By Beth Mattson-Teig
How and where people work underwent huge changes — could flexible office space see an increase in demand ?
Prior to the pandemic , coworking facilities were often lauded as a model for the “ future workplace .” Thirdparty providers offered trendy , flexible , highly curated space alternatives — and they were gobbling up a massive amount of square footage in the race for market share . Can operators regain momentum , or has COVID-19 permanently altered user demand for flexible workspace ?
The flexible office market — aka coworking — represents a fraction of the overall office market . However , its rapid growth before the pandemic was tough to ignore . According to a 2020 research report published by JLL , the global flexible space market has grown by an average of 25 percent since 2014 , with the top 20 markets across three regions recording a combined flex inventory of around 204 million square feet . That expansion , both in the U . S . and globally , was propelled by a growing list of corporate users that included Google , Microsoft , and Bank of America . Additionally , JLL predicted that flexible space could account for 30 percent of the market by 2030 .
Yet views are mixed on how COVID-19 has altered the course of that trajectory . Some see significant challenges ahead in the near term . “ Coworking is definitely down now . It will come back , but it will likely never be the same ,” says T . Bradley Fulkerson , III , CCIM , a senior managing director and head of tenant advisory services at Transwestern in Atlanta . The old model of working elbow to elbow , regardless of whether it was with fellow employees or people from a multitude of cohabitating firms , is a tough sell in a post-pandemic market , he adds . Tenants want more space and are more focused on health , safety , flexibility , and hygiene .
Disruption from the pandemic has forced some shakeout , closures , and pruning of underperforming locations . A U . S . affiliate of Regus filed for Chapter 11 bankruptcy in 2020 , while Newmark acquired Knotel in 2021 after that firm filed for bankruptcy earlier in the year . In some cases , former coworking spaces have been acquired by competitors or converted to single-tenant space .
Others , including coworking providers themselves , are seeing a resurgence in demand that has been fueled by uncertainty and a desire by workers to find alternative remote workspace outside of their homes .
“ The pandemic accelerated the future of work , especially the need for flexible office solutions ,” says Peter Greenspan , global head of real estate at WeWork . As a result of COVID-19 , companies took a new approach to analyzing their real estate portfolio , and some have realized that , moving forward , they will need less traditional office space and instead more flexible , scalable real estate options , he adds .
The fundamental shift to remote working created a lasting impact on the way both businesses and landlords think about flexibility — and space that facilitates flexible work — within their portfolios ,
Changing Preferences in the American Workforce
Percentage of Employees Willing to Adopt Each Work Pattern
Home
72 %
10 % exclusively from home
* Work in at least two places ** Work in a café , hotel lounge , coworking facility , etc . Source : JLL
adds Greenspan . An example of this is a recent deal WeWork signed with Ivanhoé Cambridge to provide its tenants at Place Ville Marie in Montreal with an innovative flexible workspace solution . Ivanhoé Cambridge is converting an 11,000-sf space on the 29th floor of the office tower to a community workspace designed to foster collaboration and creativity . The space , which will be powered by WeWork , is set to open in this spring . According to Greenspan , this partnership reflects WeWork ’ s ability to help landlords innovate and evolve their spaces to meet the needs of today ’ s changing workforce .
DISRUPTION DRIVES DEMAND One of the key selling points for coworking spaces before the pandemic was its flexibility — and that is more in demand than ever . “ I think coworking spaces will flourish for the next couple of years , and the reason is that companies are still trying to assess what just happened , how much space they really need , and where they need it ,” says Soozi Jones Walker , CCIM , president of Commercial Executives Real Estate Services in Las Vegas . Some businesses are apt to turn to coworking space as an interim solution while they figure out what their space needs will be going forward , she adds .
Hybrid Work * 67 %
Office + Home = 28 % Office + Home + Third-Party Place = 20 % Home + Third-Party Place = 16 % Office + Third-Party Place = 3 %
Third-Party Place **
40 %
Office
74 %
24 % exclusively in the office
CBRE released its 2021 Global Occupancy Insights report that shows that more than half of respondents said they are using some form of flexible space to rethink their workplace and real estate strategies as the world shifts to more flexible work models . In addition , 43 percent of survey respondents said that their use of coworking office space will increase as their office footprints change in the face of this new work model .
“ The pandemic has turned this entire business around for us ,” says Daniel Levison , CCIM , CEO of CRE Holdings in Atlanta . Levison has cofounded multiple companies , including Atlanta Investment Properties ,
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