How Economic Downturn Could Make Co-working Grow Faster
With the rapid expansion of co-working concepts across the United States, many in the CRE industry have speculated that the sector is becoming overbuilt. But, new research from law firm Ropes & Gray says that in the event of an economic downturn, co-working could be set for even faster growth.
The firm’s Coworking: A real estate revolution? report surveyed 100 senior executives in real estate, including investors, lenders, landlords, brokers and co-working companies. The study examined growth drivers, risks and challenges for co-working as well as how co-working would fare in a market downturn.
Findings of the survey indicated that corporate tenants are turning increasingly towards co-working operators for shorter-term and flexible office arrangements. The co-working sector has also created downward pressure on the average term for office leases, according to Ropes & Gray.
According to the survey, 61% of lenders believe that co-working will be less vulnerable than traditional office space in an economic downturn. A further 89% agree that traditional office landlords have adopted innovations and amenities inspired by the co-working sector.
Of the many concepts in the co-working sector, 67% of those surveyed expect significant consolidation through mergers and acquisitions over the next three years.
On the sales side, 70% of respondents agreed that the trend of co-working providers buying assets will accelerate over the next three years.
As far as risks that co-working companies are facing, respondents to the survey marked rising interest rates, increased leasing and construction costs, competition from new market entrants, and traditional real estate companies launching co-working brands.
For comments, questions or concerns, please contact David Cohen
Connect CRE News
Your source for daily news covering CRE transactions and trends. Stay informed on national, regional and property sector news that matters to your business.
Connect Events
Whether digital or in-person, Connect Events set the stage to bring together relevant content with CRE’s most active players to engage, influence and inform.
Connect CREative
A full-service marketing agency dedicated to CRE clients. Combining our CRE background with our team’s business, marketing, communications, technology, to develop and execute comprehensive strategies to create, build, and and grow successful brands.