We’ve witnessed many real estate trends in the last three years, but maybe none as pendulous as the office workspace. Large corporations are always going to have offices and meeting facilities; the way employees work within them with flexible in-person reporting, however, has evolved. What about the small- and medium-sized employers that have shed their physical offices entirely? What about tech startups reluctant to sign long-term leases in an unusual economy? Look no further than financial news in recent weeks, showing a phoenix rising from the workplace ashes: Co-working spaces are resurging in popularity once again.
In a two-year period, co-working space tracker Upsuite cited the shuttering of 800 co-working spaces, representing 10 million square feet returned to the commercial market. A majority of those were co-working offices of less than 15,000 square feet each. But in Covid-19’s wake and a resulting shift in office work styles, places such as WeWork, ImpactHub, Knotel and District Coworking are providing much-needed, on-demand spots for meetings, quiet focus time and collaboration.
In San Francisco’s Salesforce Tower, for example, WeWork tends to be a spot of choice for startups, namely because it’s flexible enough to offer smaller businesses short-term leases or drop-in common spaces. The provider reported membership growth of 33 percent in Q2 2022 and usage climbed to an average occupancy rate of 72%, matching its Q4 2019 rate. Remote workers for the most part have outgrown working from their couches and dining tables, and app-based booking services are making flexible workspaces easier than ever to access.
In 2021 on Bloomberg News, CEO and Founder of women-centric The Riveter Coworking, Amy Nelson, spoke about her difficult decision to close all Riveter units in six states the year prior in the throes of Covid. She also offered in the interview that co-working spaces would see a resurgence coming through what she called the “Virus Economy.”
Eighteen months later, her forecast appears to be correct: Increasing reliance on freelancers, hybrid workers looking for community, and the need for meeting spaces in remote working situations are driving this demand. Nelson herself resurrected and retooled her business with the added intention of helping freelancers develop and grow their businesses.
In very recent financial news, WeWork founder Adam Neumann is adding residential rental real estate to his entrepreneurial repertoire with a rental concept called Flow. Neumann received a big boost this month with the help of Silicon Valley-based venture capital firm Andreesen Horowitz, to the tune of $350 million. Neumann has been snapping up apartment units (more than 3,000) throughout the Southeast and told press that the residential real estate rental market is ripe for disruption. His idea is to give renters a branded product that offers consistent service and community features to create a socially supportive foundation not previously seen in the rental space.
Details of the Flow business plan are fuzzy, but the financial backing is very real. We’ll be watching to see how this branded rental concept wraps itself around co-working.
It’s clear that co-working spaces are currently enjoying a renaissance. According to The Business Research Company, the global co-working space market will nearly double from $16.17 billion this year to $30.36 billion in 2026.Those “floating desk” proprietors that weathered the most tumultuous times of Covid-19 are now enjoying thriving memberships, welcoming new faces and opening new doors. If necessity is the mother of invention, then we will continue to witness innovators creating solutions to the newest set of workplace challenges. What will you fund next?
If you’re seeking quality commercial real estate investments throughout the Pacific Northwest, we’re here to help. Juniper Capital provides private real estate financing, including hard money loans for commercial, construction, multifamily residential opportunities and more. If you would like more information on this topic, call us today.