A recent Yardi Kube survey revealed that almost 40% of its respondents, prospective commercial real estate office tenants, already have a coworking space subscription or are considering flexible office options in the future. The total supply of coworking spaces was less than 2 percent in 2019, according to a Yardi Matrix coworking report, but attraction to the concept has grown as the hybrid work option becomes more prominent.
Coworking addresses a lot of businesses’ issues concerning bringing employees back to the office following the COVID-19 pandemic. The hybrid model allows employees to choose when they work from home and when they opt to come into the office, making a flexible office agreement a viable option for businesses. Coworking spaces also meet tenants’ growing demand for flexibility as well as cost reduction and space optimization, according to Yardi Kube.
Yardi Kube conducted its five-question survey with approximately 1,100 respondents across the United States between May 1 and June 15, 2022.
Why more tenants are considering coworking
Cost savings was the most popular response to Yardi Kube’s inquiry into why tenants were choosing a flexible workspace (24 percent). Having the flexibility to increase or decrease their office footprint as needed was second (17 percent), followed by access to short-term leases (10 percent). The figures line up with data from a prior CBRE survey, which showed a shift in the CRE office industry toward coworking spaces. Embracing hybrid work and the desire to change office footprint sizes on demand were the main drivers for this shift.
“Turnkey offices, with everything corporate occupiers need for a properly functioning space, have long been the traditional solution and while this is still the preferred option, flexibility is key,” said Brian Sutherland, Yardi vice president of sales, during a webinar. “Coworking provides the best of both worlds.”
The opportunity to facilitate a hybrid work model and the ability to recruit from a larger talent pool were other factors that have led to more interest in coworking.
The office still has a purpose
Once employees started to embrace the hybrid work model, offices became necessary again following a long stint of most companies operating remotely. As workers return to the office, even on a limited basis, businesses have to decide how much space is necessary. According to Yardi Kube’s survey, a majority of tenants (56 percent) have no plans to change their office footprint. A little more than a third (35 percent) will look to increase their office footprint. Ninety-one percent of respondents either are keeping their footprint the same or looking to grow, which is a strong indicator that office space remains necessary. Meanwhile, just 9 percent of respondents said they plan to decrease their office footprint.
“Factors such as current lease terms, occupancy rates and new lease proposals are influencing space-related decisions, but with growing interest towards coworking and flexible options, the role of the office as we know it is likely to change,” Yardi Kube said in its report.
Embrace of hybrid work is driving coworking attraction
Businesses’ interest in coworking spaces likely would not have increased so significantly without employees showing a desire to come to the offices, even if it’s in a limited capacity. That desire does exist however, and employers have found their staff value in-office time more when they have control over how much work they do outside of the office, according to the survey.
Additionally, businesses’ desire to create an office culture that meets employees’ expectations for flexible work schedules is still strong. Almost half of the survey respondents (47 percent) stated they wouldn’t require in-office attendance or two days in-office at the most. The Yardi Kube survey also revealed a near even split between companies that plan to return to the office full-time and ones that will offer full-time remote, 34 percent and 35 percent, respectively.
“This means that the return plans for companies differ, and each company’s needs are important when considering the ideal office solution and work dynamic,” the report said.
Meanwhile, 12 percent of businesses plan to have workers come to the office one or two days, and 19 percent are leaning toward having staff report most of the week (three to four days).
There are still a number of industries that believe traditional offices are the best solution, however. A little more than 60 percent of respondents said they do not plan to use a coworking space. They might still have flexible working policies but believe that having a dedicated office space for just their company employees is a better solution.
“As the world of office occupiers shifts towards hybrid work, the biggest opportunity, and possibly the biggest challenge, for business leaders is to reimagine the role of the office and create clarity on when and why their workforce should be in the office,” the report said. Still, individual company needs vary, which is why evaluating all aspects related to the workspace is key to ensuring the best solution for supporting each company’s work dynamic.”