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Business Solutions

WHERE TO WORK?

COWORKING FILLS A GROWING NEED

PAUL FIORILLA
Associate Director, Research
Yardi Matrix

COMMERCIAL REAL ESTATE has always evolved in ways office space within markets. The study found that as of
that reflect technological and social changes. The most 1Q18 there were 1,166 coworking sites with 26.9 million
obvious current examples revolve around how e-com- square feet of space, which represents 1.2% of office
merce has altered the landscape for retail and industrial space in those markets.
properties, but no property type is immune. The trends
impacting the office market are arguably subtler, but The study revealed that Manhattan has by far the most
the sector is transforming to meet the shift in demand coworking space, 7.7 million square feet, followed by Los
for lower costs, more flexibility for corporations, a more Angeles with 3.7 million square feet. Miami has the most
entrepreneurial workforce, and tenants that care more coworking space as a percentage of stock, 2.7%.
about community and the environment.
Recession-Driven Expansion
One trend gaining visibility, coworking, represents a small Regus pioneered the “workspace as a service” concept in
yet growing segment of the office market. However, data the 1990s, first in Europe and later in the Americas. The
on the amount of such space within commercial real idea was to provide space for self-employed workers and
estate has been hard to come by. This paucity of informa- the small number of corporate employees who traveled or
tion prompted Yardi Matrix to conduct a study of build- worked remotely. Initial efforts were aimed at traditional
ings with 50,000 square feet or more in 20 major markets. office employers such as law and accounting firms that
It was one of the first attempts to quantify the amount of wanted to have remote offices.
square footage of coworking space in relation to total
Coworking is an evolved form of executive suites space
that also encompasses increased amenities and more
flexible leasing arrangements. It took off after the Great
Recession due to a culmination of trends that increased
demand, including:

• Growth in the gig economy. The number of self-em-
ployed workers has risen dramatically in recent years.

• Entrepreneurial workers, which include includes found-
ers and employees of startup companies.

• An increasing number of employees working remotely,
made possible by technology that enables people to be
connected.

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