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Could a possible recession be coming for the coworking industry?
2018 was no doubt a successful year for the coworking space industry, but now, experts are weary about its future.
CBRE’s year-end report showed that coworking increased 200% from 2017 to 2018 with 200 coworking companies operating nationwide.
“The demand for flexibility is very strong and negotiating lease terms — whether it’s directly with a landlord or going through a third party flex-space operator — there’s increasing appetite for that,” said Nicole LaRusso, director of research and analysis at CBRE.
Although coworking seems unstoppable at the moment, there is speculation on how the durable the trend is.
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Trading tensions and possible (inevitable) economic downturn could lead the real estate market into risky territory. In this scenario, experts say that tenants leasing flexible spaces could be the first casualties.
LaRusso says that in this case, tenants will most likely look for short-term options, so some may continue to move into coworking spaces and others may give back their space.
“The divergence is likely due to the perceived risk associated with higher concentrations of flex space, as well as the fact that buildings with high flexible space concentrations are much more likely to be Class B buildings,” according to the CBRE report.
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JLL research revealed that Dallas-Fort Worth is ranked 12th out of the country’s top 15 coworking and flexible space markets, taking up 3 million square feet of space.
Office provider LABS has launched its 96,100 square foot flagship property LABS House in Bloomsbury, London that features coworking, offices, and full-service dining.
Cool office interiors are ideal at first glance, but looking into a company’s principles, such as gender equality and flexibility, will be the factors that retain talent.
Colliers International revealed the success of the office market last year due to high demand for coworking and tech firms, but predictions for 2019 are uncertain.
Shared office space providers as tenants have become the norm for many landlords and building owners, and now many REITs have adopted coworking as it continues to expand.
Brookfield Properties has teamed up with Convene to spruce up the 73,000 square foot Brookfield Place into a full-service events venue that accommodates up to 500 people.
Many coworking operators pride themselves on massive, rampant expansion, but some industry experts believe this growth could lead to failure and consolidation in 2019.