Coworking has reached the size and scale where it's starting to have second order impacts on the broader real estate industry.
Farthest along is coworking's impact on office design. As anyone who's recently visited a newly designed corporate office knows, they look a lot like coworking spaces.
And, of course, corporations are increasingly housing employees in coworking spaces. Allwork's recent article The Top 5 Most Valuable Companies that are Using Coworking nicely covers this trend.
But the coworking's impact on commercial office real estate goes much further.
Thanks to a variety of workplace-as-a-service offerings, large corporations are starting to outsource the design and operation of their offices to firms offering to build and operate coworking-like office spaces to house their employees.
For example, the global banking giant UBS recently announced it's turning to WeWork to design and run one of their office space's in New York.
It's one of 30 large corporations using WeWork's Powered by We service, which designs, builds, and operates office space for internal use by corporations. WeWork is also providing similar services for small to mid-sized firms, which they call HQ by WeWork.
The retail real estate industry is also being impacted by coworking.
According to a recent study by JLL, coworking spaces at retail properties are predicted to grow at an annual rate of 25% through 2023.
JLL also suggests coworking may help landlords fill empty spaces and revitalize malls hit by the decline of department stores.
An example is mall operator Macerich. They've entered into an agreement with the large coworking chain Industrious to add coworking spaces to some of their U.S. malls.
The mall benefits from leasing space and the foot traffic provided by the coworking space. The coworking space benefits by being in an attractive location with lots of amenities nearby.
When we first started researching coworking back in 2007, one of our first reactions was that coworking could potentially provide companies and individuals much greater levels of efficiency, flexibility and agility than a traditional office space.
That potential is being realized and leading to broader changes in the real estate industry.
Coworking's 2nd order impacts extend beyond real estate. They include increasing the move to flexible and distributed work, helping drive the shift towards greater work/life integration and, of course, enabling the growth of independent work and the gig economy.
We'll cover these other 2nd order impacts in more detail in the future.
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