Co-Working Continues to Change CRE Landscape
San Francisco’s co-working sector has recorded explosive growth and so far this year, there have been six new leases larger than 10,000 square feet with co-working companies actively looking for more space.
SAN FRANCISCO—Co-working has, of course, changed the global landscape of commercial real estate. The sector has grown significantly during the past few years, especially in major tech cities such as San Francisco, according to a recent co-working report by Cushman & Wakefield.
“Co-working operators control approximately 3 million square feet of office space in San Francisco,” Derek Daniels, associate director of research for Cushman & Wakefield tells GlobeSt.com. “At 3.5% of total office inventory, that is a significant figure and proportionally in line with other major gateway markets like Manhattan. San Francisco’s co-working sector has recorded explosive growth since 2017. So far this year, there have been six new leases signed larger than 10,000 square feet and there are a handful of co-working companies actively looking for more space.”
To be sure, the city is home to a wide range of operators, whether international giants such as WeWork or local boutique providers. In breaking it down, there are 107 co-working locations in San Francisco, occupying 2.9 million square feet of office space.
This surge in co-working growth during the last two years has surpassed the combined total of the previous seven years. Co-working operators can be found in nearly every submarket and across all property classes in San Francisco. That said, these operators have a majority concentration in class-A space in the CBD with 43 class-A locations representing 63% of the share.
WeWork has been the largest contributor to growth while Knotel has picked up the pace during the past 12 months. Regus is also a co-working influence in the city, rounding out the top three.
In fact, WeWork’s lease at the 430 California St. represented its first full-building lease in San Francisco and one of the largest office leases recorded in the city last year. Today, at 285,000 square feet, it is the largest co-working location in San Francisco. Kennedy Wilson and Takenaka Corporation executed the 251,722-square-foot lease with WeWork last year.