While office owners across the country continue to struggle with high vacancy rates and uncertainty about future tenant demand, one growing segment is beginning to emerge this year.
Coworking operators are seeing large companies investing more in flexible workspaces and rehiring employees at higher rates than in traditional offices, with some seeing increased demand Expanding its unique footprint to accommodate Market experts say this could help fill some of the millions of square feet of vacant office space.
Of the 1,100 corporate real estate decision makers surveyed, JLLof Future Work Style Survey 202243% of respondents said they plan to accelerate their investment in flexible spaces over the next three years.
“The change we have seen post-Covid is a change to flexibility.” we work senior vice president Errol Williams Said. “What we are seeing and hearing more and more is that companies are increasing the share of flexible properties included in their overall property portfolio strategy.”
WeWork’s occupancy rate reached 72% across its real estate portfolio of 641 locations worldwide in the second quarter. According to the financial report.
The company said U.S. bookings for WeWork All Access, a membership that gives customers free access to its coworking spaces, increased 64% year-over-year in September and 81% in the week following. did. labor dayU.S. bookings for WeWork On Demand, a pay-as-you-go model with no monthly commitments, increased 62% year-over-year in September.
This growth is WeWork’s stock price fell 71% so far this year. But Williams said the market pain doesn’t reflect the firm’s solid fundamentals.
“What’s happening now is macroeconomic, but that doesn’t change the fact that we’ve fundamentally changed and how important flexibility is in the current world of work.
WeWork’s Errol Williams speaks at the Bisnow event in Boston on November 18, 2021.
The coworking market is growing across the country, with even less populated states like Nevada, Minnesota, and Utah ranking among the top 25 markets with the most coworking spaces. According to CoworkingCafe market research Released last week. The survey found that California, Texas, Florida and New York had the most coworking spaces.
“We believe coworking is one of the creative solutions that office owners and developers use to make better use of their office space,” says Ressler.
“There are different types of creative solutions that people are looking at,” Ressler says. “Co-working is probably the most important one, and we believe it will be in the double digits in terms of improving office occupancy this year.”
diligence CEO Jamie Hodari He said his company’s footprint increased 60% last year to meet the growing needs of office employers who want to give their employees more workspace options. Industrious has over 150 locations worldwide, According to its website.
The company last month partnered When Mitsui Fudosan America It now occupies 40,000 SF on the 12th floor of the Homer Building in Washington DC. in DC When Californiathrough a partnership with avalon bay When gray star To bring coworking spaces closer to employees.
“A lot of what’s happening right now is that flex partners are needed to fulfill the way people actually want to work and the actual workplace strategies companies are looking to deploy at the perimeter. says Hodari. “It’s not just that people are afraid of long-term leases.”
Industrious isn’t the only coworking operator recognizing the need to expand.
May, IWGMore said so scheduled to open 500 to 700 new coworking spaces Regus and Space Arms.This comes after the company was hit hard during the pandemic and filed Chapter 11 Bankruptcy at dozens of locations in the United States.
Small businesses are experiencing similar growth patterns.Based in Boston work bar recently expanded into the suburbs around Boston. This is because most of our clients wanted to give their employees the option to work closer to home.The operator currently has nine locations and partnerships synergyis a Boston-based developer that plans to introduce co-working spaces in some of its buildings.
“The biggest trend we’re seeing post-pandemic is that larger Fortune 500 companies are using more space and locations to deliver solutions to their employees,” said Workbar CEO. Sarah Travers Said.
The company last month Open The new Workbar location in the Boston suburb of Woburn opened at 50% capacity and continues to beat the company’s financial benchmarks, according to Travers.
“Demand is definitely outpacing the overall market,” Travers said. “Even during the pandemic, our landlords would say there has always been a significant amount of human traffic in and out of our space. I think it perfectly shows that we are superior.”
Large brokerage firms have entered the market as they see the trajectory of demand for coworking spaces.
Courtesy of Industrias
Hardworking CEO Jamie Hodali
Last year, CBRE Acquired 35% interest diligent and forward flowerA unique flexible workspace brand, has joined the company. May, CBRE invested $100 million Another sign of confidence in the industry is growing interest in the company.
“Part of what got us excited about that investment was not just the capital itself, but the partnership with CBRE and the message in the sense that it was not a traditional real estate ecosystem or flex,” Hodari said. says. “You don’t have to choose one over the other, but this guy can have the two coexist in the building.”
JLL will also accelerate the growth of its Flex by JLL coworking arm, new location in seattle We are preparing to open 15,000 SF Flex offices in New Jersey in the second quarter of 2023. The company has already opened multiple locations in the US, UK and Australia.
“The reason we stick to flex is because we expect the industry to continue to grow as we see where the office of the future is headed.” Jacob Bates, Head of America for Flex by JLL. “By 2030, we expect 30% of his office space to be flexible.”
Some office owners have coworking spaces in their hands. BXP is driving a unique flexible workspace offering at a handful of properties in Greater Boston. contains one of Causeway HubWhen Irvine. its launch Flex Workspace+ brand.
“in terms of [office owners’] Feelings about flex and coworking have changed dramatically,” Bates said. “Asset owners recognize that this should not only be part of the occupier strategy, but part of the asset owner strategy.”
Bates said he believes the growth of the coworking sector will help lower vacancy rates across the office market.
“That would help a lot,” Bates said. “It also leads to asset amenities he becoming a bigger part of the package and part of the asset leasing strategy.”