Coworking can Be Lucrative in Buildings, But Only to a Certain Extent

Though many landlords and property developers have entered the coworking industry, panelists during a recent CRE event pointed out that in order for coworking to be lucrative in buildings, no more than 20 to 30% of space should be allocated to it.

The opinion voiced by many is backed by a recent CBRE study, which found that once the share of coworking in a building takes up over 40% of the building’s footprint, the building shows less favorable cap rates than its peers. Still, there’s no denying the impact of coworking, and last year alone, coworking operators accounted for 10% of office absorption in the US; that number rose to 34% during the first half of this year. 

Advertisements

Panelists also noted that the coworking industry will experience increased consolidation and that small coworking spaces are unlikely to survive in the long-term. 

Advertisements