The number of flexible workspaces are set to increase by 56 per cent in 2022 as the industry continues to break records according to flexible working experts.
The number of coworking spaces worldwide in 2018 was 16,599 and it’s on track to reach 18,287 by the end of 2019. The rate of year-on-year growth has slowed somewhat to 9.5 per cent compared to 15.2 per cent in 2018, but last year saw 2,188 new space openings, a record number. Around 1,000 of the new openings were in the USA. As further evidence, Office Freedom, a global flexible workspace brokerage saw its inventory grow by 45 per cent in the last year.
New space openings in 2019 are forecast to drop by around 22 per cent compared with 2018. Many operators are now focussing on increasing occupancy and profitability rather than large wholesale expansion. Although the rate of growth overall has slowed there has been a trend in growth per capita in less populated countries and states (e.g. Luxembourg, Singapore and Ireland) where demand for coworking globally remains strong.
The year before, 2018 saw a shift in market trends with more corporate clients looking for flex space. Research indicates that up to 40 per cent of individuals working within flexible spaces are part of larger organisations and this is predicted to grow to 60 per cent by 2022. Consequently, shifts towards more hybrid spaces and offering private space as well as traditional coworking are predicted by industry experts.
The latest forecasts suggest global flexible spaces will soon cross the 20,000 mark and look set to reach 25,968 by 2022. This represents 56 per cent growth on 2018 and reflects an average increase of more than 2,500 new spaces every year since 2015.
Discussing the evolution of flexible workspace, founder and CEO of Office Freedom, Richard Smith said: “Today’s flexible workspace provides a habitat that supports staff wellness, staff welfare, helping companies become happy and productive places of work. As a result, the flexible workspace industry has attracted large corporations, enterprise companies, fintech, etc. etc. Today’s flexible workspace can make you feel like a million dollars working in a 5-star hotel – I know this from personal experience – I describe the workspace (by FORA), that Office Freedom work out of in Soho, Central London as Office Paradise!
“The market continues to evolve and thrive. By 2030 up to 30 per cent of office space occupied by the corporate sector is expected to be flexible workspace. At the moment well under 10 per cent of the office real estate market is flex. As in any industry, in a cyclical world, there will inevitably be bumps in the road but relatively speaking it’s still very early days for the industry.”
Looking forward, Smith is expecting to see high growth in some markets while others mature for the rest of 2019. Smith added: “We predict greater investment leading to more consolidation from large scale providers, with smaller independents carving out niche sectors and sustainable business communities. Rate trends will continue to vary by location with certain markets witnessing a short-term dip in rates due to over-supply.
“Aside from market investment, a recent global industry study of 15,000 business people highlighted a material power shift towards employees who are demanding more flexibility. In the survey 50 per cent of employees are working outside of their main HQ for at least 2.5 days a week. Eighty-five per cent said that productivity has increased as a result of greater flexibility and 80 per cent of employees stated that, given two similar employment offers, they would turn down the one that didn’t offer flexible working.
“Two thirds of new space openings globally are new businesses entering the market the remainder are established operators, large chains and franchises. Therefore, whilst the established space operators are thriving, most new space openings are coming from businesses entering the market for the first time. Last year Office Freedom recorded a 32 per cent increase in new operators in Central London.”
Research shows a new coworking space opens in London every five days and in New York City every 7.5 days.