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Co-working spaces make up half of net absorption

Posted on April 5, 2019 in Posts by Zoe Hughes

The NAREIM Innovation Summit took a deep dive into co-working spaces this week in Chicago – and heard that flexible office solutions accounted for 58 percent of net absorption in 2018, a 152 percent increase year-over-year.

Up to 40 percent of that demand comes from new tenants to the office market, NAREIM members were told, with more than 60 percent of co-working space demand coming from existing office-users.

The NAREIM Innovation Summit explored how real estate investment managers are underwriting co-working providers as tenants, and also talked about how providers are working alongside managers as JV partners as well as competitors. Questions also explored the sustainability of flexible space providers to withstand a downturn, manager concentration risk thresholds per asset and portfolio, corporate guarantees and the infrastructure required to establish your own co-working space in an asset.

As the industry weighs the challenges and opportunities posed by flexible space solutions in office and multifamily, NAREIM members were given insights into the priorities behind corporate real estate decisions in the office market today. Key takeaways included: