CommercialEdge released its national office report for October, shining a spotlight once again on the reemergence of coworking spaces as a magnet for tenants, developers and investors alike. As a recent survey conducted by BOMA confirmed, office-using businesses are signaling their preference for shorter lease terms and more flexible workspace arrangements, which will allow them to quickly adjust their footprints according to their needs.
However, despite expressing a positive outlook on the future of coworking, only 17% of U.S. tenants had a significant share of flex space within their real estate portfolios at the time, according to a CBRE survey. That said, the same report noted that 59% of tenants expected coworking to make important gains within their respective portfolios in the next two years.
Moreover, the popularity of flex space is not limited to C-suite decision-makers: A joint WeWork and Cushman & Wakefield survey found that employees were also keen to spend more time working from these shared spaces. As a result, real estate brokerages are taking steps to ride this future wave by increasing their investments in coworking. For example, CBRE pumped $100 million into shared space operator Industrious — this after it had already invested $200 million in 2021.
Likewise, established coworking operators such as IWG are also looking to grow their inventories. The parent company of Regus and Spaces, it will be adding at least 500 new U.S. locations to its roster, primarily in suburbs and smaller cities. In fact, IWG already has more than 1,000 coworking locations in markets covered by CommercialEdge. Its runner-up, WeWork, boasts more than 250 spaces.
46.6 Million Square Feet of Office Space Under Construction in Q3 2022
CommercialEdge has logged roughly 139.1 million square feet of new office space that’s currently under construction across the U.S.
Prior to the pandemic, office starts routinely hovered around 80 million square feet. While the rate of new projects under construction has yet to match that pre-pandemic pace, the deficit has not been as serious as expected: Specifically, 2021 produced 62.2 million square feet of starts, while the first three quarters of this year already total 46.6 million.
Meanwhile, the supply of offices under construction has increased in some Sun Belt markets, such as Austin, where it went from 5.1 million square feet in 2019 to 5.8 million this year. Starts in other cities in this area that also had high levels of in-migration have largely remained unchanged.
$13 Billion Added to U.S. Office Sales Volume in Q3
In the first three quarters of 2022, the nationwide office sales volume totaled $69.3 billion. It was led by Manhattan with transaction totals reaching $5.45 billion. Overall, office sales in the third quarter were down $6 billion from the previous three months and were halved compared to totals reached in the previous two years.
The Washington, D.C. market was the second-largest contributor. Its $4.1 billion in sales was close to the pre-pandemic mark of $4.5 billion. To date, the highest-priced transaction on the Washington, D.C. market was that of 601 Massachusetts Ave. NW — a 478,818-square-foot property located in the Seventh Street Corridor. Completed in 2015 by Boston Properties, it was acquired by Mori Trust in August for $513 million — the largest sale by both total cost and price per square foot ($1,109).
For more highlights, read the full report by CommercialEdge. Need a reliable and up-to-date listings platform that grants you access to the most sought-after coworking solutions in major cities across the U.S.? Simply sort properties by location, size or price to find the best fit for your business:
