A Conundrum for Coworking Spaces
Demand for Coworking Space Could Spike
Coworking space providers have been battered by the pandemic for the past year. Demand for their services tumbled as people across the country shifted to working from home in a matter of weeks. WeWork’s international occupancy rate was down 47% at the end of 2020 and the company lost $3.2 billion over the course of the year.
However, in the upcoming months, coworking companies may need to deal with the opposite problem they faced a year ago: demand for flexible office space is likely to jump at a time when supply is limited.
Companies Face Uncertainty About Leases
This summer and fall, many companies will likely be reluctant to sign leases on office space before they settle on norms for remote work in the long term. In the meantime, people who have received vaccines may be eager to return to working in an office setting after a year of working from their couches and kitchen counters. Coworking spaces could provide a solution for these people.
During the pandemic, most coworking space companies have shed their leases whenever possible. Coworking companies accounted for about 7% of all space which returned to the Manhattan office real estate market between March 2020 and last month. This means that the supply of flexible office space is low and companies may need to scramble to keep up with demand in the coming months.
Though it is difficult to predict the pandemic’s full impact on long term patterns in the workplace, remote work will likely be more common. People have grown accustomed to Zoom (ZM) meetings and other ways of collaborating remotely. Though remote work has caused headaches for some employees, others feel positively about the flexibility and focus that remote work can provide. Some companies may also shift to remote work in order to cut out the cost of office space.
Because of these and other trends, analysts expect that flexible leases, which currently account for 2% of office space in the US, will account for 10% of office space by the end of the decade.
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