After a year of pandemic woes, 1776 is shuttering its DC location (again)

As of Friday, incubator and coworking network 1776 will no longer have a D.C. location.

Following a year in which a pandemic and economic downturn shifted many workspaces from offices to homes, 1776 will be closing its Lafayette Square location on April 30.

But fear not, DMV startups and desk-renters: This is not the first or the second time that the company has shut down a DC-area location, and it very well could come back down the line. In 2018, the company shuttered its 15th Street location, which was a key hub for D.C. startups for five years. This was followed by the closing of its Crystal City location in Arlington, Virginia, in 2019, but it reopened in the District at its current location, and added an incubator location in North Bethesda, Maryland.

The closure comes as pandemic pivots have challenged not just offices, but also the shared workspaces that are popular for startups and entrepreneurs seeking proximity to resources and other companies.

“While we were hopeful that demand for the downtown D.C. market would pick up in 2021 as both vaccine distribution and interest in working in close proximity to the White House increased, we sadly have not seen significant changes and had to make the tough call to leave the District,” 1776 Director of Strategy Melissa Rucci said in an email to Technical.ly.

The company does plan on returning to the area down the line, but was unable to give a firm timeline of when that would be coming.

“We see this as a temporary departure, as the DMV is a valuable region for supporting entrepreneurs and innovation,” Rucci said.

The company is continuing to operate its locations in the Philadelphia area and Indianapolis, as well as virtual programming.

According to the Washington D.C. Economic Development Partnership’s annual DC Development Report, released in March, 1776 is not alone in the coworking slump. WeWork, once home to 13 spaces in DC, closed three spaces in 2020 and has plans to close four more in 2021. The report also found that Regus, MakeOffices and Spaces all closed District locations or shut down operations completely.

“The rapid expansion of coworking firms in the Washington region has likely come to an end,” the report states. “Even prior to the pandemic there was concern over the risk that the coworking industry brought to office investors, especially since the industry has not yet proven how well it could weather an economic recession.”

Unlike this recent shutdown, both of the previous closures were due to 1776’s inability to reach an agreement over lease renewal terms with the building owner. After 1776 merged with Benjamin’s Desk in 2017, it shifted its business model from “assuming lease liabilities to a managed service model,” meaning that it relied on relationships with property managers to run its spaces.