The flexible office sector is expected to continue expanding through 2025 following a year of growth driven by evolving work preferences and technological advances.
Coworking inventory grew 13% by square footage year-over-year, as of the third quarter of 2024, according to data published by CoworkingCafe. The total number of coworking spaces increased by 22% during the same period last year.
Both suburban and tertiary markets have experienced growth in coworking spaces. In suburban markets, hybrid employees are often choosing to work closer to home, in part to avoid lengthy commutes, according to Cushman & Wakefield's flexible office outlook. For example, New Jersey’s inventory of coworking space grew 36% year over year, which highlights strong demand from one of New York’s major suburban markets.
Meanwhile, growth in tertiary markets saw coworking footprints grow by 20% in aggregate year-over-year, the report said. Indianapolis and Nashville had the strongest growth at 40% and 35%, respectively.
Tertiary markets make up about 10% of total coworking inventory, up from 9% in 2023. Secondary markets have 47% of flexible office space, up from 45% in 2023, and gateway markets have 43% of flexible office space, down from 45%.
Flexible office solutions are an opportunity for owners looking to reposition buildings struggling with occupancy, said Cushman & Wakefield. Some owners have developed their own brand of flexible office space or have partnered to operate their flexible office offerings. Others have begun offering self-managed flexible office space.
Flexible office space is a key component of the evolving reimagined cities trend that is prompting cities to rebalance their real estate portfolio mix.
“Reimagining cities includes a rebalancing of the live-work-play environment that defines cities,” Cushman & Wakefield said in its Experience per Square Foot (XSF) report. ”Flexible office has been at the forefront of this rebalancing, bringing both live and play into the work setting for over a decade, creating spaces that promote both socialization and collaboration — employees’ top stated purposes for the office.”