Sources have revealed that CBRE, the world’s largest commercial real estate services firm, is looking at 3 World Trade Center to house its new coworking brand Hana.
The beginning of coworking consolidation
Coworking space operators are being affected by a lack of funding from venture capitalists.
The China Real Estate Chamber of Commerce (CRECC) found that 40 companies disappeared from January to October 2018 and 40% of coworking spaces are currently half empty.
These startups heavily rely on fresh financing, so analysts believe that smaller firms won’t be able to compete with major operators, such as WeWork, and will either close down or be acquired.
Kr Space, one of China’s largest coworking firms, says it is being more particular in expanding and cutting overlapping business positions to reduce operating expenses. An anonymous executive for the company also revealed that the operator recently cut 12% of its staff.
“The reason coworking operators are in the doldrums is quite simple: they are leasing desks quite cheaply while their office acquisition and operating costs are high,” said Gary Wen, head of the commercial department at Savills North China. “They have been telling investors that they can rent out a desk at 4,000 yuan a month but they haven’t been able.”
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Beijing coworking spaces in secondary areas range anywhere between 1,000 and 2,000 yuan per desk per month.
Sean Wang, vice president of Cushman & Wakefield Greater China, said that coworking operators losing rent revenue is damaging, but firms that haven’t recklessly expanded will survive.
On the other hand, Wen believes major industry consolidation is on the horizon.
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Hoxton Hotel is branching out from traditional hospitality services with the launch of its coworking brand Working From_ at its London Southwark and Chicago locations.
Speaking at the 2019 MIPIM conference, IWG’s CEO Mark Dixon said that companies of various sizes should offer some form of agility in order to attract and retain talent.
As the coworking space sector continues to evolve and grow, experts believe that there will be a 25% growth of these offices within retail properties through 2023.
Ryan Simonetti, CEO of Convene, believes that the firm sets itself apart from the competition by going beyond serviced workspaces and offering more hospitable amenities.
Building Industry Gathering Oakland has opened its 3,650 square foot, one-of-a-kind coworking space geared towards small minority and women-owned businesses in the area.
Novel Coworking’s newest Chicago location will include workspaces, such as office suites, private offices, and coworking space, to accommodate various-sized companies.
As the gig economy continues to become more prominent amongst younger professionals, the demand for flexible coworking spaces from this generation rampantly grows.
Hospitality company Accor is working to expand its coworking services to 1,200 of its hospitality locations, which could make it the largest coworking provider in Europe.
Brexit has left the London office market in development limbo, but thanks to the surprising resilience of the market, builders are moving steadily forward with projects.
After WeWork revealed a positive growth in the first quarter of 2019, experts are still concerned about how sustainable the company would be in the face of a recession.