Real Estate Marketing & Beyond
Businesses seeking flexible short-term office solutions are showing greater interest in co-working spaces as the fast-spreading COVID-19 Delta variant causes uncertainty over plans to return to work.
Some of the major companies snapping up co-working spaces are in the technology sector. The Wall Street Journal reported tech firms are signing contracts for so-called “hot desks” or for bigger spaces of more than 50,000 square feet that often last less than a month.
Companies see co-working spaces as the perfect short-term solution while they think about their own longer-term return to work policies. Many had planned to return to the office this fall, but the surge of Delta variant cases derailed that timeline for many.
“In a time of uncertainty we provide flexibility to corporations and small businesses trying to figure out what their employees want,” Melinda Holland, WeWork’s head of sales for the U.S. and Canada, told the Journal.
WeWork is one of the best known co-working space providers and pulled in revenue of more than $215 million in July alone, it said. That month was one of the strongest desk sales on record, it added. Another shared working space firm, Industrious, also reported the strongest sales in its nine-year history that months.
“Inquiries are off the charts with very short lead times,” Debra Larsen, chief executive and founder of WorkHouse, which rents out desks in New York. “Companies are solving for September.”
The idea is to use co-working spaces to provide an alternative to employees who’re working from home another option. Some firms are using these spaces as a substitute for their pre-pandemic headquarters that may congregate a higher number of people. Or they’re using it as a way to recruit more employees—without relocating them—by offering them workspaces all across the country.
While co-working spaces take off, leasing activity in the office market has been recovering much more slowly. Office vacancy has climbed to 18.5% in the second quarter, which is nearing a 19.7% record that was reached in 1991, according to Moody’s Analytics.
"Companies are still in that discovery phase that work is going to be done differently," Julie Whelan, global head of occupier research at CBRE Group, told The Wall Street Journal. "The beauty of these [co-working] providers is that if something doesn't work they can bail and try something new."
