Brokers are warming up to co-working operators. The latest Apto National Broker Buzz poll shows that brokers are less concerned about brands like WeWork than they were a year ago. According to the survey, 56% of respondents said that co-working is not a threat to the industry, up from 49% last year, while 40% said that the brand was somewhat of a threat, down from 44% last year. Only 4% of respondents said that it is a major threat.
"With familiarity comes a higher comfort level," Tanner McGraw, founder of Apto, tells GlobeSt.com. "The longer WeWork is around, the less fearful brokers are of it. We're also seeing greater understanding and acceptance of the notion of real estate as a service, which is the larger dynamic that WeWork represents. In so many aspects of the economy, goods and services are being procured on demand, so the idea of real estate as an on-demand service is less shocking than it was a year or two ago."
Brokers are also adopting co-working operators as clients, negotiating the lease deals in office buildings. They are also helping landlords launch flexile office lease programs in office buildings as well to capture those clients. "Brokers are realizing there's money to be made representing landlords and tenants participating in the short-term flex office space market," says McGraw.
While brokers are warming up to the idea, they also acknowledge that the co-working market has a long future ahead of it. In 10 years, 44% of survey participants expect co-working to account for 10% to 25% of the total office market, and 17% of participants expect co-working to make up 25% of the total market. This could have some impact on the direct leasing space. "As the market grows, it's likely to impact direct leasing inventories and pricing, though it's too soon to know exactly how and the results are likely to be different not just from market to market, but from submarket to submarket," says McGraw. "I'm curious to see, longer term, if developers start to build product just for this use, be it super-high-amenity product or super-low-amenity product. It's still the early days of this market. We don't know how it's all going to shake out."
While the poll only surveyed brokers, McGraw says that landlords also seem to be warming up to co-working operators and the flex office market in general. "Actions by some leading office landlords suggest that many acknowledge the increased demand for short-term, flexible space and many want to accommodate it," he says. "In Southern California, for example, LBA Realty is partnering with Hana to offer some shorter-term flexible space at LBA's expansive campus in Irvine. We're seeing evidence of similar approaches by other landlords in other markets."
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Kelsi Maree Borland
