As coworking giant WeWork continues to work its way through bankruptcy and office occupancy rates remain well below prepandemic levels, national workspace operator Workbox continues to grow.
After unveiling new locations in Chicago and Dallas this month, the Chicago-based startup announced a $17.5 million Series A raise with a follow-on option for an additional $5.5 million.
Led by Chicago Atlantic, the funding will be used to accelerate the company's growth across the United States. The company has now raised more than $25 million to date.
With 10 locations across five cities, including five in Chicago, Workbox plans to add another 10 nationally by the end of 2025.
John Wallace, co-founder and CEO of Workbox, said flexible office space has the chance to drive the recovery of office real estate moving forward and praised Chicago Atlantic as an investor that can look past office market headlines to see the company's true value.
"If anything, we're helping with the recovery of the office market and we're not taking on fixed-cost liabilities," he told Chicago Inno. "Demand for flexibility has never been stronger, and we're seeing throughout our current portfolio [that] office owners are looking for solutions to meet more flexible demand from occupiers."
Workbox's stabilized assets are 85% to 90% occupied across the portfolio, according to Wallace.
"If you're headquartered in New York, the days of having a single 50,000-square-foot location in New York City are behind us. You have employees in Denver, Austin, Seattle and Nashville, and that's really driving demand in flexible office," he said.
Workbox targets small early- and growth-stage businesses.
"They don't have the resources to sit at home for an entire year. They want to collaborate in person and that helps with retention," he said. "Even if large companies are bringing people in five days a week, they're still looking to get shorter-term leases with landlords. They're still trying to keep flexibility because the way people work has shifted."
Workbox is opening at a former WeWork location in Fulton Market, which was among several spaces WeWork announced it would not keep last month.
"We've raised smaller rounds, but we see a big opportunity in today's market. If we've had one soft spot, it's been our balance sheet and this solves our balance sheet. It allows us to be a little more front-footed instead of doing one-off deals," Wallace said.
