How coworking is changing the real estate market

Posted on September 12, 2019

Emerging technologies always affect the way we live our lives. With the rise in serviced office spaces such as virtual offices and coworking offices, we are now seeing this rising trend have an impact on the real estate market. Coworking spaces prove to commercial real estate owners that 10-year leases are not the only way to generate income. Let us take a closer look at just how coworking has changed the real estate market.

The rise of coworking

Beginning from a single office opened in 2005, today flexible workspaces have grown into a 26 billion dollar business worldwide. Studies conducted in 2019 show that there are approximately 35,000 flexible workspaces covering 521 million square feet of real estate. It is regularly used professionally by freelancers, entrepreneurs, artists, musicians and even multinational corporations. The freedom of hourly leases and the flexibility of renting a single conference room makes coworking a hit with the masses.

Coworking influence on facilities management

Coworking is beneficial to both the landlord and the user. The cost of managing and setting up utilities is shared by the tenants, which means that there is no additional burden on the business owner. Business operators earn money from the managed office facilities they provide to users, thus being able to charge a reasonable fee per desk.

Effects on brokerage

As long-term leasing agreements are reducing in number, brokers and the profession of brokerage is shifting towards advising instead of brokering. Coworking space agreements are a lot less complicated than traditional leasing agreements. These agreements are flexible, allow short-term leasing and allow for scalability, making them very enticing for new business owners.

About 10% of all offices in India are currently occupied by the coworking sector. This trend allows new business owners to find a fully furnished office for rent in Mumbai at a reasonable rate. It allows landlords to lease their property to coworking spaces that conduct regular maintenance and upkeep, thus improving the longevity of the building. Coworking is currently the third-largest contributor to office spaces in India. This is an impressive feat considering the fact that three years ago coworking was not even on the charts. Being such a profitable endeavour for everyone involved and shaking up the real estate market is one of the earliest indicators that show that coworking is here to stay.


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