EXCLUSIVE: Coworking Company Cross Campus Continues Expansion After Acquiring DeskHub

Aiming to be a serious player in the growing flexible office industry, a Southern California-based coworking company has its sights set on rivaling WeWork and Regus.

As part of a broader strategy to expand its presence in the Western region, Santa Monica-based Cross Campus, a Lowe-backed boutique flexible office and coworking company, has acquired coworking firm DeskHub.

Cross Campus officials did not disclose the acquisition price of San Diego-based DeskHub, which had two locations.

As part of the deal, former DeskHub owner Jay Chernikoff will join Cross Campus as its chief marketing officer, responsible for marketing the company and broker partnerships. The two DeskHub locations will be rebranded as Cross Campus, Cross Campus CEO Ronen Olshansky said.

“Last year was a phenomenal year for us,” Olshansky said in an interview with Bisnow at Cross Campus’ South Bay coworking facility in El Segundo. “We were really focused on growth and in getting this platform ready for scale. We went from three locations to seven locations."

The purchase brings Cross Campus’ total locations to seven across two states — California and Arizona — and approximately 220K SF under management.

Cross Campus has five facilities in and around the Los Angeles area, and DeskHub adds new coworking locations in Little Italy in San Diego and in Scottsdale, Arizona. 

With the acquisition, the company will now serve about 2,500 members, including individuals, small and midsize businesses, and larger enterprises. Tenants include Microsoft in Santa Monica, Factset in downtown Los Angeles and PeerStreet in South Bay.

Growing Market

Cross Campus’ move highlights the growing flexible office and coworking market. 

Though it makes up less than 1.5% of the Los Angeles office market today, the flexible office/coworking space is growing in the city. 

Los Angeles is the second-most-popular flexible space and coworking hub nationally, with flexible space operators taking up 3.54M SF of office space, CBRE reports. New York ranks No. 1 with 9.2M SF of office space taken up by flex office operators and coworking companies, according to CBRE. 

Since 2008, coworking space has grown by 500% in Los Angeles, JLL reports.

Nationally, a Newmark Knight Frank study released in December examining coworking's impact at 24 U.S. metros found coworking occupies nearly 50M SF of office space or about 1.4% of office inventory.  

“When you look at the real estate ecosystem and some of the big firms, they are really coming around to the idea that this product — flexible, experience office — is not just a niche. It’s not just a fad," Olshansky said. "It’s attracting customers across industries. There is a lot more validation now that this could be 20% to 30% of the market a decade from now. Maybe quicker.”

Olshansky said while the flex office market is growing, it is also fragmented. Aside from power players such as WeWork, Regus, Industrious and Convene, there are a lot of small independent operators.

The Instant Group, a flex office provider, found that independent operators make up 93% of the nation’s coworking market.

Olshansky believes the market is ripe for consolidation in the next few years.

"[The flexible office/coworking market] is not very sophisticated and it’s getting more and more competitive," he said. "Customers are demanding more. The market is maturing."

Olshansky said along with the acquisition of DeskHub, this is going to be a big year for Cross Campus as it looks to expand its presence in the Western region.

Olshansky said the company just finished a strategic round of investments led by Lowe, and included investors McGuire Builders, Continental Development Corp. and a syndicate of investors out of Asia.

He said his company is actively looking to acquire two more coworking companies as it heads into an institutional Series B round later this year with a target of $50M raised.

“We’re looking to be the company that redefines the office experience for companies of all sizes and industries,” Olshansky said. “There is a pretty radical change in the way companies are using space not just for work but for events and gatherings of their team. This is a new model that is more flexible and capital efficient than the lease structure. 

“We think more and more are benefiting from a new experience-focused environment that contributes to their workers' health and productivity. We think we have a platform that will scale and be at the forefront of those changes."

CORRECTION, JAN. 23, 9:40 P.M. PT: A previous version of this story misnamed one of Cross Campus' tenants. The story has been updated.