While loans with exposure to coworking account for a small portion of the CMBS universe, office loans with exposure to coworking spaces could become a significant part of the CMBS universe as this business evolves, Morningstar suggests. And its evolution so far has been rapid.

Since coworking's inception with executive suite giant Regus PLC, the number of coworking spaces climbed to about 7,800 globally, a 36% rise between 2014 and 2015. Even with this rapid growth, these companies lease roughly 1 million square feet backing just 1.1% of the $139.32 billion in outstanding CMBS office loans, as of November 2016, says Morningstar.

MIAMI—Morningstar Credit Ratings just published research report that suggest a paradigm shift in the officing world. Dubbed, “Sharing the Experience—As Co-Working Grows, the Office Isn't Necessarily an Office Anymore,” the study offers some interesting insights into where we are and where we're going.

Coworking, which typically involves individual members or member businesses paying a fee to share office space, is spreading quickly, evolving with pioneering rental models and innovative service offerings. Different than executive office suites, the alternative workspace method has sprung up in cities large and small.

“The coworking model involves firms leasing office space from owners and re-leasing the space to individual users, creating unpredictable revenue streams,” Steve Jellinek, vice president of CMBS at Morningstar Credit Ratings, tells GlobeSt.com. “Consequently, underwriting such loans must account for the fact that, although the space appears fully occupied, the coworking companies might not be able to rent the entire space.”

Fueled by structural changes in the workforce and mainstream companies looking for more flexible expansion options, the firm contends, co-working—another facet of the sharing economy—will play a more significant role in commercial real estate. That, the report suggests, poses challenges to underwriting and valuation standards for the commercial mortgage-backed securities market.

While loans with exposure to coworking account for a small portion of the CMBS universe, office loans with exposure to coworking spaces could become a significant part of the CMBS universe as this business evolves, Morningstar suggests. And its evolution so far has been rapid.

Since coworking's inception with executive suite giant Regus PLC, the number of coworking spaces climbed to about 7,800 globally, a 36% rise between 2014 and 2015. Even with this rapid growth, these companies lease roughly 1 million square feet backing just 1.1% of the $139.32 billion in outstanding CMBS office loans, as of November 2016, says Morningstar.