Coworking has changed the game
Coworking is no longer only about office leasing…it is more about an experience. Coworking spaces each have their own respective ambiance and, depending on what floats your boat, you have several options to choose from. Long gone are the days of being boxed into a traditional office space. Coworking is a new kind of product with a new mode of thought that has attracted a new kind of consumer.
This model really gives hope to the budding entrepreneur. Some start-ups have amazing potential (a solid business plan, sound projections, and sensible targets) but they do not have the capital yet. It does not mean they will not get it; it just means they just do not have it now. In order to be productive, businesses need a dedicated space to create a solid foundation.
Coworking affords the opportunity to create stability
Sometimes a company needs a coworking space because they are testing the market. Atlanta is a big slice of pie and it can be hard to determine where your market share is. While you can guess from afar, it makes more sense to get some boots on the ground to help the company move forward. Coworking creates a platform for businesses to get their feet wet in Atlanta before committing in a way that hugely impacts their bottom line.
Today’s concept of office leasing simply is not what it was 3 or 5 years ago. Companies that enter new markets, and choose coworking as an option, have a plan. They are intentional about choosing coworking as a first stop before deciding to lease traditional office space.
We are in a recession
While coworking is a great option for some business owners, there are some challenges for the coworking sector of the office market. We are in a recession and, due to all this volatility, we are at a point in the real estate cycle where we really do not know what is going to happen. This cycle is unparalleled to any other that we have experienced. Who could have imagined experiencing a pandemic in their lifetime? Not me.
Out of 50 states, Georgia is ranked #15 for population growth
We have 18 Fortune 500 companies here, and our real estate is attractive to everyone. This means businesses are coming. Coworking has been in rapid growth mode since 2016. According to a JLL survey published in the 4th quarter of 2019 on office space optimization, the average worker spends only 40% of their day at their desk and 80% of work is considered “collaborative” (that sounds like the foundation for the coworking model to me).
Flexible work space is not a passing trend…especially considering our current environment. Coworking has prepared us for these strange times by enabling us to visualize what a non-traditional office environment looks like. In fact, it is the future of our work space. I think we can all agree on that now.
What does the future of coworking look like?
Despite that fact, we need to know what the future looks like. According to Cushman & Wakefield’s 4Q20 Market Beat, in 2010, coworking leasing represented just 0.5% of all net new leasing. By 2018, the share was 9.5%. Case in point, during the 2001 recession, Regus (which had embarked on an aggressive expansion program) saw its global occupancy decline from 75%- 59% and then take three years to recover. During the Great Recession, which impacted the CRE sector far more negatively, Regus was better prepared due to its more measured expansion strategy. As a result, Regus’s memberships in the U.S. declined by 5.5% and recovered in a year. Coworking is floating in untraversed waters, however, we all are. We shall see how it all unfolds. Stay tuned.