Co-working Office Buildings on the Rise
Thursday, July 18th, 2019
Demand for co-working spaces is expected to show continued strong growth over the next few years, as more younger workers favor flexible office space over traditional office settings, according to BBG, a leading commercial real estate due diligence firm.
Flexible office space has quickly become a major disruptive force in the office real estate market. The co-working office trend has drawn mostly a younger generation who finds this an appealing workplace alternative in today's sharing economy.
According to industry reports, there are an estimated 35,000 co-working spaces worldwide with a market value of an estimated $26 billion. And the number of the nation's flexible office spaces is expected to grow at an annual rate of 6 percent until 2022.
Co-working spaces accounted for more than 25 million square feet in the 30 top US markets. Manhattan ranked the highest in flexible office space (12.5 million square feet), followed by Boston (3 million square feet) and Seattle (2 million square feet).
The co-working office trend also has allowed some investors and owners to raise their property values by dedicating a certain amount of square footage to flexible office space. One industry survey said nearly 40 percent of buildings that included co-working space achieved a higher value than the average for office buildings in their market.
"The proliferation of co-working office buildings reflects a monumental change in the way today's society views the workplace," said BBG CEO Chris Roach. "Flexible office space gives people the opportunity to meet and interact with others who have different skills and backgrounds that may not be otherwise available in a traditional office environment. In addition, it creates new opportunities for building owners and investors who could possibly generate more value from properties in high-growth areas."