At this point in the coworking industry, there is little question that coworking is expanding rapidly. Far from the small-scale, scattered spaces that comprised the industry a few years ago, the current coworking industry is evolving towards more scalable models of creating coworking communities, and toward a wider range of services offered to clients.
JLL recently released research on the coworking industry trends heading into 2019, noting that coworking spaces now accounts for 5 percent of U.S. office space—and is expected to account for 30 percent in the next 11 years.
Location, Location, Location
The top players for growth in coworking are still major cities, with New York, San Francisco, Silicon Valley, Austin, and Boston rounding out the top five list for potential growth.
However, it is important to note that there are more concerns than potentiality when starting a space even in one of these top locations. “Influencers,” as JLL terms them, vary across the lists. For example, New York’s growth potential is mainly influenced by population and entrepreneurial presence, while San Francisco shares the entrepreneurial presence but benefits more from the presence of tech industries than from sheer density of population. Similarly, Silicon Valley, sees little influence from population density at all and instead has the benefits of tech industry presence and venture capital.
The various influencers from JLL are as follows:
- Financial services
- Supply constraints
- Mixed-use development
- Pro-business governance
- Young talent
- Healthcare
- Corporate HQ relocations
- Tech firms
- Relative value for tenants
- Media and entertainment
- Regional population
- New development
- Population growth
- Nonprofits
- Political advocacy
- Government contractors
- Life sciences
- Venture capital
- Entrepreneur base
The wide variety of factors in determining the potential of a location for a coworking space illustrates an important overall trend for coworking as well. Space owners and operators—more than ever—must know the exact population they are serving, why they are serving them, and how to attract and retain these individuals. Even spaces outside of JLL’s “top cities in the industry” list will find it critical to understand the influencing factors in their own communities and to use these influencers to their advantage as they plan, expand, or update their space.
What Drives Growth?
JLL cites coworking giants such as Regus, WeWork, and Convene as the main drivers of growth for the coworking industry overall, illustrating a need for coworking spaces to continue to work toward scalable options. While scaling does not always mean opening new spaces, the coworking industry has demonstrated its continued emphasis on innovation and evolution.
For example, while some communities will focus on the tech industries they tend to serve with their spaces, it is important to note that tech employees only comprise an average of around 5 percent of coworking clientele. The high percentages of other industries represented in coworking will continue to force space owners and operators to tailor to a variety of industries as they design spaces and service plans to reach such a wide variety of members.
Influencers can determine some of this tailoring in a variety of ways, and the influencers listed by JLL are in turn influenced by other factors. For example, “young talent” often becomes an important factor for the success of coworking spaces in a given city. However, the presence of young talent, JLL explains, is often due to low cost of living, which can, in turn, be due to any number of factors.
One of these factors can be governmental involvement in business development, as is the case in several of JLL’s top cities list for growth going forward. These governmental efforts can range from urbanization efforts in downtown areas to economic development or redevelopment packages and incentive programs offered to businesses (and sometimes coworking spaces).
