The market for shared office space, or “co-working,” has had a meteoric few years. The industry became popular in the 2010s as firms bought up urban real estate for lease to individual workers, with WeWork becoming a powerful industry player. Then came COVID-19, and this very model was pronounced the most infeasible. UCLA real estate analyst Stuart Gabriel, for instance, told the Los Angeles Times that “anything that has the word ‘co’ in front of it—co-working, co-living” would be eschewed out of public health concerns.
But now, as the pandemic nears an end, firms and workers face a question: return en masse to conventional offices, keep working from home (WFH), or find another option? This is where co-working could reemerge as an option that somewhat combines both.
Last spring, researchers Anita Kamouri and Kate Lister observed that 80% of workers surveyed desired long-term partial WFH arrangements. More recent data shows continued support for this model. Last May, Twitter announced that it would let some staff permanently work remotely. On top of this, COVID has accelerated a budding remote work trend where workers have no office to arrive to anyway, and must WFH. For these and other reasons, Moody’s anticipates a nearly 20% office vacancy rate in 2021.
But the home environment is not always productive. Over the last year, Kamouri and Lister write, “many struggled with bored children, barking dogs, noisy spouses, internet overloads, IT complications, general stress, and more.” WFH may be even harder for workers who live in small urban apartments and have roommates.
Enter co-working space as that third option. Before COVID, demand for the space was surging. AllWork, a website dedicated to future-of-work trends, writes that “coworking space as a percentage of total office space nearly doubled from 1.1% in 2017 to 2.1% as of Q2 2020.”
The real estate analytics firm JLL finds that “flexible space” (another name for co-working), should represent 30% of office space by 2030. Co-working Resources, a publication catering to co-working space operators, projects a worldwide growth of such spaces from 16.6k in 2018 to 42k by 2024.
During COVID, some co-working spaces in the U.S. struggled or went bankrupt. But now there are signs of optimism: WeWork is making a second attempt at going public, after being acquired by a Japanese bank. Barnfox, a co-working startup, has opened two offices in upstate New York. Its amenities are similar to those found in many offices prior to COVID restrictions: food, beverages, common areas. It also hosts events like barbecues, possibly looking to replace traditional office social functions.
Co-working spaces are popular for individual workers because, as mentioned, they are a middle ground between the slog of office commutes and the dissonance of working from home. But they are also in the interest of companies looking to save money. Lister and Kamouri speculate that a potential economic downturn will cause firms to reduce their office footprint and simply purchase co-working space for their employees.
What is more, traditional office owners may go under. By last May, New York office realty Vornado had lost $24 million from tenants not paying rent, and its stock has halved since 2016. Office occupancy nationwide remains starkly low, and numerous offices have had to keep pushing back reopening dates.
Co-working space may satisfy both ends of the employer-employee relationship. It is not that the traditional office is dead–many firms are still buying up office space in cities like New York and Chicago. But the future is pointing to work relationships that are either hybrid (home + office) or entirely remote. Co-working space will be attractive in either case.
This article featured additional reporting from Market Urbanism Report content staffer Ethan Finlan.