As CBRE’s flexible office provider bags its first London sites, we talk strategy with CEOs Andrew Kupiec and Paul Nellist
“We want to be an ingredient to the occupier, an ingredient to the assets, not necessarily blinking lights on the side of a building,” says Andrew Kupiec, chief executive of Hana, the standalone flexible office provider launched by CBRE late last year.
While he doesn’t say it explicitly, Kupiec is clearly seeking to differentiate the new flexible office offer from the likes of WeWork. And while the roots of the Hana name – which means “work” in Hawaiian, “flower” in Japanese and “happiness” in Arabic – have a touch of the WeWork vibe, the feel of the space is definitely more grown-up.
EG caught up with Kupiec and EMEA chief executive Paul Nellist as Hana announced its first three locations in London – at Nuveen Real Estate’s 70 St Mary Axe, EC3, LGIM Real Assets and Mitsubishi Estates’ 245 Hammersmith Road, W6, and Oxford Properties’ St Martin’s Court, EC4 – to find out more about the company and its global ambitions.
Changing nature of real estate
CBRE launched Hana as a standalone subsidiary towards the end of 2018. Kupiec says the launch was a direct result of conversations with CBRE clients about the changing needs of employees and the changing nature of real estate.
“More and more we kept hearing: how do I incorporate hospitality? How do I incorporate flexibility? And ultimately, how do I attract the right talent and retain that talent? And how does it all come together with technology?,” says Kupiec.
“For over a year we sat down with owners and occupiers around the globe and asked them what their needs were, how they wanted to address the changing world of work and how Hana could be a part of that.”
The result, says Kupiec, was that landlords wanted to be able to address the flexible needs of occupiers and capture market demand but wanted to do it in a traditional real estate market without being disintermediated.
And so Hana was born. The Hana model, says Kupiec, seeks to partner with landlords through a variety of methods, be that a traditional lease agreement, a hotel-like management agreement or a participation agreement.
“Owners want transparency into the operation of the building. They want transparency into the financials of how flexible space works and they’re looking to have a trusted partner at the table that can be consistent, and with the backing of CBRE, Hana is that choice,” says Kupiec.
From an occupier perspective, Kupiec says Hana is focused on large Fortune 1,000 companies with global footprints. Companies that want the exciting environment of flexible space but that also have more corporate requirements.
Owners want transparency into the operation of the building. They want transparency into the financials of how flexible space works and they’re looking to have a trusted partner at the table that can be consistent, and with the backing of CBRE, Hana is that choice.
A typical Hana space will be separated into three different products. Hana Team, which are dedicated suites for enterprise companies – private space that can be branded for the occupier; Hana Meet, meeting spaces that can be booked and used by both Hana clients and external users; and Hana Share, a traditional co-working space.
Hana Team will typically take up 70% of the space, Meet 20% and Share 5-10% of a Hana location.
Kupiec says the Hana offer focuses so little on the traditional co-working space as growth in flex space is primarily going to come from enterprise clients requiring dedicated space.
“We think that is very different to what is in the market today,” he says.
With two sites secured in the US – an operational 67,000 sq ft unit in Dallas, Texas, and an under-construction 60,000 sq ft property in Orange County, California – and three locations now secured in London, Hana has set its sites on global growth.
EMEA boss Nellist says there will be more growth in London but adds that regional expansion is also very high up on the firm’s to-do list, with Manchester a particular target.
“There’s a heavy and strong enterprise demand in Manchester, and we fully acknowledge the fact that it is the powerhouse of the North,” says Nellist. “It has got a very healthy and competitive flexi space landscape, so both of those combined tell us that there is demand for our product. There’s not a premium offering in Manchester, so there’s an opportunity for us for market share.”
Dublin is also a key target for Hana. “There’s a large concentration of US enterprise clients based in both Dublin CBD and on the outskirts, especially around the southern suburbs,” says Nellist. “Again, it’s an opportunity to bring a premium offering to a market that we think is lacking at the moment.”
Outside of the UK and Ireland, Berlin, Frankfurt, Amsterdam, Paris and Madrid will be targeted.
“I think there is also an opportunity for us to look at somewhere like Dubai,” adds Nellist. “We are noticing that there’s a strong demand for the flexi space product in general. It is a pretty immature market, but there’s certainly a desire from a landlord perspective to introduce something new to the market.”
The US too will obviously be a focus for expansion. Alongside Dallas and Orange County, Hana hopes to open sites in New York and along the northeast corridor, in cities such as Washington DC.
While both Kupiec and Nellist sometimes slip into WeWork-style flex language – “We’re here to anticipate the needs of our members, our guests, in any given moment and fulfilling those” – both seem acutely aware of the need for the structure of the traditional real estate industry to sit alongside the softer, hospitality element of flexible space provision.
“To run a successful flexible space environment takes a lot of back-end work, a lot of traditional real estate management and understanding of how properties work, and I think this is one of our key differentiators,” says Kupiec. “The expertise of our parent company and injecting all of that knowledge while we build the front end and hospitality layer is a really great combination.”
A great combination, or the perfect ingredient perhaps.