Owner of Ottawa co-working spaces seeing signs of recovery in hard-hit industry

Maher Arar
Coworkly owner Maher Arar says demand for co-working space plummeted during the pandemic and has yet to recover. File photo

One of the world’s largest co-working companies made headlines this week when it sought creditor protection in Canada – but some owners of local on-demand office spaces say their business is slowly starting to rebound after measures aimed at containing COVID-19 hit the industry hard earlier this summer.

“As an industry, I think we’re already recovering, but not at the rate that people would expect and people would want,” said entrepreneur Maher Arar, who owns two such facilities in Ottawa under the Coworkly banner.

Arar, who shut down his business in late March and reopened in mid-June, said his revenues have been steadily rising, adding he’s adding new members on a regular basis and inquiries continue to pour in. 

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The veteran entrepreneur owns the building that houses his facility in Vanier and is receiving relief under the federal government’s rent subsidy program for the Coworkly location he operates in leased space in Westboro, and Arar said he’s managed to keep his head above water by keeping a lid on expenses. 

He said he thinks the “bleeding will stop” for the industry as a whole in the first quarter of 2021 provided there’s no “huge” second wave of COVID. 

“I think once a vaccine is found, the floodgates for co-working spaces will be wide open.”

Kane Willmott, co-founder and CEO of Toronto-based iQ Offices, also said business is picking up at the 13,000-square-foot co-working facility his company opened at 222 Queen St. early this year.

“We are seeing increased demand and expect more in September and October as those are traditionally two of our busiest months of the year,” he said in an email to OBJ.

However, the economic fallout from the virus appears to have taken its toll on some co-working providers.

IWG, which owns on-demand office brands Regus and Spaces, said this week it has reached an impasse in negotiations with some of its landlords after the pandemic forced many occupants to either work from home or offer late payments.

Without creditor protection, the company says it could face a “lockout” from Canadian landlords that could be triggered if the U.S. guarantor for 39 leases files for insolvency in the United States, a move that would affect 3,000 of the 15,000 Canadian occupants. The other locations operate under different leases.

IWG currently operates four co-working facilities in Ottawa under its Regus and Spaces brands and plans to open another 55,000 square feet of on-demand office space at the Zibi mixed-use waterfront development early next year. 

A company spokesperson told OBJ he couldn’t comment on the future of the Ottawa locations because the matter is before the courts.

Arar said he’s “not surprised at all” to hear that some co-working spaces have defaulted on their rent. 

“Every single co-working space has been affected in one way or another,” he added. 

‘Next 12 to 24 months are going to be a challenge’

Bruce Wolfgram, a principal at Ottawa’s Proveras Commercial Realty, said it’s a tough ask right now for co-working providers to convince wary clients that occupying a desk next to a complete stranger is safe.

“You’ve got many different entrepreneurs in one big office environment,” he said. “You don’t know them, and you don’t have the same feeling of comfort which you may have had in a conventional office space. 

“I would definitely say the next 12 to 24 months are going to be a challenge. It remains to be seen if all the current co-working spaces are able to survive.”

Still, Wolfgram said he remains “bullish” on the industry’s long-term future.

“The reasons why they were popular still exist,” he said. “That is not going away ​– it’s just being put on hold until we get a vaccine for COVID. I don’t think the majority of people want to work in their bedrooms forever.”

Other real estate industry insiders agree. They argue that co-working spaces could play a valuable role in easing workers back into the office environment once COVID-19 abates and companies start thinking about reopening. 

Shawn Hamilton, managing director of CBRE’s Ottawa office, told OBJ earlier this year that some employers could opt to split up their teams, allowing some workers to return to the office while others remain at home or set up in a co-working facility.

“It wouldn’t surprise me if people used co-working space to help them stage back to work,” he said. “I do think there will be a need and demand for the flexibility they offer.”

– With files from the Canadian Press

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