Dive Brief:
- Despite efforts by employers to bring workers to the office more frequently, employees are exercising a preference for flexibility in both schedule and location, driving demand for flexible office options, according to Cushman & Wakefield’s 2025 flexible office outlook.
- The U.S. has seen a 13% year-over-year increase in coworking inventory by square footage as of the third quarter of 2024, with the total number of spaces growing 22% over the same period, Cushman & Wakefield says, citing data from Coworking Cafe.
- By implementing more flexible office options within an occupier's portfolio, companies can offer greater choice for their employees, providing both location and schedule flexibility to accommodate distributed workforces, Cushman & Wakefield’s report notes.
Dive Insight:
As some companies attempt to push all workers back into the office, others have decided to lean into coworking, driving an increase in the number of coworking spaces, according to Yardi’s Q3 National Office report. In 2024, evolving work preferences and technological advancements spurred growth in the flexible office sector and the momentum is expected to continue, with demand for flexible offices set to rise in 2025, according to Cushman & Wakefield’s report released late December.
Operators are adopting various strategies to expand flexible office offerings, including portfolio enhancement and landlord-led initiatives, the real estate services firm says. By implementing flexible options into office portfolios, some landlords are developing their own flex office space brands to provide tenants with “increased flexibility as the workplace continues to evolve, its report states.
Landlords are additionally offering self-managed, flexible office space to diversify their building portfolios, enabling them to access “a wider pool of potential tenants,” the report says. Cushman & Wakefield notes that owners are collaborating with partners to operate their flexible office spaces effectively.
Both suburban and tertiary markets have accounted for a significant share of growth in coworking inventory, Cushman & Wakefield says. For example, New Jersey’s inventory of coworking space grew 36% year over year as of Q3, “demonstrating strong demand from one of the major New York suburban markets,” the firm notes.
Secondary markets recorded the largest share of flexible office space at 47% in Q3 2024, up from 45% in 2023, according to Cushman & Wakefield research. Gateway markets, including New York City, Boston, Chicago, Los Angeles and Washington, D.C., saw a drop in share of flexible office space from 45% in 2023 to 43% in 2024, the report notes.
Tertiary markets, which make up 10% of total coworking inventory, saw 20% aggregate year-over-year in footprints, led by Indianapolis and Nashville, which grew the most at 40% and 35%, respectively, Cushman & Wakefield says.
Providers are expected to make “opportunistic plays in 2025,” acquiring smaller firms in select markets and adding to their inventory, per the report. The firm noted that as stakeholders work to revitalize cities through a “rebalancing of the live-work-play environment that defines cities,” flexible office space has been at the forefront, creating spaces that promote “socialization and collaboration” — employees’ top-stated purposes for returning to the office, Cushman & Wakefield says.
