The coworking industry is likely to pivot away from the common long-term lease business model as the pandemic has made it too risky to sustain in today’s economic climate.
According to The Wall Street Journal, coworking firms who operate with this model have been among the hardest hit within the office industry. However, those with lease management agreements with landlords are expected to do better.
Even prior to the pandemic, the sublease model was seen as less favorable. This was particularly highlighted after WeWork’s failed attempt to go public in the fall of 2019.
Now, companies like Industrious who have leaned into the partnership-strategy are prepared to take over abandoned leases from struggling coworking companies like WeWork.
Some operators may take the Knotel route as well. For a while, the New York-based firm was viewed as a more stable version of WeWork. However, after facing mounting lawsuits over unpaid rent, the company recently filed for Chapter 11 bankruptcy and will be taken over by Newmark.
Still, the growing popularity of the hub-and-spoke model and flexible strategies overall should provide the industry with more opportunities in the near future.