CANOPY’s CEO on the Growing Demand for Boutique Coworking Spaces
As hybrid models prevail, Steve Mohebi weighs in on the Bay Area’s need for flexible workspace.
Steve Mohebi, CEO & Co-Founder, CANOPY. Image courtesy of CANOPY
With hybrid work culture slowly becoming the norm, an increasing number of commercial real estate landlords and investors are expanding their flex office portfolios, lured in by the subsector’s projected growth. Boutique coworking spaces with modern finishes and high-end design are among the most in demand today.
In the Bay Area, one network of shared workspaces is expanding fast. CANOPY currently operates three locations in San Francisco and another one in Silicon Valley, all offering personal desks, shared workspaces, conference rooms and private offices. Most recently, CANOPY opened in Springline, the 6.4-acre live-work-play destination developed by Presidio Bay Ventures in downtown Menlo Park, Calif.
To find out what his vision and plans are, we asked CEO & Co-Founder Steve Mohebi to share his thoughts on today’s office market landscape, and illustrate why boutique coworking spaces make sense for office landlords across the Bay Area.
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How has office vacancy fluctuated in the San Francisco Bay Area in the past couple of years?
Mohebi: Vacancy continues to climb throughout the San Francisco Bay Area, but a large percentage of the space that’s considered vacant is technically occupied and paid for, it is actively being marketed for sublease due to lack of utilization. This highlights the overall mega trend: reduced utilization and acute need for flexible workspace solutions in the prevailing hybrid work model.
What are the main challenges that office landlords in the area face today?
Mohebi: Office landlords continue to face a flurry of challenges due to the lingering effects of the pandemic and the current consequences of the economy. For companies who are leasing space, shifts in staffing and hybrid schedules continue to fluctuate, preventing them from committing to long-term, large-scale offices. For the spaces that remain vacant, plans for converting to residential or other uses can be incredibly difficult and costly, leaving landlords with empty towers for months and years on end.
Most of these challenges are not going away anytime soon, so it is crucial that landlords continue to be creative and work with the right partners to find long-term solutions for filling vacant space. The acute need in the prevailing hybrid work model is flexible workspace solutions that enable executives to right-size their footprint to optimize facilities expenses—often the second-largest line item of any Bay Area business, behind payroll.
Pacific Heights, CANOPY’s coworking space at 2193 Fillmore St. in San Francisco. Image courtesy of CANOPY
What is CANOPY’s business model and what sets it apart from other flex workspace solutions?
Mohebi: We firmly believe that flexible, shared workspaces are the answer to the challenges facing both landlords and tenants today and in the future. The demand side is acutely tilting toward flexibility as a need to have, not a nice to have. The supply side, namely landlords, are holding outdated products—large blocks of office space—that are rapidly becoming obsolete. Our turnkey solution provides landlords with an immediate solution to this dilemma with a flex product that meets the prevailing needs of the market.
The most notable is our commitment to thoughtful, elevated design throughout each space… We design each space with highly curated colors and textures, while enhancing productivity with elegantly ergonomic furniture and abundant natural light.
Our commitment to sustainability and design, paired with more intimate workspaces in key locations across the Bay Area, and offered via flexible membership options, has ultimately created an ecosystem of accomplished and aspirational leaders from all industries. From downtown San Francisco to the heart of Silicon Valley, we’ve designed CANOPY to be a place for top talent to flourish, to which landlords and members have been receptive before, throughout and since the pandemic.
How is your model meeting the needs of both landlords and tenants in the Bay Area?
Mohebi: For landlords, we create a seamless experience, handling all responsibilities related to leasing, outfitting and managing the space, all under a long-term contract. For our members, CANOPY is a flexible, convenient solution for their fluctuating needs. As companies grow or downsize, transition from remote to hybrid, our workspaces are able to accommodate without compromising on the quality of the space or experience.
Overall, it’s crucial in today’s hybrid work environment that our workspaces provide an elevated experience that cannot be replicated by a home office. From on-site amenities like a private garden and integrated chef-driven restaurant to being in the proximity of great retailers and public spaces, each CANOPY location is designed to be an intentional, productive place to be at any time of the day.
Financial District, CANOPY’s coworking space at 353 Kearny St. in San Francisco. Image courtesy of CANOPY
Who are CANOPY’s tenants? What type of tenants are looking for boutique coworking spaces?
Mohebi: Across all four of our locations, we house members from a wide range of industries, mostly from financial services, but also design firms, law firms, professional services, tech start-ups, nonprofits and foundations and more. We are very proud of the diversity in our membership base, accentuated by a near gender-balanced community—a rarity in the Bay Area.
These types of companies are typically looking for trophy, Class A space, but in today’s modern work environment, they’d like the flexibility and access to amenities that most spaces can’t provide. The competitive options are formulaic offices in cavernous spaces built for scale. With our boutique offerings and beautiful spaces, we’re able to attract top talent from each of these industries, creating an unmatched networking experience for our members.
READ ALSO: A Glimpse Into NYC’s Booming Boutique Coworking Scene
Financial District. Image courtesy of CANOPY
How have your San Francisco locations performed last year?
Mohebi: 2022 was a fantastic year for CANOPY, bringing in the highest revenue in our history and setting us up for a record year in 2023. Our most recent location opened in November 2022 in the heart of Silicon Valley and was more than 50 percent presold prior to opening day. We’re proud of the occupancy levels we’ve maintained compared to the rest of the market and look forward to our continued growth in 2023.
Why did you choose Springline? What made that project a good fit for a CANOPY location?
Mohebi: We chose this location because Springline is conveniently located just steps from the Caltrain Station and adjacent to downtown Menlo Park, bringing new energy to the heart of Silicon Valley through hospitality-driven modern residences, a dynamic culinary roster, and creative offices for growing businesses and entrepreneurs. Lastly and most importantly, Springline is an on-brand community committed to excellence in design, sustainability and the overall visitor experience. This is reflected in its commercial success with office rents setting national records.
Please tell us more about member benefits at your Menlo Park boutique coworking space.
Mohebi: At our Menlo Park location, CANOPY members benefit from the wider Springline development with amenities including nine chef-driven restaurant concepts, a fully equipped fitness center, a golf simulator, an entertainment lounge, a community dog park and nearly 2 acres of public outdoor space. The walkable neighborhood is home to hundreds of modern apartment residences, bringing the mixed-use community to life with constant energy and activity. Members also have complimentary access to amenities including a full-time, full-service concierge, a programmed events schedule and a heated and misted private garden workspace.
Why do you believe that this model is the answer to the future of office space?
Mohebi: The country’s office market continues to face an uncertain future as challenges around filling vacant space and fulfilling tenants’ demands persist. We’ve struck a balance through our tailored, trophy office spaces that provide development partners with stability and members with flexibility. The way we handle leasing for the landlord and office management for the members allows us to de-escalate the decision on both sides, creating a long-lasting solution that has proven successful.
Can you share anything about your plans for this year? Do you intend to open boutique coworking spaces in other areas of the country?
Mohebi: We’re currently exploring new opportunities to expand CANOPY across the country as we assess the right spaces and partners to grow our business while maintaining the same level of quality and attention to detail that we’re known for. We look forward to announcing more details as these plans come to fruition this year and beyond.
What are your predictions for the Bay Area coworking sector in the upcoming 12 months?
Mohebi: We expect continued proliferation as more and more of the office sector reaches for a flexible workspace solution amid the prevailing hybrid work model. CANOPY stands alone as the only premium option to meet the needs of the upper quartile of the market—both for flex office as well as other would be direct lessees who seek short-term flexibility in the uncertain market ahead.
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