Coworking: A fast-growing real estate market segment in 2019
What You Need To Know About Coworking
Coworking is a relatively new term in the professional world, but it has quickly become widespread – the modern-day office is growing like a weed.
Once a niche concept for the rare freelancer, coworking spaces are now mainstream, and used by enterprises from start-up to corporate, as well as an expanding pool of professionals who work freelance or remotely.
The impact of coworking on real estate
With the traditional office on the decline, professionals are turning to more flexible spaces that better suit their needs. Networking, community, and collaboration made possible through the notion of coworking. So, what does this mean for commercial real estate?
According to Yardi Matrix, a commercial real estate data and research platform, coworking experienced year-over-year (from 2017 to 2018) growth of more than 60 percent among top U.S. industries, one of which is real estate.
Coworking is dominating commercial office space, particularly in urban centers. WeWork, a world-wide coworking enterprise, is now New York City’s largest tenant of office space. (1) Across the U.S., coworking space accounts for 27 million square feet of commercial real estate.
Market trends for 2019
Coworking office spaces are one of the fastest growing segments in today’s real estate market. This trend is expected to continue.
It’s no surprise that the swelling demand for coworking space is having a significant impact on commercial real estate. The rise in popularity of these flexible spaces has helped spur a recovering real estate market, particularly in the last couple of years. Coworking spaces are responsible for consuming some of the vacant office space inventory, contributing positive net absorption. (2)
The recovery of the market means better lending conditions for developers, which will continue to perpetuate the development of a robust market. Confidence in coworking spaces has improved, too, and landlords are demonstrating increasing willingness to rent to these shared offices.
Initially opposed by real estate professionals, coworking spaces are proving their worth. Real estate investors are following the Big Apple’s suit, and coworking spaces are cropping up in small- and mid-sized cities across the country. That said, coworking spaces present different challenges than an ordinary commercial space, so we recommend seeking the advice of a Fort Lauderdale real estate attorney before diving in.
The coworking space segment is a fantastic opportunity for real estate investors interested in buying or developing commercial real estate. When considering a purchase, be sure to hire a South Florida commercial real estate attorney at Schecter Law to provide counsel and review and prepare agreements, titles, and deeds. For more information on the services we offer commercial landlords, get in touch with us today at (954) 779-7009.