A few months after the grand opening of its San Francisco Ikea store, Ingka Group has unveiled Hej!Workshop, its first-ever coworking concept in the U.S.
It’s a counterintuitive bet by one of the few private entities investing heavily in a beleaguered downtown market. Ikea, which has largely bucked the broader decline in big-box retailers, is focused on diversifying past its core business of suburban furniture warehouses.
Enter San Francisco: In 2020, a subsidiary of Ingka purchased the vacant 6x6 shopping center at 945 Market St., intending to transform each floor into its own unique destination.
Hej!, on the fifth floor of the building, spans 46,000 square feet and can accommodate up to 500 people. During a visit on a recent weekday afternoon, the space was only about 20% occupied, but workers could be spotted using common areas to chat and interact.
Ikea is located in the Mid-Market neighborhood, which was once considered a poster child for the shared economic benefits of the tech boom. Now, it has become a cautionary tale of the industry’s post-pandemic retreat. Companies like Uber, Block and Twitter have scaled back their presences, and issues such as drug use and homelessness have worsened.
Research from real estate firm Kidder Mathews tagged the total availability rate of office space in Mid-Market at 59.4%, the highest of any San Francisco submarket.
“The amount of suffering going on outside is tough to watch sometimes,” said Mike Faulkner, general manager of Hej!, which operates in partnership with coworking company Industrious. “But it doesn’t affect what’s going on here. Most people are able to put their heads down and focus on what they want to.”
There are no cubicles at the coworking location. Instead, private offices, varying in size, are encased in glass that offers a mix of privacy and visibility. Each of the spaces bears a resemblance to the staged rooms seen in Ikea stores with minimalist styling and a color scheme of pastel colors and Gatsby bronze.
In the coming months, a Nordic food hall with a focus on local and organic offerings will open on the ground floor, and plans for a fitness center on the fourth floor are already underway. Members of Hej! receive special discounts for both.
“The idea is for someone to be able to spend their entire day here without leaving,” Faulkner said. “The longer they’re in an area, the more likely they are to spend money in it.”
Prior to landing at Industrious, Faulkner managed coworking spaces for IWG, a main player in the industry. Even after WeWork’s dramatic collapse, Faulkner argued coworking offices are in a better position to recover than traditional office properties.
“More people are preaching flexibility than ever before,” Faulkner said. Even though traditional office rents have fallen drastically, the cost of building out an entire office is still more expensive than paying for something that is turnkey like Hej!
Faulkner said the coworking space is focused on serving startups of up to 50 employees or smaller clusters of remote workers that need a satellite office.
Industrious, which also operates three other locations nearby in San Francisco, offers month-to-month rates as well as leases up to three years. Members can sign up for access to the common areas only in Hej! for $400 a month. Offices start at $1200 a month, and suites go for $14,500 a month.
The idea is for people to only pay for what they need, Faulkner said. The small private offices are suitable for individuals or small teams, and the suites are complete with meeting rooms for larger groups.
Everyone on the floor has access to the common areas such as the lounge, the library (which strangely enough, doesn’t have books), the two kitchens, the salmon-colored events room and the 20 phone booths.
‘You can just lose track of time here’
Furniture, as one can imagine, is not a problem.
Kyle Keepes, who moved to San Francisco from Nashville in January, rented a small office for himself at Hej! that he filled with furniture and decorations from the Ikea store downstairs. Behind his swivel chair is a self-watering plant and on the wall are banners representing all the places he’s lived: Indiana, Tennessee and now California.
Keepes works remotely for a private equity firm that pays for the space because it doesn’t have a San Francisco office. In choosing between Hej! and other coworking options, Keepes said he was drawn to Industrious' attention to customer service and quality of amenities, such as free daily breakfast. After working in the common areas for a few weeks, Keepes decided to upgrade to a private space.
“I was going crazy taking calls from my little studio apartment,” he said. “And it’s hard working in shared areas since I’m a really loud talker.”
Around the corner from Keepes’ office is an artificial intelligence incubator called Amid Labs, which was brought into Hej! rent-free in an effort to market and activate the property.
Amid Labs offers 12-week fellowships for AI entrepreneurs from around the world to come to Hej! and work on companies or products together.
“Even if they’re in competition, we want AI creators to be in the same space together since the technology is evolving so quickly,” said Grant Long, who co-founded the incubator after a career in startups in New York and Shanghai.
“When people hear [we’re a new incubator], they assume the space is going to be shitty,” Long said. “But they get here, and they are just blown away.”
Long and his team host weekly panel discussions and networking events at Hej!, which he said are meant to connect fellows with investors while providing a place for the AI community at large to gather and exchange ideas. Last weekend, Amid Labs hosted a daylong hackathon.
One of the people grinding in the office that entire time was Arta Koroushnia, an entrepreneur from Ottawa, Canada, who moved to San Francisco earlier this year to take part in the AI revolution.
From 8 a.m. to 6 a.m. the next day, Koroushnia sustained himself on the complimentary craft teas in the kitchen and ate the fresh fruit put out daily by staff.
“If you’re not careful, you can just lose track of time here,” he said, before turning his attention back to his three monitors of code.
Correction: This story was updated with the proper spelling of Lauren O’Halloran's and real estate firm Kidder Mathews' names.