The rise of coworking creates new opportunities for office tenants to use space more effectively, and for owners to generate leasing revenue while offering onsite amenities. But as with any disruptive change, coworking can create new challenges as well. Increasingly, we’re seeing tenants and landlords turn to brokers and advisers to help them make coworking work to their benefit.
According to market analysts, coworking companies leased more space than any other industry last year. In 2018, WeWork became the largest tenant in Central London and in New York City, even though its share of the coworking market is still less than 15%. On the demand side, the number of coworking space subscribers doubled year-over-year in 2017, and again in 2018.
Today, according to Yardi, coworking represents just 2% of the office market, but reverberates through the sector. About 40% of coworking members are believed to be incremental tenants—if not for shared space options, they probably wouldn’t lease space at all—and the number of these workers is expected to grow in the sharing economy. For larger tenants, having an onsite coworking option might alleviate the need for large conference rooms or overflow spaces.
An individual signing up for coworking may not require a broker, but an experienced real estate adviser can help companies determine how to best leverage shared space as part of their workplace strategy. If onsite coworking is part of a building’s appeal, what happens if the coworking provider closes its doors? A professional representative can help navigate these issues.
Leasing pros also play a key role in helping owners determine how to make the most of the coworking trend, whether that means leasing space to a dedicated coworking provider or creating their own offerings. Some owners wonder if the growth of coworking space is sustainable, or whether third-party providers might disavow lease commitments when companies tighten their belts and demand for shared space declines.
Conversely, if coworking companies take over a large share of the office market, they could start to insert themselves into landlord-tenant relationships, or gain too much leverage over owners on lease terms. The same dynamic could affect broker-tenant relationships and commission structures in the future as well. But from speaking with other international affiliates around the world, the message I’m hearing is that coworking firms won’t have much of an impact on relationships built on expertise and value.
The reality is that coworking can be an effective strategy for many companies to minimize occupancy cost, maintain flexibility, and tap into the power of the gig economy. In fast-changing times, brokers are needed more than ever to deliver a better all-around worker experience while enhancing office space efficiency.