In the area of co-sharing platforms, office space is also making its mark. In Manhattan, the largest occupier of office space is a co-working company, renting out tables and cubicles to commercial tenants that do not want to rent a whole office.
Co-working companies rent office space from landlords, renovate and adapt them to the new style of working, and sublease them out to start-ups and other companies for a premium. Most of these sublease contracts are flexible in office space and lease term. A tenant could rent as little as a spot in a shared table and for as short as a day.
Although the lease agreements can be quite expensive for what you get, it has proven to be the best option for clients who need a good location for less than renting a whole office. Moreover, these office spaces are usually equipped with amenities such as wifi, coffee bars, and lounges, which are very attractive to new companies.
Since the great recession, the co-working industry has grown exponentially. JLL, a real estate service firm, found that the co-working space has grown 4 times over the past 8 years , from 12 million square feet in 2010 to 59 million square feet in 2018.
Business Model and Recessions
There is skepticism from some as the co-working business model is based on long term leasing of large spaces and leasing out small spaces for short term. There is no guarantee that the co-sharing demand will stay strong through recessions. As interest rates are rising, leaders are starting to look for signs of a recession and wonder if the co-working industry will be able to survive one.
However, the recent investments in co-working space done by large investment firms shows the strong confidence that these firms have for this business model. Moreover, co-working companies in London have experienced growth as commercial rents are declining due to Brexit, showing their resilience to a slower economy. It is estimated by Cushman & Wakefield that co-sharing spaces will account for 10% of office inventory in the future.
Co-working in Canada
In Canada, co-working space has been growing in large cities such as Toronto, Montreal and Vancouver. Co-working companies have been signing contracts for areas that are to be completed in 2 to 3 years. There is uncertainty on whether demand of such office space will still be strong then which will be a test to the new business model.
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