Codi’s downtown San Francisco headquarters looks like a typical startup office, from the open-concept floor plan and video-calling conference room to the snacks and sparkling water in the kitchen.
But it also works as a proof of concept for what CEO and co-founder Christelle Rohaut sees as the future of how commercial real estate operates in a remote working world.
The 19-person startup uses the office four days a week for its business activities. On Thursday, however, a public relations firm takes over in a timeshare model that Rohaut says has become increasingly popular with Codi users. Currently, approximately 30% of Codi customers take up space temporarily, compared to 70% who rent full-time.
“We can bring in different businesses on different days, which helps generate revenue, bring spaces back to life, and align more with how businesses operate today,” Rohaut said.
Overall, there is very little interaction between Codi and his co-worker outside of friendly exchanges of baked goods. The startup provides lockers to secure personal items.
What is Codi?
Codi operates a marketplace platform that lists commercial properties it is renovating and preparing for rental. He also functions as an office manager who takes care of furniture, cleaning services, and utilities, in addition to creature comforts like snacks and coffee.
Instead of the five- or 10-year terms common in commercial leases, Codi offers deals as short as six months, with rents pro-rated based on the amount of office space needed – similar to renting an Airbnb or a holiday home, but for an office space. Custom options such as standing desks, monitors and whiteboards are available at an additional cost.
“We talked a lot about how demand for office space has plummeted. That’s true, but I think there’s still a strong demand for specific, turnkey, flexible office types,” Rouhat said.
San Francisco’s commercial real estate industry is facing a vacancy crisis which was kickstarted by the pandemic-induced shift to remote working. The return of office workers to San Francisco has lagged behind most other major cities in the United States, and vacancy rates are hovering around 25%, its highest level ever.
Codi’s model is based on revenue sharing with landlords, who benefit from reduced vacancy times and reduced renovation expenses. The rents consist of an all-inclusive price which includes base rent, utilities, office management services and weekly cleaning.
“Our pitch to them is this: it’s better for a business to use space now that really loves it, even if it’s for a short time,” Rouhat said, adding that there’s still skepticism. healthy in the industry. “More than ever, businesses need flexibility, ease and speed, but we need to partner with owners who are open to it.”
Currently, Codi lists approximately 130 spaces in 50 buildings in the Bay Area and New York. The company recently raised a $16 million Series A round led by Andreessen Horowitz. Rightly, the venture capital firm announced its own transition to a “cloud-based” model earlier this year.
Codi was founded in 2019, born out of Rohaut’s urban planning studies at UC Berkeley and his interest in the circular economy, the idea that existing resources should be shared, reused and recycled in an effort to combat environmental impacts and waste.
The initial concept was something like an “Airbnb for the office” that allowed remote workers to rent space inside private homes. But then came the pandemic and a major pivot as underutilized space shifted from residential to commercial.
In order to differentiate Codi from competitors like WeWork and Industrious, Rohaut said that many potential clients are “looking to get away from the coworking experience with their own private office.” The company’s bread and butter are offices ranging from 1,000 to 5,000 square feet, intended to accommodate fast-growing businesses that may need to regularly assess their space needs.
Elliot O’Connor, co-founder and CEO of Frontier, a startup that connects companies with freelance AI talent, used Codi to find flexible office space that he rents out three days a week.
O’Connor found himself basically stuck in a Vancouver Airbnb during the pandemic due to travel restrictions. When he was finally able to move to San Francisco months later, he found himself isolated in his apartment as he tried to get the business off the ground and began looking for ways to bring his team together in person.
At first it kicked in the tires of a traditional lease, but the complex network of stakeholders and legwork involved in finding a space proved overwhelming. Codi provided a streamlined process with more unique options in neighborhoods outside of downtown. Rather than the six months it typically takes to sign a lease and occupy a space, Codi said his move-in time was around four weeks.
O’Connor now rents ground-floor office space in the marina on Mondays, Wednesdays and Thursdays for a handful of local employees at a cost of around $1,500 per month. Instead of being locked into a one-year lease in the former art studio-turned-office, he has the option to renew quarterly.
“It’s very relaxed and residential,” O’Connor said. “One of the great appeals of their model is that they make non-traditional commercial real estate more accessible and they’re a lot less straightforward than WeWork.”
Commercial real estate is notoriously a slow and old-fashioned business, but Rohaut believes the pandemic has already fundamentally changed what tenants are looking for. Now, she says, it’s time for the industry to react.
“In five years, Codi or a similar model will become the norm,” Rohaut said. “My hope for the future is that we really get to that transition and real estate is completely freed from its archaic model of long-term office leasing.”
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