at Westfield San Francisco Center.
Cowork at the Mall, a New York-based start-up, plans this summer to open its first co-working space at Chicago's Water Tower mall in approximately 15,000 square feet that a Sports Authority once occupied. It is also planning two locations in the Los Angeles area.
The company originally assumed it would draw the most interest from smaller online firms that wanted a physical presence, said Mark Kennedy, chief strategy officer of Cowork at the Mall. Instead, the interest came from more established brands -- like Lego, Microsoft, Nike, Old Navy, Riley Rose and Samsung -- that told him they no longer needed larger footprints and multiple locations, he said
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