The Rise of Coworking and What it Means for Investors
The way we work is changing – and so are opportunities for investors in the office space market. Coworking is a relatively new phenomenon that is rising exponentially in popularity worldwide. Increasing numbers of professional service providers, start ups, entrepreneurs, freelancers and small businesses are choosing to work from dedicated coworking spaces where they can rent desk space on a daily, weekly or monthly basis and enjoy the benefits of communal spaces, networking and collaboration opportunities and, in most cases, educational and social opportunities.
A report published earlier in 2016 by property consultants DTZ found there has been an upsurge in coworking space worldwide and that the total global market could hit 50,000 such spaces over the next three years. The international juggernaut of the coworking explosion is WeWork, founded in 2010 and based in New York City. In 2008, Adam Neumann and Miguel McKelvey opened GreenDesk, an “eco-friendly coworking space” in Brooklyn. In 2010, the pair sold the business and established WeWork. By 2014, WeWork was the fastest growing lessee of new office space in New York. As of December, 2015, WeWork had 54 coworking spaces in the US, Europe and Israel and the company is expanding rapidly.
For example, in the UK WeWork is currently seeking to quadruple the commercial property it occupies in London to 1.5 million square feet.
Coworking spaces have been established in every capital city in Australia, most successfully in hip locations with ease of access to parking, transport, cafes and shopping. Most are located in Sydney and Melbourne, with River City Labs in Fortitude Valley being one of the few coworking spaces established so far in Brisbane. In the future, it’s predicted that large organisations will use coworking facilities alongside their core office space when dealing with business change and to create more flexible and attractive work cultures to attract and retain the best talent.
While it’s still early days here in Australia, there’s no doubt that coworking will reshape the office property market in a profound way. Savvy investors who are aware of this will be best-placed to use the knowledge to their advantage.