Is There a Co-Working Revolution in the Real Estate Market?

  • By: mvadmin
  • Date: November 27, 2019
  • Time to read: 3 min.

According to an article on the Financial Post, the largest occupier of office space in Manhattan is not a bank or a law firm. Instead, it’s a real estate company that makes flexible office space available to commercial tenants, one cubicle at a time. In short, it is a co-working space.

Co-working is a concept where a shared workplace, often an office is used by different people who work for different companies or organisations.

Those coworking are usually not employed by the same organization. Typically, it is attractive to work-at-home professionals, independent contractors, independent scientists or people who travel frequently who end up working in relative isolation.

Coworking also works as a social gathering of a group of people who are still working independently, but who share values and who are interested in the synergy that can happen from working with people who value working in the same place alongside each other. It lets you have all the positive experiences of an office without the issues that come with it.

Coworking offers a solution to the problem of isolation that many freelancers experience while working at home, while at the same time letting them escape the distractions of home.

Co-working companies rent office space from other institutional landlords, upgrade the space to meet the needs of start-ups and others active in the sharing economy, and then sublease the space at a premium to short-term renters, the article said.

One of the major attractions of the coworking space is that users can rent the space for as less as a day or even for a year. Most coworking spaces charge fees for users to be able to access it, but some public coworking spaces are completely free.

Coworking spaces at premium locations are not inexpensive; however they are definitely cheaper than renting out entire an office when you only have a small amount of employees.

“Flexibility comes at a premium rate, in which the monthly rent for a desk (depending on the location) could be as high as $500. Yet, if one needs only a cubicle in a high-end office location, a co-working space will prove a lot cheaper than renting an office,” the FP article said.

Coworking spaces are usually designed like an office and always have good WI-FI but could also include other facilities like a café, recreation centre and even projectors and other equipment needed for small meetings.

According to some experts, co-working spaces are also now available in a variety of places with an Airbnb like business model; this can mean that working at a stranger’s dining table soon could be the way many freelancers work.

However, the future economic outlook appears less favourable. As interest rates rise and volatility returns to the markets, business leaders have started to wonder about the next recession. The resilience of new business models that have not weathered a recession is of great interest to many, the FP article said while asking if co-working firms will be able manage their expensive obligations if the demand for short-term rental space were to decline or disappear.