CANOPY TALKS

SF Business Times: High-end Boutique Co-Working Firm Opens Third San Francisco Outpost

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Co-working company Canopy wants to be the Tesla of co-working and shared space.

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The San Francisco-based company just opened its third location in July continuing its focus on high-end co-working spaces with curated, custom furnishings and sleek interiors.

The latest Canopy outpost at 353 Kearny St. helped transform a dilapidated, 10,000-square-foot office building into five floors of private offices and conference rooms bathed in natural light. “We’re filling up,” said Yves Béhar, a designer who co-founded Canopy with Steve Mohebi and Amir Mortazavi. “It’s not just a design or conceptual strategy. It’s a business strategy.”

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The company’s monthly fees for a private office start at about $2,000, which can be double what competitors charge.

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Canopy’s members are willing to pay a premium for design, privacy and services ranging from wifi and coffee to speaker series and events, he said. Béhar likened it to people who pay more for a boutique resort than say a large chain hotel.

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The company started out with 2,800 square feet in 2193 Fillmore St. in Pacific Heights. In 2018, the company opened up its second location in 11,000 square feet at 170 Columbus Ave. in Jackson Square, where it is currently expanding to double its footprint.

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Canopy’s spaces are small compared with other shared office and co-working operators including WeWork, Knotel and Breather, but that’s the point, Béhar said. Each of Canopy’s locations features a custom color palette and format.

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“There’s a difference between cookie-cutter businesses that replicate the same formula in all their locations and ones that are tailoring each space to a different location and demographic,” he said. Béhar, a Swiss designer who founded San Francisco-based industrial design and brand development firm Fuseproject, also designed some of the furniture used in all Canopy locations. Mortazavi also works on the design and Mohebi oversees finance and operations.

Canopy’s landlord on Kearny Street is Brick and Timber Collective, a firm that specializes in renovating historic buildings in Jackson Square and the north waterfront in San Francisco. The investor paid $6.8 million for the property last year.

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The 1907 building sits at the corner of Kearny and Pine streets, an intersection that abuts 555 California, one of San Francisco’s most well-known office buildings, and 500 Pine, the glass-clad headquarters of fintech startup Blend.

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“We are really big fans of Canopy’s design,” said Glenn Gilmore, founder and president of Brick & Timber Collective. “They have a uniquely thoughtful approach to every building and we were enthusiastic to see what they had in store for 353 Kearny… It presented the opportunity to restore a beautiful building, on an important corner, with meaningful historic features.”

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Currently, about 5 percent of the nation’s office space is controlled by co-working, incubator and shared office space operators, a figure that is expected to reach 30 percent by 2030, according to a recent report from real estate brokerage firm JLL.

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Many growing companies don’t want to have to deal with landlords, lawyers, architects, contractors, furniture sellers, movers, and other vendors just to get an office up and running.

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“We take all the headaches out of designing your own space on your own,” Mortazavi said.

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Canopy’s Kearny Street location only offers private offices and full-floor options and no “hot desks,” which are shared areas in co-working offices that any member can work from. Member companies in that location range from one to 35 workers.

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Shared desks appeal to more of the freelance and small start-up crowd, whereas the private offices are geared toward the shared or flex office space segment of the market, Mohebi said.

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Flex or shared office space offers ready-to-move in office space at more flexible lease terms than a traditional direct lease, he said. Canopy requires a six-month minimum commitment whereas a landlord might ask for a commitment of several years.

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Canopy’s Kearny Street location is already more than 90 percent occupied. The company’s other locations are at capacity. In all, the company has more than 500 members at its three locations and could reach up to about 700 members when the Jackson Street expansion is complete early next year.

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Mohebi said Canopy’s locations are profitable from the start because they generate revenue immediately.

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Canopy wants to continue expanding in San Francisco and is looking to add another two locations within the next year.

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Co-working “is a very large market,” Béhar said. “We’re not interested in the low or mid-level. We think we have a unique position in the market.”

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As Initially Posted in the San Francisco Business Times.

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