While major coworking players are expected to play a role in shaping the industry’s post-pandemic reality, small operators have an uncertain future as they lack the financial cushion of their larger counterparts.
“Us mom-and-pops have worked so hard to have the small piece that we had, and we’re giving back a much larger piece of what we’ve had now,” said Lisa Skye, cofounder and CEO of Primary. “For the larger operators, it’s a less significant impact.”
Primary is just one example of an operator who had to give back a big portion of its portfolio as it goes through the bankruptcy process.
So far, small operators in Manhattan gave back 180,000 square feet in the year ending March 2021. With this, more established operators have been slowly taking over abandoned space in hopes of staying afloat amidst the uncertainty.
Others have closed all together. For instance, The Assemblage closed all three of its Manhattan locations last June.
According to a report from Upsuite, 20% of all coworking spaces had closed, and operators within just one market made up 46.4% of those closures.
Large operators were also forced to give back a huge portion of space, but these firms have had the ability to restructure other leases and their overall business model to become sustainable in the future.
“The WeWork, the Knotels, the IWGs, those guys are like 20% of the market,” said Liz Elam, founder and executive producer of Global Coworking Unconference Community. “The other 80% is small-to-medium-sized business operators.”