Aiming At WeWork, Knotel Says It Will Double S.F. Footprint
After notching a $1B valuation earlier this week, Knotel told Bisnow it now plans on doubling its San Francisco footprint over the next four months.
to capture its ample demand for office space.
By the end of the year, the flex office provider expects to reach 1M SF in San Francisco through leases in the city's Financial District and South of Market area. That would put Knotel within reach of coworking giant and competitor WeWork in the country's most coworking-saturated city.
Founded in 2015 and based in New York City, Knotel had 2.5M SF of office in its hometown as of late June and has invested heavily in many of the world's biggest cities like London and Paris. The flex workspace provider builds and operates custom workspaces for companies with 50 employees or more and just closed on $400M in Series C funding.
As of late May, it had about 300K SF of office space in San Francisco to WeWork's approximately 1.5M SF, according to Cushman & Wakefield. Now, it has about 500K SF in the city, according to Knotel Global Vice President of Growth Trevor Clark
"The goal for San Francisco is to be number one or number two," Clark told Bisnow.
He points to San Francisco's lack of available space relative to its continually ravenous demand as the reason for Knotel doubling-down on the city.
"In San Francisco, even the largest companies in the world can't really build a coherent real estate strategy that matches there talent acquisition plans," Clark said. "And we've been a valuable resource for them in the Bay Area."
Clark says the company has enjoyed a 33% price increase over the last two years and an average sublease length of over two years now, with three- to five-year subleases common now in most markets.
"The plan is to be in the 30 largest cities in the world, at least by enterprise penetration, and we're about halfway there," he said. "We went from doing the classically disruptive thing of somewhat undercutting the market to get penetration to now signing agreements at market rate and charging fair market for the service."
