The openings underscore a major trend in coworking: Not its expansion into markets beyond the San Francisco-New York fulcrum that many operators such as WeWork rode to prominence – that’s been going on for a couple of years now at least – but rather coworking and flexible office space’s potential in these secondary markets.
As they do scratch the surface, analysts say that these secondary and tertiary markets could end up illuminating much more about the future of coworking than the next WeWork or Regus lease in the Bay Area or Manhattan.
The trend is driving coworking operators to move into those secondary cities in anticipation of larger companies pursuing more coworking space beyond the big gateway markets.
“That’s why a lot of these coworking companies that have opened in these kinds of secondary and tertiary markets are doing so in the CBDs of those markets,” Schneider said, referring to central business districts.
Ten markets – Manhattan, Los Angeles, Washington, Chicago, Boston, San Francisco, Dallas-Ft. Worth, Seattle, Denver and Atlanta – accounted for more than 70 percent of the nation’s coworking and flex-office space inventory as of May 1, according to CBRE. The firm’s research also showed that the 10 biggest markets accounted for nearly two-thirds of flex-office leasing in the first quarter of 2019.
This growth potential has spawned a veritable parlor game in commercial real estate concerning the fate of coworking as it expands beyond its original gateway markets to the likes of Charlotte and Nashville.
More than one in 10 coworking locations worldwide were a joint venture between a landlord and a coworking operator as of August 2018, according to Cushman & Wakefield, and that share has only likely grown.