The concept of coworking office space has whipped up a storm in the past ten years and garnered immense popularity among startups and MNCs alike. As per Emergent Research, 2016 witnessed a growth of around 11,000 coworking spaces worldwide. On analysing the nuances of the coworking industry, one can identify several key trends few of which have been summarised below:
1. Coworking’s Impact On Commercial Real Estate
In the last five years, the commercial real-estate industry emerged from an environment characterised by constricted lending conditions and stagnant real-estate construction. Aided by the recovery of the economy, which is predicted to continue till 2022, there has been a robust growth in the demand for industry services. This continued economic recovery will serve to drive industry growth and operators are expected to benefit from better lending conditions.
With the emergence of the coworking office space, there has been a major impact on the performance and utilization of commercial real estate. For instance, coworking operators have contributed a significant amount of positive net absorption in key metropolitan markets. Also, coworking has initiated a trend of upgrades and expansion of amenities, which has led landlords to make heavy investments into both base buildings and coworking spaces.
2. Coworking Spaces Expanding In Size
According to a statistic, the average coworking space rarely exceeded 20,000 square feet before the year 2011. Now, it is not uncommon to see spaces that exceed 100,000 square feet, which target established corporations. Startups, entrepreneurs, and major enterprises, like IBM, Google, or Verizon, have come to realise the benefits of coworking – this is a testimony of the fact that temporary leasing arrangements are more appealing to companies of all scales and sizes.
3. Increased Focus On Niche Markets
Small and upcoming coworking spaces that are catering to a niche market are witnessing faster growth and greater profitability. By pinpointing on a niche, coworking companies are able to create a community of businesses that grow cohesively and develop a shared economy.
For instance, if a coworking space situated in a strategic urban location targets health-tech companies, they will be able to deliver access to industry-specific knowledge and expertise and a community of like-minded individuals. When people work together in a shared professional environment, it paves way for additional revenue streams and community building. Market segmentation and growth into niche markets indicate a thriving, maturing industry.
4. Coworking Has Gone Global
Coworking spaces have sprung up in major markets worldwide. Large coworking corporations have spread far and wide to accelerate growth, reach, and influence. Spacemob, Southeast Asia’s largest coworking space, has taken over Singapore, and Impact Hub has already launched eight locations in South America. With the current rates of global expansion, major players in the coworking realm will expand further, creating a dense and interconnected network of like-minded professionals.
5. Big Corporations Moving Into Coworking Spaces
Big corporations like KPMG and Microsoft are gradually delving into coworking, while others are navigating through possibilities of funding a new coworking venture. Now, entire teams are moving into coworking spaces, who are able to live up to developing industry trends. These teams have better access to innovation, education, and talent, with reduced real-estate expenditures and enhanced flexibility.
With the advent of these trends, some of which are here to stay, there arises a question of whether the coworking industry can withstand a major market turndown. Even major companies have had to witness bankruptcy and market turndown after the dot-com boom. A recent study has compared coworking trends with that of the commercial real estate industry and opines that coworking might continue to be a viable alternative lease option, keeping qualitative and quantitative industry indicators in mind. Whether or not coworking will survive a debilitating market phenomenon – only time will tell.