The occupancy rate is a percentage that is calculated by dividing the square feet occupied by the square feet unoccupied (RSF or NIA), multiplied by 100. It's been around before the coronavirus pandemic, but the onset of COVID-19 has solidified the position of coworking as the go-to workspace solution. Initially, many people thought it was just a trend that would eventually die out. However, twelve years later, what began as a movement has become an industry that has completely changed how people rent and use office space. Nowadays, many people use coworking, flexible workspace and workspace as a service interchangeably.
One thing is certain, no matter what term you choose to use, flexible work environments are here to stay. Coworking spaces have become the expected and preferred workplace for today's workforce. This is especially true as more companies opt for permanent remote work options after the pandemic. Companies that adopt hybrid work models are incorporating flexible workspace solutions into their real estate strategies to meet the needs of remote workers in different cities and countries. It's not only the growing adoption by companies that suggests coworking is the new standard, but also the increasing interest from owners, real estate developers and investors alike.
The coworking industry has been hit hard by the pandemic. Despite this slowdown in growth, research from last year shows that the coworking industry will come out of this pandemic alive and strong. Specifically, reports have found that suburban coworking spaces are the most successful in a post-COVID-19 world. As remote work becomes more popular, many are choosing to leave big cities in favor of more suburban (and affordable) areas. Currently, the 10 largest providers of coworking spaces and flexible offices represent 36% of the market (Forbes). Before the pandemic, co-working spaces were the fastest-growing type of office space in commercial real estate.
Each model and workspace is different, so ultimately, it will depend on how your RSF space is distributed in common areas, corridors, private offices and coworking spaces. With the growing real estate presence of shared office space, new competitors are emerging in the market, such as commercial real estate giants, property management companies and amateur co-workers. The profitability of your workspace depends on how you divide your interior space between common areas, corridors, individual offices and coworking spaces.
