With Americans eager for space and many companies opting for fully remote workforces during the pandemic, some had begun to ask whether the trend of shared office space had reached its end. But with vaccines proving effective at preventing serious COVID-19 cases and Americans feeling more at ease about sharing workspaces again, coworking has reached a renaissance of sorts, according to the latest Matrix Office National Report from Yardi Matrix.
The company estimates that some 117.5 million square feet of shared space currently exists nationwide, representing about 1.7% of all national office space. Most of that flex space is clustered within a handful of metros, with more than a third of it concentrated in the top five office markets and more than half in the top 10. Predictably, the top coworking space is Manhattan, with an estimated 15 million square feet of flex area, almost twice that of second place Los Angeles and its 7.9 million square feet.
Yardi expects that amount of total square footage across the country to grow in the coming years, with both small companies and new companies alike increasingly exchanging permanent, long-term traditional office leases for less expensive, more flexible alternatives. Larger firms that have adopted more flexible remote or hybrid models, meanwhile, will likely look toward coworking as a way to save real estate capital while still giving their employees meeting spaces and other amenities.
To support these projections, Yardi pointed toward the recent rebound of WeWork, one of the country’s largest providers of both physical and virtual coworking spaces. WeWork reported during its second quarter earnings call that its occupancy rate had grown to 72% in Q2, matching its pre-pandemic occupancy during 2019’s fourth quarter. Memberships for the company, meanwhile, jumped 33% annually to reach a record high.
WeWork competitor IWG, which operates several hybrid workspace brands such as Regus and Spaces, also reported that its 2022 H1 saw annual revenue growth of 22.3%, “driven by strong demand for hybrid working.”