In recent years, there’s been a significant increase in demand for coworking spaces as a result of the rise in remote work and the need for flexible solutions. And, the current uncertainty in the economic sector is driving more businesses to downsize their workspaces and stray from strict, long-term leases. Accordingly, the office market is bound to continue to face some challenges in 2023 as tenants seek to boost productivity and efficiency, while also reducing their office footprint and improving their bottom lines.
With that in mind, CoworkingCafe — a nationwide coworking space search website — released a comprehensive report on the state of the coworking industry. Specifically, analysts used proprietary data to determine exactly how this sector was performing in the nation’s top markets. Namely, the report considered the number of coworking spaces as of March 2023; their square footage and distribution; the median prices; and the top operators on the market.
National Supply of Flexible Workspaces Exceeds 5,600
The number of coworking spaces nationwide grew to 5,612 as of March 2023. What’s more, according to a recent report, coworking spaces have established themselves not only in busy urban cores with vibrant business districts, but also in a number of thriving American suburbs.
In particular, coastal markets boasted the highest numbers of coworking spaces, with Manhattan, N.Y.; Los Angeles; Washington, D.C.; Boston; and Houston in the spotlight. Especially in light of the pandemic years, these areas were best served by coworking spaces due to their ability to provide flexibility, lower costs and short-term leases.
Almost 113 Million Square Feet Attributed to Coworking Spaces Nationwide
According to the most recent data, there was 113,742,866 square feet of coworking space in the United States, which accounted for 1.67% of all office space inventory. This figure has significantly increased since 2010, when JLL claimed that flexible workplaces nationwide occupied about 12 million square feet. As such, this amounted to a tenfold expansion of this industry in the last 13 years.
National Median Prices in Coworking – From Virtual Offices to Open Workspaces & Dedicated Desks
Virtual offices were priced at a median of $94, while open workspaces were at a national median of $134 and dedicated workstations went for $326.
However, the median prices in several markets were significantly higher than the national medians: More precisely, rates in Manhattan and San Francisco — two of the most populous and sought-after corporate hubs — were, in some cases, twice as high. For instance, in Manhattan, the typical monthly cost for an open workspace was $300, which is more than twice the national average. Across the country, the median price for the same kind of subscription in San Francisco was $357, which is more than $200 more expensive than the national average.
Meanwhile, open workspaces and dedicated desks — two of the three types provided by coworking spaces — registered somewhat higher prices in the Denver market, coming in at $160 and $340, respectively. According to the most recent Yardi Matrix National Office Report, as of January 2023, Denver’s office vacancy rates had skyrocketed — a trend that was mostly attributed to remote work.
Similarly, the American Community Survey conducted by the Census Bureau revealed that 28% of Denver’s active labor force worked from home, which was one of the highest percentages in the nation. Yet, Denver claimed fewer than 200 flexible workplaces (which was substantially less than other top cities). Thus, the high demand that remote employees create here could explain the higher costs in this region.
For a more detailed analysis of coworking pricing in the top U.S. metro areas, read the recent CoworkingCafe report on coworking subscription fees.
Markets with Most Coworking Spaces
The East Coast-West Coast rivalry still holds true in terms of the availability of coworking spaces, with Los Angeles coming in second with 265 flexible workspaces to Manhattan’s 290. Clearly, large populations and well-established business sectors in both markets support the need and demand for coworking spaces, as well as regular offices. According to recent reports, the two cities saw the greatest demand for all types of office space, likely due to being the furthest along in their post-pandemic recovery.
Next, with 243 flex workplaces, Washington, D.C. ranked third in the nation. In fact, the federal government has been quite transparent when it comes to adopting remote and hybrid work as a strategy to give workers in this sector a competitive market advantage. Consequently, it’s anticipated that coworking spaces will continue to gain momentum in this area and become a popular choice for many government employees.
Chicago also had a sizable number of coworking spaces, boasting 235 locations. According to data from CBRE, office vacancy rates in this area have increased since the pandemic began: Chicago’s vacancy rates were 13.8% three years ago and increased to 21.4% by the end of 2022, primarily due to the rise in remote and hybrid work. Additionally, the flight to quality and location was also evident in Chicago, according to Globest. This indicates that preferences for workspaces are shifting and there’s a greater desire for high-class amenities, which coworking spaces are known to provide.
The fifth and final metro area with more than 200 coworking spaces was Dallas-Fort Worth. The metroplex boasted 225 flexible workplaces that cater to the large number of firms operating in the area.
At the opposite end of the spectrum, Fort Lauderdale, Fla., had 67 coworking spaces (only one fewer than Nashville, Tenn.), while Kansas City, Mo., had the least number of flexible workspaces for its citizens among the top 25 markets, with just 52 spaces available.
Leading Markets by Square Footage
Despite having nearly as many active coworking spaces as Manhattan, Los Angeles only had half the of the total square footage (6.75 million square feet, as opposed to Manhattan’s 13.57 million square feet). In fact, given that Manhattan is notorious for its small-space real estate, the size of the coworking sector there may even come as a pleasant surprise.
Conversely, the market with the least amount of coworking space was again Fort Lauderdale, which had a total of just 1.26 million square feet — less than one-tenth the size of Manhattan’s. Even Minneapolis-St. Paul and Kansas City (both in the Midwest) had somewhat more space than Fort Lauderdale, with respective totals of 1.39 million and 1.36 million square feet.
The difference between Manhattan and Los Angeles became even clearer when looking at the average square footage per market. As measured by this metric, Brooklyn registered about 20,000 square feet less than Manhattan, which had an average of more than 46,000 square feet. On this list, Chicago came in third, followed (perhaps unexpectedly) by Kansas City.
Otherwise, the areas with the lowest average square footage among their coworking inventories were Denver, New Jersey and San Diego. In particular, San Diego featured coworking spaces with an average size of 16,000 square feet. Dallas-Fort Worth, Miami, Fort Lauderdale and Minneapolis-St. Paul were additional markets with space below the national average.
Most Markets Dominated by Large Coworking Operators, with Exception of Brooklyn
Industry juggernauts Regus, WeWork, Industrious and Spaces were the top operators with the largest numbers of coworking spaces on a national scale.
However, local or independent operators made their presences known in various markets, despite the national and frequently local monopolies attributed to large coworking giants. For example, regional California operator Barrister Suites Executive held 19 slots in Los Angeles, although Regus was the overall leader here with 43 locations.
Similarly, Brooklyn saw small, local coworking space operators surpass larger players in the field: WeWork (the only big operator in this market), had four spaces, while smaller players GreenDesk and WorkHeights each had six. Moreover, Two Trees surpassed WeWork in the Brooklyn market by claiming five spaces.
To see the extended methodology used for this study, visit the CoworkingCafe blog.