Coworking London, Amsterdam & Brexit
Having just returned from the great cities of London and Amsterdam, one thing I can say for certain is that Brexit is causing some uncertainty. And while London is now the largest flexible workspace market in the world, and there doesn’t seem to be any slow down in coworking uptake, the word on the street and pubs say otherwise. Purely anecdotal, but some founders I spoke with are leaving to set-up their startups in Dublin, Berlin, and Amsterdam. Just mark your calendars March 29, 2019.
Only 6 markets account for half of all coworking space in US
Combined, the six gateway markets - Manhattan, Los Angeles, San Francisco, Chicago, Washington, D.C., and Boston - dominate the coworking subsector, and New York City leads the pack by a wide margin. As of mid-2018, the Big Apple accounted for 12 million square feet of coworking space, 10.7 million of which is located in Manhattan. Los Angeles follows with 3.4 percent. All told, the six markets account for 23 million square feet, or roughly half of all coworking offerings.
Workonomy, Office Depot’s attempt at a Coworking Space
Office supply stores are like toy stores for me (and quite a few grown-ups I know). So when Staples announced a coworking partnership with WorkBar earlier this year and with Office Depot opening their first location last week in Los Gatos, California, I was excited at the idea of working from inside an office supply store. The photos and the renderings look terrific, but still, when I walk into my local Staples and Office Depot, just can’t see myself working there. And really, what kind of community will flourish? Incidentally, Staples/WorkBar charges a monthly fee of $130, Office Depot's Workonomy charges $40 for daily use to $750 a month for a private office.
Franchising?
“One opportunity for coworking operators to scale up and grow quickly is through franchising” says Dallas-based Ryan Hoopes, a senior associate at real estate services firm Colliers International. And while only two major coworking operators so far, New York-based Serendipity Labs and Naples, Fla.-based Venture X, have leveraged this strategy, he expects more coworking operators to adopt the model. Actually, I found another one - Office Evolution. Except when you look at this site and the prospectus, it’s so cookie-cutter that it makes one wonder can, and should, coworking really be franchised? I guess we’ll wait and see.
Additional bullet-points from Cushman & Wakefield to reflect upon this month:
Inventory in this office niche has increased by 5 million square feet every year over the last three years
Before you go to bed tonight, another 15,000 sf of coworking space will have opened in the U.S.
Investors are comfortable with a coworking space ratio of 15-30% of a building
This ratio is increasingly perceived as a strategic necessity by landlords and investors
Flexible office space will triple in size—representing 5-10% of office inventory in many markets
Coworking demand is strong, but only 30-40% is additive
And my favorite takeaway:
Coworking is well-positioned to weather an economic downturn