The Rise of Coworking Spaces

The Evolution of Work 

The growing phenomenon of coworking has had a major impact on the property market and how investors and landlords view space. It has also provided clients with more choice and flexibility than ever before. Coworking spaces offer several options, from serviced offices and executive suites to hybrid spaces, which combine the best of coworking and private office space. The main reason for its increasing popularity is the agility it offers businesses of all sizes, but there are plenty of benefits. 
 

What’s Driving Demand for Coworking?

There are a few key reasons why coworking space is in demand right now. The major benefits of coworking include:

• Scalability. Instead of locking a business into a traditional office lease, coworking allows companies to scale up and down as needed, with no unexpected fees, penalties or long-term commitments. 

• Affordability. Coworking allows those working on a tight budget to enjoy predictable monthly overheads and expenses. Costs for Internet connectivity, utilities and other basic office supplies are built into the pricing upfront. Plus, coworking means a client pays only for the space they need and use.

• Productivity. Coworking spaces are specially designed to maximise productivity. Administrative tasks are all taken care of via onsite support, leaving clients free to focus on work. Coworking offices are also often situated in prime locations, making travelling, meeting and networking that much easier.

• Collaboration. Coworking setups help to create a sense of community as like-minded business owners, freelancers and entrepreneurs interact and build connections.

• Innovation. Coworking with a mix of like-minded people helps to foster an environment of creative collaboration, innovation and problem-solving. 
   

The Rise of Coworking and Flex Space around the World

Flexible space, including coworking, now accounts for up to 5% of all office space in 18 of the largest global markets, including Tokyo, Sydney, New York, London and Los Angeles. This figure is expected to double in the next five years as demand grows and more corporates begin to seek flexible workspace solutions and supply moves from CBDs to outlying areas in some of the world’s key cities. 

In the UK:

• Flexible workspace contributed to 35% of commercial property transactions in London over the past 12 months.
• Demand for flex space has increased by 25% in London and 35% throughout the rest of the UK.
• There are now 6,075 flex space centres across the UK, showing 7% growth over the last six months. 

In the US:

• The US is currently the largest market for flexible workspace in the world.
• The fastest-growing US flexible workspace markets are in New York, California and Texas.
• The average desk rate across the US in 2018 was $969, up from $934 in 2017.

In the APAC region:

• There has been an increase in demand for coworking and flex space in the Asia Pacific region, leading to a supply increase of 16%.
• This increase has given many businesses the opportunity to set up in the very central locations at a more affordable rate.
• The APAC flex market is set to overtake EMEA in volume of supply by 2021.

On a global level, demand for larger coworking and flex spaces from corporates now make up one-fifth of total market demand. Supply has started to spread outside of CBDs as the market begins to evolve. Increased supply is making desk space more affordable in key locations, and increased competition is pushing suppliers towards greater innovation and higher standards across the industry.