New study shows that co-working, flexible office space is on the rise

An example, in New York City, of co-working office space. (Image provided by The Instant Group.)

An example, in New York City, of co-working office space. (Image provided by The Instant Group.)

by Dan Rafter

U.S. office buildings are more frequently offering tenants co-working space today, office space that employees from several different companies share as a way to save on the cost of space and equipment.

According to the 2016 Flexible Workspace Review released in May by The Instant Group, co-working grew more than 10 percent across the United States last year. Office buildings offering co-working space and executive suites — offices that independent contractors or other workers can rent for a limited time — grew by 12.9 percent.

The Instant Group said that the total flexible workspace market grew by an average of 4.3 percent last year, with 3,596 combination centers now offering co-working spaces and executive suites. The United States leads the world in this kind of workspace, with the United Kingdom in second place with 3,290 combination centers.

The increase in buildings offering some form of co-working is four times higher than that of the growth of conventional executive suites, which increased by only 3.4 percent during the same time period.

“Co-working has proven to be a powerful driver of the market in the United States,” said Tim Rodber, chief executive officer of the The Instant Group, in a statement. “Co-working benefitted from early adoption by tech and media firms that have, in turn, done a marvelous job of promoting shared workspace and collaboration between start-ups and established firms.”

Rodber says that the growth of co-working and shared office spaces is showing no signs of slowing.

“What we are seeing is a broad expansion of flexible workspace solutions as companies of all sizes seek out collaborative workspaces that challenge the conventional office market,” Rodber said.

Tenants in all markets don’t have equal access to co-working spaces, though. According to the study, the U.S. flexible workspace market is still relatively concentrated, with 50 percent of the total market for this kind of office space located in just five states. The same 50 percent of the market is also concentrated in just 50 cities across the country.

Not surprisingly, given its reputation for tech start-ups, California leads the way as the state with the most flexible office space and the largest number of dedicated co-working spaces. According to The Instant Group, there are now 103 “pure” co-working spaces in California, a number that more than doubles that of any other state in the United States. These centers are devoted solely to co-working.

New York City continues to have the most expensive flexible work space in the country, with desks costing $1,047 to rent on average each month. Washington D.C. offers pricey flexible work space, too, with an average workstation rate of $1,022 a month. That’s an increase of 17.2 percent when compared to one year earlier.

In the Midwest, Illinois has the largest number of co-working centers, 145 according to The Instant Group. That’s a year-over-year increase of 5.4 percent. The average desk rate for co-working space in the state is $709 a month, according to The Instant Group.

Chicago, not surprisingly, led the way in the state, with 116 co-working centers with an average monthly desk rate of $839.

Ohio boasted the second-highest number of co-working spaces in the Midwest, according to The Instant Group’s report. The state had 70 co-working centers with an average desk rate of $588 a month. Michigan had 61 co-working centers with an average monthly desk rate of $643. Minnesota had 45 co-working centers, according to the report, a jump of 7.1 percent. The average desk rate here was $701 a month, while Tennessee had 56 centers with an average monthly desk rate of $652.

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This entry was posted in Chicago Commercial Real Estate, Illinois, Illinois real estate, Michigan commercial real estate, Minnesota real estate, office, Ohio commercial real estate, Tennessee and tagged , , , , . Bookmark the permalink.

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