Coworking spaces that house a mix of corporate users and individuals may be faced with a less sophisticated future amid a potential economic downturn.
WorkSuites CEO Flip Howard said many operators have a hip, modern feel, but receive much of their revenue from corporate users.
“When the market turns down, do these corporations that are paying two or three more times for their office space in exchange for a cool environment and flexibility stay?” said Howard.
Howard believes that while some may be open to paying more, some won’t. For WorkSuites, Howard has said he has needed to make sure one single client doesn’t get too big for the space and not depending on just one client for revenue.
Grant Pruitt, Whitebox Real Estate President and Managing Director, said that his company has similar reservations about firms and landlords and compared coworking to that of data center businesses in the 2000s.
“You saw that with executive suites during the recession as well. Everyone flooded into that market, but when times got really tough, you had to have staying power to sustain the downturn,” said Pruitt.
Regardless, both Howard and Pruitt believe that office-sharing will remain in various forms, fulfilling the need for more flexibility within the office market.