International Coworking Day took place on August 9th 2020 marking the 15th anniversary of the coworking movement. What noone in the coworking arena could have predicted last year was just what was lurking around the corner for their 15th year celebrations. The pandemic has dampened that and created enormous challenges and decisions for space-owners and tenants alike. But it has apparently generated new types of demand too, as people seek work space flexibility in a tumultuous and uncertain world.
Global commercial real estate leaders, Cushman & Wakefield produced a report to clients on the impact of COVID-19 on commercial real estate and potential coworking trends – and preparing them for what’s next.
The key takeaway
“Coworking has become a significant driver of office demand with more than two million people working in over 22,000 coworking spaces around the world in 2019. The sector was in its early stages during the Global Financial Crisis (GFC) and experienced explosive growth during the longest economic recovery on record. Not to be confused with flex office spaces, which are custom tailored to how a company works, coworking is an arrangement where several workers from different companies share an office space. Both types of workspaces promote collaboration, which continued to proliferate throughout the Americas in 2019 even as the sector anticipated a recession. However, a global pandemic is most likely not what respondents of coworking magazine deskmag’s 2019 survey had in mind when asked about their outlook on a potential financial crisis. Members were relatively optimistic about their job security with 37% holding a favorable opinion globally—slightly more positive in North America at 39%. However, North American sentiment over the relative health of coworking during a financial crisis was more pessimistic—34% of respondents felt that the sector would fare poorly in a downturn over the short term and 31% over the long term. In contrast, global responses of 26% illustrated less pessimism than the Americas…
Fast forward a year and the economy faces more precarious scenarios than anyone expected. The challenging business environment has forced some coworking providers to shut operations in certain cities. Others have gone out of business entirely. A major draw of coworking—its social factor—has become a drawback during a health crisis. As providers said goodbye to the popular ‘happy hour’ and hello to social distancing, many were wondering how a sector focused on socialization and community would survive through the pandemic…
One negative externality of globalization is the increased likelihood of pandemics. So while coworking providers navigate the new normal, they are not alone—all commercial real estate sectors will need to consider what this means for the total workplace ecosystem and its occupants. Investors are already planning to implement wider ranging Environmental, Social and Governance (ESG) strategies in their portfolios. Some expect that a health and safety grade, similar to LEED certifications, will be necessary for properties. The path forward will require more of the ingenuity and creative thinking that made coworking commercial real estate so popular in the first place”.
You can get the read the full Cushman and Wakefield report here.