Coworking Market Size is Growing Rapidly
Commercial real estate (CRE) in the United States is valued at as much as $17 trillion. Within this massive industry there are diverse markets occupying different portions of the whole. One such segment—a rapidly expanding one—is coworking. Coworking market size has ballooned in recent years, firmly establishing itself as part of the traditional office-based CRE metric. But even though it’s categorized under the broad term “office space,” coworking stands apart.
CRE investors, landlords, and businesses all recognize coworking as a growing segment of the broader industry. It’s changing the landscape of traditional office stock, forcing building owners to think more about coworking as a long-term practice. The data speaks for itself. Check out a breakdown of the coworking market, its growth, and its projections for the future.
Current coworking market size
In 2019, coworking became a burgeoning industry. Coworking market size is hard to nail down because it grows with every passing month. It also depends on how you estimate the value of the coworking market itself. Is it the value of property and memberships? Or is it measured in gross revenue?
Coworking companies estimate the total addressable market size at $1.6 trillion. This includes the value of commercial leases. It paints a picture of the enormity of the coworking market, but doesn’t necessarily capture the true value—unless a company owns the building outright, it’s a leveraged capital asset. A fairer valuation of the coworking market is the value of its collective revenue. This number currently hovers around $26 billion.
Expected coworking market growth
While the current size of the coworking industry is impressive, what’s even more amazing is its projected growth. Coworking market growth from 2013-2018 measured an astounding 29%. This fast-paced expansion is set to continue with few abatements as commercial leaseholds transition to an “access over ownership” model.
Coworking’s growth is evident in a variety of metrics. These metrics include number of locations, seats, and memberships, as well as the amount of total office stock attributable to flexible workspaces. The figures are eye-opening:
- The number of coworking facilities will reach 36,000 by 2025, from 18,000 in 2019.
- By 2030, the flexible workspace market will represent 30% of U.S. office stock.
- More than 5.1 million people will have a coworking membership by 2022.
These numbers show a clear, upward trajectory across the board for coworking. More spaces, more members, and more of a role in CRE. Looking outside the U.S., the numbers become even more prolific. For example, England sees a new coworking space open, on average, every five days. China and India are also primed to contribute to global coworking, emerging as the largest markets for flexible space by as early as 2022.
Trends driving market growth
There are several major coworking trends driving the market’s rapid mainstream ascent. First among them is the shift to remote work. More than ever, full-time employees maintain part-time remote work schedules from home or coffee shops. While they appreciate the freedom and autonomy, these workers still prefer some of the trappings of a traditional office. They choose coworking for the business-casual atmosphere and the social opportunities.
Coworking statistics also suggest that rising CRE costs play a role in the prominence of the space-as-a-service business model. Companies have begun unloading burdensome leases. In turn, coworking companies have picked up the cost. They burden the lease by generating wider cash flow from patrons, while companies pay a fraction of the cost to ensure their employees get the space they need. It’s a partnership that makes sense, and the massive disruption coworking has caused proves it.
There’s also globalization to consider. As more companies do business abroad, traveling becomes a necessity. Travelers need a place to work on-the-go and companies need to be lightweight to accommodate this broad service. Coworking is the solution. As the global economy intertwines itself further and the world becomes closer, coworking will help make work just as agile.
No longer an emerging market
Emerging markets tend to be those gathering steam, poised for a breakthrough. Coworking has had its breakthrough into the mainstream—now, it’s an established market. With strong market share, the industry has room to grow as demand for coworking space increases. Based on how far it has come already, it’s possible coworking will dominate commercial real estate for years to come.
Keep reading: Benefits of coworking software.