Connected Solutions

Canadian Coworking Market Overcoming Obstacles Amid COVID-19


The Canadian coworking industry has grown rapidly throughout the last decade. A 2019 CBRE report showed that the flexible office sector had quadrupled its footprint since 2014, and it is expected to surpass 7 million square feet of space this year. However, the COVID-19 pandemic has thrown plans in all commercial industries into a state of doubt. While all provinces have rolled out new reopening guidelines, the fact is that we have spent over a quarter of the year battling COVID, placing one in seven small to medium-sized businesses at risk of permanent closure. This has left many questions surrounding the future of the workplace from a physical and a cultural standpoint and its effect on the progress of coworking in Canada.

Adapting to working remotely

According to a survey by networking provider Citrix, 55% of people who switched to work from home (WFH) environments during the pandemic said they would like to continue to WFH at least more frequently. This is an area where the coworking industry can capitalize. The simple answer to why coworking will survive these trying times is that people still need to work.

The market segment that has been the base of coworking memberships is still operating, albeit in new or different circumstances. Lawyers, accountants, freelancers, entrepreneurs, digital nomads, and many other groups of coworkers still have jobs to do. They may have different tasks and a different workload, but the fact remains they need space to work. Some may choose to WFH long term, while others may feel the need for human interaction with like-minded professionals. A new segment of the workforce that had never worked from home before may find that there are distractions or loneliness in their homes throughout the day, leading them to explore coworking spaces, as well.

A new office look and feel

The new iteration of the workspace will need to increase space per employee, with significant infrastructure changes needed for health and safety. Coworking spaces, like traditional offices, will need to implement fundamental additions such as partitions, sanitation stations, walkways without desk space to allow for distancing, air purification, and divisions in private offices where multiple people sit, just to name a few.

There will be a need for more virtual meetings to adhere to new capacity limits for meeting rooms. This means internet speed and bandwidth limitations may become a greater factor now than before (5G implementation may be expedited).

A major advantage for the coworking industry is that social distancing is more feasible in a shared workspace than in a traditional office. A coworking operator can space out seating areas, keep unoccupied desks, install or encourage phone booth usage, among other options to facilitate social distancing. A cubicle set up or common break room makes it difficult to avoid contact with others.

There will surely be hybrid working models, as well. Some companies are choosing to have a percentage of their workers in the office every other day or every other week, adhering to limited capacity. Certain features of offices like meeting rooms and kitchens and entryways simply cannot be removed or altered. Signage should be implemented showing where to walk, reminding workers to not gather in common areas, and encouraging 6 feet of distance.

The future of Canadian flexible workspace

There is tremendous room for growth in Canadian coworking, even with an explosion of spaces over the last 3-5 years. Per Cushman & Wakefield’s research, in Toronto, 38% of the office market growth between 2017 and Q1 of 2020 was attributed to coworking spaces. However, coworking still represents only 1.4% of Toronto’s total office inventory. In Vancouver, however, coworking represents about 3% of the office market, and the main factor preventing additional growth is downtown’s sub vacancy rate of 2%. Montreal has seen its coworking space double in the last five years, to approximately 1.1 million square feet. While the pandemic surely delayed some expansion and new openings, overall it is not expected to halt the growth throughout the largest Canadian markets.

Coworking conglomerates WeWork and Regus combine for nearly two-thirds of spaces in these areas, but with a shift to more suburban coworking spaces to avoid mass transit and densely populated areas, members could see an influx of local operators establishing a niche closer to workers’ homes.

CBRE’s Canada Quarterly Statistics report explains that while job losses were initially severe during the pandemic, the unemployment rate should return to pre-pandemic levels by 2021. This should help coworking as well if most people are back to work, and a significant percentage choose to stay remote. The report predicts that because most major Canadian markets entered the economic downturn at peak office demand, the rebound back to more development should happen quickly and especially competitively in downtown cores.

There is room for growth and there is a demand for coworking space throughout the largest Canadian markets. That combination makes it very likely that the industry will overcome the obstacles of 2020 and continue to expand. Businesses will continue to adapt to new guidelines and worker needs. Whether its increased remote work which could lend to people turning to coworking spaces, or whether its traditional offices reconfiguring themselves inspired by flexible spaces, there will be sustained success in the sector.