Co-working Is Not Just "Office Centric"
Flex space has also penetrated the retail, hospitality and multifamily industries.
CHICAGO, IL—Co-working options are reshaping the U.S. office market as the sector has grown approximately 23% each year since 2010, according to new research from JLL. In 2018, more than two-thirds of the US office market occupancy was flex space and JLL predicts it will make up almost 30% of the market by 2030, compared to less than 5% today.
“Co-working, however, is not only office-centric,” says Scott Homa, Senior Vice President and Director of US Office Research, JLL. “Flex space has also penetrated the retail, hospitality, hotel and multifamily industries.”
For example, Staples is now putting co-working areas inside of their stores, hotels are carving out work-space on a floor or two and apartments are incorporating co-working spaces into their units as a tenant amenity.
There is also somewhat of a cultural shift towards alternative workplace arrangements such as working from home or co-working spaces. A lot of employees are untethered from their desk and basically just need a seat and WiFi connection to complete their work, explains Homa. One main reason there is such a demand for flex space is because these options allow employees/teams to execute their daily roles and responsibilities in a location that will help fulfill their company’s mission and their own professional ambitions.
According to the report, there is no indication that flex office space saturation is expected to happen anytime soon and, as a matter of fact, there a number of top markets poised for rapid flex growth. These markets include L.A. (Westside), Denver, Seattle, Washington, D.C., Northern Virginia, Boston, Austin, Silicon Valley, San Francisco, and New York.
“These cities all have a few traits in common,” says Homa. “They are mostly gateway cities located in high-growth areas, their demographics include individuals with significant income and education with some tech backgrounds and these areas typically consist of a younger workforce instead of a more mature population.”
Of courses, urban areas, with limited space, have fewer home office options and so co-working spaces are important and in-demand.
Homa expects to see continued disruption of the traditional lease model as investors, occupiers and operators come to terms with a new—more flexible—way of conducting business.