At the 2019 PM Expo event in Toronto, Yardi Kube hosted a breakout session in conjunction with iQ Office Suites, the third largest coworking space in Canada. Dale Hersowitz, Yardi vice president of coworking, and Kane Willmott, CEO of iQ, shared the stage to discuss the prevalent coworking trends from a Canadian and global perspective.
The session drew a diverse crowd including designers, architects and facility managers, among others. Some attendees explored the benefits of the coworking industry for the first time.
Coworking benefits for landlords
As the office industry evolves and repurposes concepts from coworking, it’s evident that landlords would benefit from adding coworking to fill vacancies.
In addition to increasing income per square foot, it is a rapidly growing segment in the most desirable downtown areas of major cities. The appeal and demand for a building increases with a coworking space as a major occupier.
Landlords looking to enter the industry are exploring management agreements with operators. Since many landlords lack the coworking insights to independently operate a shared workspace, those who see the benefits of diversifying their portfolio are partnering with experienced operators to run a successful space in their building.
The landlords also reach a new demographic who is looking to access a professional setting in a prime location at an affordable rate. It’s not uncommon for startups and small businesses that begin in coworking spaces to outgrow the space they’re leasing, and expand on their own within the building.
As an operator with spaces in five of the six largest Canadian cities, Willmott is well versed in Canadian coworking trends. He explained how the total square footage of flexible office space has nearly doubled in four years, reaching 7.4M square feet in 2020. This will represent over 2% of the total downtown inventory. In the same time frame, Vancouver alone will have seen a 112% market growth.
For a market that did not adopt the rise of coworking as quickly as the U.S or the U.K, Canada is quickly starting to make up for lost time. Five operators now have over 120,000 square feet of space nationally, with iQ up to 200,000 square feet in 2020. This places them behind only Regus and WeWork, the most visible worldwide brands in the industry.
Per a recent report from Instant Offices, the U.S had only 283 coworking spaces in 2010. As of December 2019, there are now an estimated 5,476 spaces. That trend is forecast to grow by nearly 1,000 more locations in the next two years.
The worldwide scope of the largest coworking cities demonstrates the remarkable achievement of the young industry. There are 13 different nations and four continents represented in the 18 cities with the most coworking spaces. Enquiry growth is also rising exponentially in 17 of those 18 cities, up 46% just this year in New Delhi.
In the 2019 Office Tenant Preference survey done by Informa, survey participants expressed high demand for the following:
- natural light
- conference rooms within the office space
- parking lots
- ability to receive packages during work hours
- exterior green space
- energy efficient lighting
Although coworking is still considered a newcomer in commercial real estate, there have already been noticeable shifts in the industry. Initially, there was a focus on executive offices. Next came a rise in the shared desk space model. Currently, workspace as a service is the predominant trend.
As iQ Office Suites can attest, the premium offerings in the market must be artfully and thoughtfully designed, service oriented and focused on privacy. Coworking still keeps its core of networking opportunities, community building and hot desk concepts. Security, service and unique design, however, have become more prevalent in the top spaces, while keeping the private spaces in a shared workspace.
Many coworking spaces still use open networks, a trend that’s starting to change. Wi-Fi security is a very significant topic in the industry and protecting members’ data with VLANs, two-factor authorization, firewalls and malware protection is an ever-growing solution to hacks and data breaches. This is especially significant as larger companies continue to enter the market. In the aforementioned survey, 77% of respondents said it was essential to have secure infrastructure with cyber security enhancements in their office.
In regard to the future of coworking, Hersowitz stated the importance of the Internet of Things (IoT) to the success of operators. The IoT is the driver behind technology such as smart offices, energy efficient appliances, HVAC, door access control, and inventory and space management. Each is a critical factor to coworking operators.
Members consistently place hospitality and amenities at the forefront when selecting a new space to join. Comfort, security, concierge and personalization will continue to be significant drivers for members. Operators should be ready to adjust their spaces accordingly.
Coworking and the shared workspace industry will continue to make an impact at PM Expo on a yearly basis. Learn more about how Yardi Kube is the platform of choice to power the largest coworking spaces.