Last June, at the Social Workplace Conference, Karen Williamson – senior researcher, JLL -and Maciej Markowski – workplace strategist – delivered a presentation that explored the unprecedented growth of coworking and the impact it’s having on corporate real estate.
Coworking itself isn’t a new concept; it’s been around for ages, but it is just now being embraced by — freelancers, startups, entrepreneurs, and (yes) big corporate businesses. And though only a few short months ago coworking was still considered a trend, the movement has–thanks to large companies embracing these types of spaces–reached a tipping point.
According to a report by JLL, “the coworking industry makes up just 0.7 percent of the total U.S. office market, but demand is unprecedented and fueling the growth of large providers in major markets.”
Coworking is no longer a trend, it’s no longer a movement. It is now mainstream and it is dictating the way people work.
A growing industry means a more competitive market and although coworking is expected to continue to grow at a fast rate, chances are many brands and operators will either downsize or exit the marketplace.
Size and location matter. Nearly 80% of the total leased space comes from the industry’s 2 largest providers: Regus and WeWork. “A well-known brand cultivates a stronger customer base and makes it easier to capture a higher share of demand,” the report reads.
As for location, JLL emphasises how corporates look to set up as much in urban markets as they do in CBDs for recruitment and retention purposes. Which brings us to another key reason why coworking is now the norm. Coworking offers flexibility–something that the new generation of workers is demanding from employees. Where an office is located, what type of workstations they have, and the times at which these spaces can be accessed have all become a critical component of the war for talent.
Choosing the right location is essential to the success of any coworking provider. “Over the past two years, 90 percent of leasing activity in this sector has taken place in Class B and C buildings, and two-thirds of leasing activity is within urban and mixed-use submarkets that cater to today’s millennial workforce.”
What does this all mean?
It means that workspace operators that want to stay relevant need to make sure that they are building a brand that can be easily scaled, that they are setting-up their workspace solutions in prime locations, and that they have a long-term business strategy that allows them to remain resilient in an ever-changing, ever-growing market.
