Coworking companies leasing activity skyrocketed last year, increasing by 200% from the previous year. Despite this, experts do not see this growth to continue at the same pace.
Coworking firms took up 18% of all leasing activity in Manhattan with 111 leases signed last year, a big jump from the 6% reported in 2017.
“We’re seeing just a tremendous explosion in the amount of leasing activity among coworking and other flexible space operators,” said Nicole LaRusso, the director of research for the tri-state region at CBRE.
Commercial real estate service company Cushman & Wakefield even dubbed 2018 the “Year of the Coworking/Flex Office Sector.” The company found that coworking operators leased about 4.5 million square feet in Manhattan last year, with WeWork and Knotel leading the pack.
Despite this, the company’s analysts do not expect this massive growth to continue this year.
A CBRE study also found that buildings with 40% leased to coworking operators should still be able to sell for similar prices to those without coworking.
When the capital market deems coworking spaces to be at least equal value to multi-tenanted spaces, that’s when it will be a concrete sector according to Spencer Levy, head of research in America for CBRE.