From Manhattan to Phoenix: Tracking the Growth of Coworking Spaces

The coworking industry’s influence on the U.S. workforce and commercial real estate markets has expanded this year. In 2023, prominent landlords of traditional office spaces find themselves dealing with high vacancy rates and high interest rates, but the coworking landscape has found a way to navigate these challenges and, according to a comprehensive report published by Coworking Café, the industry has experienced a period of stabilization.  

The report analyzed the coworking landscape of the 25 largest U.S. markets from data from the third quarter of 2023. Notably, national coworking space inventory experienced only a slight 0.15% increase in location count from the prior quarter. However, this figure conceals underlying changes, as approximately half of the top markets experienced decreases in the number of coworking spaces. This trend is partially attributed to WeWork’s 17% reduction in locations across the top 25 markets — suggestive of the volatility within the industry. 

Despite these decreases, markets such as Raleigh-Durham and Phoenix have experienced significant growth in both the number of coworking spaces and total square footage that the areas offer. This shows how there is a strong demand for flexible workspaces in these regions. The growth also aligns with broader trends in the workforce, as more professionals move to these areas and seek out flexible and hybrid work arrangements. 

The report also sheds light on the pricing dynamics within the coworking industry. While rates for open workspaces and dedicated desks have remained stable, the cost of virtual offices has become more affordable. This has in turn made coworking spaces more accessible to a wider audience. 

In terms of total square footage, Q3 of 2023 saw a 2% decrease nationwide. The top 10 locations in the U.S. that offer the most square footage for coworking spaces are: 

1. Manhattan – 14.45M  
2. Los Angeles – 6.71M 
3. Washington, D.C.  – 6.7M 
4. Chicago – 6.29M 
5. Dallas – Fort Worth – 4.46M 
6. Boston – 4.82M 
7. Houston – 4.16M 
8. Atlanta – 4.42M 
9. Denver – 3.18M 
10. San Francisco – 2.91M 

Looking ahead, the coworking industry is poised for continued growth by adapting to the changing needs of professionals in the workforce. The demand for flexible workspaces is likely to persist, driven by the ongoing adoption of remote and hybrid work models. However, the industry may also face challenges, as shown by the contraction within certain markets and the volatility in total square footage.