Bay Area Real Estate Start-Up Leaps Pond to Land in Australia

By Sharon Simonson

An Australia-based real estate investment trust has led the third round of venture funding for San Francisco-based LiquidSpace Inc., a real estate-centric start-up that has created a virtual national market for short-term users and suppliers of space.

San Francisco Downtown areaThe GPT Group and existing investors Shasta Ventures, Floodgate Fund and Greylock Capital collectively committed $6 million to LiquidSpace, which was founded in 2010 in the wake of the Great Recession as one way to help landlords and space users to put unneeded real estate to income-producing work by renting it for intervals as short as a quarter-hour.

GPT has been listed on the Australian stock exchange since 1971 and is the second-largest listed property owner in Australia. Its portfolio is a mix of offices, retail and industrial space. The company has 900,000 square meters (about nine million square feet) in 20 large office towers nationwide and another approximately 1.17 million square meters (12 million square feet) of shopping centers and mall space.

Beyond being an investor in LiquidSpace, GPT plans to partner operationally with the company in Australia, offering the extra spaces at its own offices and retail centers for the beginnings of the San Francisco company’s inventory there, GPT’s Sam Nickless said. Another part of its job will be outreach to other property owners.

“We will be the people on the ground. We will have people going out to develop relationships with those who have space, talking to tenants and also talking to workers, almost a business-development platform [for LiquidSpace] in Australia,” he said. Ultimately it is expected that GPT would also help LiquidSpace with expansion into greater southeast Asia in cities such as Hong Kong and the Singapore city-state.

Nickless, who handles GPT corporate development including strategy and new business creation, will serve on the LiquidSpace board of directors along with Tod Francis of Shasta and Mike Maples of Floodgate.

The use of retail centers would be a departure for LiquidSpace, which has focused on providing work and meeting spaces in traditional office buildings as well as hotel conference rooms. But Nickless said GPT anticipates the shop space would work beautifully. “We believe that there is a real possibility to use some space at retail centers as co-working spaces,” he said in an email message after a telephone interview with The Registry from Australia. “They are close to where people live, have lots of parking and other amenities. We would like to make this part of our inventory on LiquidSpace.”

Nickless declined to say what part of the $6 million came from GPT or what ownership it bought for them in LiquidSpace, saying that there was a desire to keep the valuation of LiquidSpace confidential. “The way it works at the moment is that we have a minority interest, and it is enough to justify us having a seat on the board—enough to matter,” he said.

Before the current funding round, LiquidSpace had raised $1.3 million in a seed round of funding and $3.785 million in a subsequent round in May 2011.

The relationship between GPT and LiquidSpace has formed rapidly, beginning in September after the Australian real estate landlord launched its own research into creating a platform that would capitalize on and cater to the mobile worker.

Co-working locations are springing up in Australia but especially in Sydney and Melbourne, Nickless said. Australian professionals, including increasing numbers of “freelance consultants,” travel frequently among Sydney, Melbourne and Brisbane on the east coast and also to Perth on the west coast. “But before we started something ourselves, we spanned the globe.” What it found was LiquidSpace.

It is not the first seemingly unorthodox investment for the Australian property company. Last year it announced it was investing in a new parcel lockers system aimed at online shoppers where they can retrieve their goods in shared-use lockers located in GPT office foyers and other public spaces owned by GPT.

GPT is not the first Australian property company to head to the Bay Area. The largest industrial property group listed on the Australian Stock Exchange, the Goodman Co., said in June that it and a partner would develop a 374,00-square-foot warehouse in Oakland with a value of $42 million upon lease.

West Coast Commercial Real Estate News