The coworking market is finally sticking in San Diego and Orange County. Just this year, both markets saw a spike in coworking firms with experts anticipating them to expand even further in 2019.
Despite this, San Diego and Orange County are experiencing growing pains. Orange County players are worried that flexible office space could take the place of small-tenant direct leasing activity.
“There’s a counter-argument that it is healthy because it allows smaller companies increased flexibility, the ability to move-in quickly, and when they reach a mature phase, they will have enough runway to build out and lease autonomous office space,” said Scott Wetzel, VP at JLL.
Still, the high expense of coworking spaces could actually boost direct leasing activity, particularly for startups who are looking to expand.
In San Diego, coworking spaces have had an impact on direct leasing activity due to many larger corporates entering into the flexible office space market. Scott Shindler, a senior associate at JLL, said that while there has yet to be a direct correlation between increased flexible offices spaces and reduced leasing activity, it has been more difficult for tenants to sublease out spaces.
More and more, markets will start adapting to the coworking industry as it continues to expand. Wetzel expects the model to grow slowly over many decades in Orange County and San Diego.