The rise of the contingent workforce and take up of flexible workspace by corporate occupiers has driven growth in the US flexible office market in 2015/6, according to our latest research. In what was the most comprehensive study of co-working and executive suites in the US market to date we discover that the market continues to go from strength to strength.
Co-working has grown more than 10% across the US in the last year alone and combination centers offering both executive suites and co-working spaces have expanded by 12.9% as existing operators seek to take advantage of the growing demand for collaborative and agile workspace.
The US is now home to 3,596 centers, the largest markets of its kind in the world with the UK following behind at 3,290 centers. The increase in centers offering some form of co-working is four times that of conventional executive suites, which have increased by only 3.4% in the same time period.
Tim Rodber, CEO of The Instant Group, said: “Co-working has proved to be a powerful driver of the market in the US and a trend that has evolved from its Silicon Valley roots to capture the imagination of the rest of the global market including cities as far flung as Hong Kong and Tokyo.
“Co-working has benefited from early adoption by tech and media firms who have, in turn, done a marvelous job of promoting shared workspace and collaboration between start-ups and established firms. But really, what we are seeing is a broad expansion of flexible workspace solutions as companies of all sizes seek out collaborative workspaces that challenge the conventional office market.
“‘Corporate’ demand for agile space solutions, which offer shorter deal terms and transparent, monthly pricing are driving markets such as Manhattan and benefiting existing brands such as Regus but also encouraging the rapid growth of the WeWork brand.”
The US flexible workspace market is still relatively concentrated with 50 per cent of the total market located in five states and the same proportion of centers in just 50 cities across the country.
California leads the way as the state with the most flexible space but also the largest number of dedicated co-working spaces, driven by widespread adoption of co-working by the TMT firms of San Francisco and Palo Alto.
- There are now 103 “pure” co-working spaces in the Sunshine State, more than double that of any other state in the US.
- Desk rates decreased in NYC in the past year by 2.9% but it is still the most expensive city in the US for flexible workspace at $1,047 per desk per month.
- Washington DC is in close second to NYC with an average workstation rate of $1,022, an increase of 17.2% on the previous year.
- San Francisco has also experienced double digit growth in workstation rates of 11.5% which take it third place in the list of most expensive locations, some $100 more expensive than Los Angeles in fourth place.
The greatest proportional growth in flexible workspace per city has come outside the top ten largest cities, in secondary locations such as San Jose, Portland and San Antonio. These markets have seen market growth of up to 15% as the number of flexible office options grow across the US.
“The most telling statistic originates in two of the US’ more mature markets – San Francisco and Washington DC – where despite increases in the supply of space by 6.3% and 7.3% respectively, workstation rates have grown rapidly,” explains Tim Rodber.
“Rate increases of 11.5% in San Francisco and 17.2% in Washington DC would suggest that the market has enough occupier demand for space to support relatively large increases in supply and still introduce aggressive rate hikes in the market. This would mark them both as areas for growth in the coming year.”
Download Instant’s 2016 US Serviced Office Review