The Future of Real Estate in a Coworking World

Glowing facade of the building with entrance to coworking in the twilight. Coworking is on the first floors. Indoors lights are on. In front of building there is a sidewalk.

HFF, a commercial real estate capital intermediary, recently wrote a blog post about coworking and how it will change or influence the commercial real estate landlord.

From what they have observed, coworking has had an enormous impact on the utilization and performance of real estate. “From a performance standpoint, coworking operators have been responsible for a significant amount of positive net absorption in major metropolitan markets.” This means that coworking has contributed to more space being used than it is being vacated in some metropolitan markets.

Coworking has also been a catalyst when it comes to building renovations and improvements, especially as it pertains to restrooms, vertical transportation, and HVAC capacity. The influence of coworking has gone as far as to change the way some traditional real estate users actually use types of space; with some adopting shared resources and offering different working areas within a given space.

HFF predicts that more changes will come to real estate and commercial landlords. The experts mention joint ventures, short-term leases, and continued redevelopment.

HFF expects landlords and coworking operators will start creating joint ventures in order to buy, develop, and reposition buildings while focusing strongly on coworking spaces. The growing popularity of coworking spaces also means that industrial buildings and offices will be redeveloped to incorporate new trends and make them more appealing to users. Also, at the rate coworking is growing, HFF believes continued redevelopment will also move into secondary and tertiary markets. And lastly, leases will shift towards shorter terms as flexible workspaces become a more viable option than traditional offices.

Nonetheless, even with the positive impact coworking has had in real estate, mainly lowering vacancy rates, experts still worry that “the long-term impacts are still unknown,” and that if the trend keeps on rising the urban core will significantly increase in density.

To read HFF’s full blog post and other insights, click here.

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