The rise of remote and hybrid work models, along with the increasing popularity of flexible work arrangements, has significantly contributed to the growth and expansion of the coworking industry. As a result, the demand for coworking spaces has soared, and coworking companies have emerged as key players in the modern work landscape.
So, to provide a comprehensive and up-to-date overview of the current state of the coworking industry in the top 25 markets in the U.S., CoworkingCafe conducted an extensive analysis of its own data from Q3 2023. The purpose of this analysis was to delve into the recent developments and trends within the industry by comparing key metrics such as occupancy rates; expansion strategies; and market penetration to the previous quarter, Q2 2023.
National Coworking Supply: Achieving Balance & Steady Growth
In the latest quarter, the national coworking inventory reached a state of balance with a total of 6,172 spaces. This represents a small increase of 0.15% compared to the 6,163 spaces in Q2. It’s also worth noting that the growth rate has now stabilized, following a significant surge of 10% from Q1 to Q2.
Among the top markets, 13 experienced a decline in coworking spaces. Manhattan, N.Y., was particularly affected, with a decrease of over 10%. However, there were also positive trends in the industry. Both Raleigh-Durham, N.C., and Phoenix showed impressive growth rates, with Raleigh-Durham witnessing a 13% increase and Phoenix experiencing an 11% growth.
Virtual Office Rates More Affordable in Q3
In terms of pricing, the median rate for virtual offices in Q3 dropped to $125 — a 12.5% reduction from June’s $143. Among the cities, Washington, D.C. had the lowest median price at $80, followed by Miami at $99. On the higher end, both Chicago and New Jersey exceeded the $200 mark with rates of $205 each.
Moving on to open workspaces, the national median price remained consistent at $149. However, there were some locations that offered open workspaces below the national median, including Phoenix; Orange County, Calif.; and New Jersey with prices as low as $119. Conversely, Brooklyn, N.Y., and Manhattan had the highest prices for open workspaces at well above the national rate.
As for dedicated desks, they maintained a median price of $329. Here again, Manhattan and Brooklyn surpassed the national median for dedicated desks with prices reaching $529 and $455, respectively.
Leading Coworking Markets: Manhattan Declines, but Still Holds the Lead, Raleigh-Durham & Phoenix Thrive
In Q3, Manhattan had the largest decrease, losing 11% of its coworking spaces. In contrast, Los Angeles had a minor decrease of 1%. This resulted in a significant narrowing of the gap between these two cities. At the same time, Washington, D.C. maintained a strong presence with 251 spaces, while Chicago and Dallas-Fort Worth swapped positions with Chicago seeing a 2% decline and DFW experiencing a 5% increase.
In terms of growth, Raleigh-Durham and Phoenix showed impressive increases of 13% and 11%, respectively. Seattle also experienced noteworthy 7% growth, while Salt Lake City’s achievement was particularly remarkable: Despite entering the top 25 markets in Q2 of 2023, Salt Lake City demonstrated a significant 7% growth.
Leading Markets by Square Footage: Declines in Manhattan & New Jersey, Growth in Phoenix & San Francisco
In the national context, coworking spaces across the country saw a small decrease in size with a decline of 2%. Specifically, in Manhattan and New Jersey, there was a notable decrease of 11% in size, indicating the closure of these larger spaces. Similarly, Washington, D.C. and Indianapolis experienced declines of 8% and 6% in size, respectively. In this case, the declines might be attributed to the closure of larger coworking spaces, potentially resulting in an overall decrease in size nationwide.
Otherwise, Phoenix stood out by opening nine new coworking spaces, leading to an impressive 8% growth in size. Another notable city, San Francisco, witnessed a commendable 7% increase and surpassed the 3-million-square-foot mark. And, despite a decrease in the number of spaces, Manhattan’s average size managed to grow by 0.3%, demonstrating resilience in the face of challenges. Additionally, Brooklyn outperformed San Francisco by showing a remarkable 5% increase from Q2, which marked the highest growth among the top 25 markets.
Coworking Operator “Spaces” Experiences 4% Increase
Regus, WeWork, Industrious, Spaces and Premier Workspace were the leading players in the coworking space market across the country with more than 70% of their locations concentrated in the top 25 markets. Specifically, during Q3, Industrious expanded its presence by 3%, while Spaces experienced a 4% increase by adding new locations. Meanwhile, Regus and Premier Workspaces saw slight reductions of 3% and 1%, respectively.
To learn more about the full Coworking Industry Report Q3 2023 from CoworkingCafe, including the research behind it and its methodology, you can check it out here.
If you haven't decided to join a coworking space yet, take a look at what the top markets in the U.S. have to offer in terms of collaborative and shared spaces:
