coworking reports JLL Knight Frank Cushman Wakefield e1623792160331

Agents’ publishing wave explores coworking boom

It’s hard to ignore the buzz around the term ‘coworking’, with companies such as WeWork – although it’s more serviced office than coworking these days – and rival Knotel dominating headlines all year.

Now the agents are getting in on the act. CBRE announced it would launch its own flexible space provider, Hanna.

This was followed by heavyweight research from advisory rivals JLL, Cushman & Wakefield and Knight Frank, all trying to own the subject and steer landlords in the right direction.

JLL said the coworking sector has more than doubled in size across Europe since 2014 and is set to grow by up to 30% per year over the next 5 years. There is a tension between cost, security and confidentiality concerns as cited by JLL which may be slowing companies’ widespread use of coworking facilities, and the increased emphasis on workspace as a service to enhance wellbeing and productivity that boosts the desire for more flexible workspace.

Knight Frank Coworking Graph

Knight Frank found that while businesses were slow to adopt co-working, this style of workspace would increase in landlord’s portfolios over the next 3 years

Knight Frank pointed out that, despite all the hype, more than half of the 120 large international employers it quizzed said they have no or less than 5% of their occupation in serviced, flexible and coworking spaces. But this is set to grow as two thirds of global corporates plan to take up more such space in the next three years.JLL Coworking Flex Space Graph

JLL’s research unpicks the main drivers of the sector’s boom – including evolutionary changes in how, when and where people work, shifts in lifestyle, and rapid advancements in technology – and provides unique insights into the risks and rewards for both companies and real estate investors in Europe.

Key findings include that globally, the amount of flex space in the 20 largest flexible office markets grew by 30% in 2017 – equivalent to almost 11m sq ft. Flexible office space is predicted to account for 30% of corporate portfolios by 2030.

JLL found that the market is split into three types of flex space user:

  • Conservative: low percentage of flex space in their current portfolios; zero/limited expansion planned
  • Experimental: low to moderate percentage of flex space in existing portfolios; up to 10% and beyond in next 3-5 years
  • Visionary: significant usage of flex space; clear and ambitious plans for widespread adoption, reaching upwards of 20% of portfolios

Barriers to flex space adoption include concerns around brand dilution, cost, security and confidentiality. But similar risks are associated with non-adoption, around staff retention and attraction, as well as being perceived as stale.

JLL’s report also states investors who need to balance the need for stable long-term income with occupiers seeking flexibility face a number of challenges, from understanding how flexible space will impact asset valuations and market transparency, to the effect on supply and demand dynamics, lease lengths and yields. In response, some landlords and developers will consider establishing their own flex space concepts; collaborating with existing providers; and looking at M&A. Landlord-initiated concepts are burgeoning in cities such as Amsterdam – where they account for 25% of all flex space – London and Paris.

Cushman And Wakefield Coworking Chart

A snapshot from the Cushman and Wakefield research.

Cushman & Wakefield survey at CoreNet Global Summit

Cushman & Wakefield surveyed 220 delegates at the CoreNet Global Summit in Boston. According to the results, the percentage of employees at respondents’ companies utilising co-working has doubled over the past 2 years.

When asked what percentage of your global workforce are or will be using coworking on a regular basis, respondents indicated the following:

  • Today: 11%
  • In two years: 17%
  • In five years: 23%

Three quarters of the respondents said that a main benefit of utilising coworking was the ability to ramp up or down a corporate real estate portfolio. Other benefits are reducing costs, attracting and retaining talent, communicating brand, and maximising efficiency.

Read more:

Cushman & Wakefield survey

Knight Frank’s Your Space report

JLL: Disruption or Distraction

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