The amount of flexible office space – sometimes known as coworking office space – continues to grow both across the nation and in key Midwest markets, according to the latest research from CBRE.
According to CBRE, there is currently 71 million square feet of flexible office space in the 40 U.S. markets it studied, a figure that accounts for 1.8 percent of the office space in these markets.
Don’t get used to this low figure, though. CBRE predicts that flexible office space will expand to about 13 percent of U.S. office space by the year 2030, when it reaches up to 600 million square feet.
WeWork remains the biggest name in flexible office space. But there are plenty of other providers, too. Users choose this type of flexible of coworking office space as a way to rent desks, computer equipment, conference rooms or office space on a temporary basis.
What’s behind this growth? CBRE points to demand from small businesses and enterprise users alike. These users prefer the flexibility of office space on relatively short-term leases, something that allows them to expand or contract their space according to the needs of their businesses.
“We’re seeing a fundamental change in the expectations that organizations and their employees have for the workplace,” said Julie Whelan, America’s head of occupier research for CBRE, in a statement. “This change is spurring an increasing number of companies to engage with flexible office solutions that provide the physical environment and business terms they prefer.”
Flexible office space is already having an impact on office markets across the Midwest. CBRE pointed to Minneapolis as an example.
According to CBRE’s 2019 flex office report, the amount of flex office space in the Minneapolis market grew 17.7 percent on a year-over-year basis, an increase of 169,000 square feet from the second quarter of 2018 to the second quarter of this year.
This means that the Minneapolis market now boasts about 1.1 million square feet of flexible office space, a figure that accounts for 1.6 percent of the market’s total office inventory. A year ago, flexible office space accounted for 1.4 percent of all office space in this market. That ratio is slightly below the national figure of 1.8 percent.
“Office space continues to adapt and evolve to meet the needs of organizations and their employees, who continue to redefine the environment in which they work,” said Jeff Jiovanazzo, managing director of CBRE’s Minneapolis business, in a statement. “There is no better example of this than the rise of flexible office space in Minneapolis, which has seen consistent growth year-over-year for almost a decade.”
Much of the flexible office space is concentrated in Minneapolis’ CBD, which accounts for 31 percent of the market’s flexible space inventory and 39.2 percent of flexible space transactions.
CBRE also reported that the inventory of flexible office space grew to 472,000 square feet in Detroit at the end of the second quarter of this year. That’s an increase of 2,000 square feet from a year earlier.
But flexible office space in this market still accounts for just 0.6 percent of Detroit’s total office inventory, according to CBRE. That’s well below the U.S. average. CBRE said that downtown Detroit accounts for 44.2 percent of the flexible office space inventory.