Coworking reigns supreme in the office sector
Yardi Matrix recently updated its Q4 2017 study of coworking spaces in the top 20 U.S. office markets concluding that the industry is the fastest growing segment of the U.S. office sector.
The study also found that metropolitan office markets show the highest concentration of high-tech employment, which has lead to the largest percentages of shared office space.
There are five major factors that are responsible for bringing in the 17 million square feet of coworking space, including increase in the gig economy, remote workers, competition to improve office environments, and overall growth of major operators like WeWork.
The top office market for coworking in the U.S., unsurprisingly, goes to Manhattan. With 13.5 million square feet, the New York City borough has been coined as the “Coworking Capital of the U.S.”
Closely following Manhattan are Los Angeles, San Francisco, Dallas and Seattle.
While it’s clear that coworking has seen growth throughout all regions of the country, urban areas have doubled the market share due to a bigger population, accessible commuting, more available rental spaces, and a large technology community.
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Some markets with low office vacancy rates, such as Manhattan, have a higher demand and inventory for coworking.
As the industry grows, it continues to evolve to suit its massive success. For example, In the early days of coworking landlords would sign long-term leases for big amounts of unused office space to coworking companies. Now, joint venture agreements allow building owners to have a bigger stake in the business.
Under such an agreement, coworking firms do not master lease the space. They build, operate and manage the landlord’s coworking space in exchange for a percentage of the profits.
Despite the changing business model of many coworking operators, the top 10 coworking spaces are still reigning the sector. Regus, WeWork, Premier Business Centers, Knotel and others have managed to grow immensely over the industry’s short lifespan.
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