The concept of the flexible office is relatively new, but proving to be massively popular worldwide. With organizations shifting focus to a more lean approach to operations, business owners are investing in their strategy and people, rather than complex infrastructure.
As a leading broker of flexible office space, Office Freedom endeavored to look more closely at how this trend is being adopted by countries across the world. After researching into London’s market growth, they turned their attention to the global market and how businesses across the world are looking for a co-working or flexible office space.
According to their research, New York and London are at the forefront of this growing market. Last year, the number of new flexible offices in London grew by 42% alone and many other countries are following suit and opening more flexible offices.
In the four years between 2014 and 2018, the number of global business centers added to the Office Freedom portfolio more than doubled. The inventory grew by 45% in 2018 alone.
In 2018, business centers in New York increased by a massive 58%, closely followed by London’s 42% increase. However, between 2014 and 2018, Berlin and Los Angeles had the largest growth of 36% and a whopping 129% respectively.
Los Angeles’ growth is likely fuelled by its appeal to start-ups and young businesses, often in the film and media sectors. Berlin has become a hub of new business taking advantage of favorable economic conditions, prompting growth in the Fintech arena. WeWork has taken advantage of this increase in popularity by opening four new buildings in Berlin recently.
Coworking Resources estimates that 2,188 new coworking spaces were opened globally in 2018, with just under half of those (1000) being in the U.S. They suggest that there are currently almost 20,000 coworking spaces worldwide, but despite a year-over-year growth of around 2,595 spaces, they project that growth is going to slow somewhat to 9.6% in 2019 compared to 15.2% in 2018. It is thought this may be due to operators choosing to develop their existing spaces to increase occupancy and profitability, rather than opening new centers.
Interest is rising for flexible workspaces and coworking spaces, as you can see from this Google Trends graph which demonstrates the rise in “coworking” searches over the last 5 years.
With over 80 million square feet of flexible workspace, the US is the largest market. 23 million square feet are reportedly managed by coworking giants WeWork and Regus. This is compared to a lesser, but by no means paltry, 60 million square feet of flexible workspace in the UK.
New York accounts for the largest concentration of flexible working spaces, with over 330 coworking centers. Operators of these spaces occupy 9.2 million square feet in the Manhattan office market with WeWork officially overtaking JP Morgan Chase & Co. as the largest office tenant in September 2018.
The city has shown very strong growth, with operator Knotel recording large gains. Beyond New York, Knotel has more than tripled its worldwide footprint in 2018 with over 100 locations worldwide and over 2 million square feet of flexible workspace.
Despite this huge growth in New York, flexible workspaces only actually account for 2.5% of Manhattan’s office occupancy. This suggests that there is still massive potential for further growth in the sector, with the market far from saturation.
This growth is being fuelled not only by freelancers and start-ups looking for casual coworking environments, but also larger corporations utilizing this flexible space to expand their business in a controlled and affordable manner.
New York isn’t the only place in the US experiencing a growth spurt. Los Angeles, San Francisco and Chicago have all witnessed more than 15% year-on-year growth in coworking spaces with currently over 566 workspaces between them.
After spending over 25 years in the industry, Office Freedom are one of the world’s leading office brokers. With over 13,000 offices worldwide, the company provides flexible and private office space to businesses of all sizes. From large international enterprises to freelancers, they have worked with over 30,000 clients to find their dream office space.
The explosive growth of flexible workspaces can be seen across the globe. Below are the growth percentages for the year 2017 - 2018:
With more businesses embracing flexible workspaces every year on a global scale, this growth is likely to continue and potentially accelerate for the foreseeable future.