Over half of co-working space providers will expand

Saturday, 16 March 2024

Co-working spaces have soared in popularity over recent years, and it reflects how the modern workplace is changing, according to new research.

Sharedspace.co.nz has released its first annual report into the co-working space sector in New Zealand, and it shows the sector had an average of 22% growth every year since 2013.

That rate tracked with the 23% annual growth rate in the sector in the United States reported by commercial real estate firm JLL.

The report found there were 194 co-working spaces with a footprint of 169,000sqm across New Zealand, 82% of them locally owned.

Within that total, 68 providers were operating a single space, while 37 were operating multiple spaces.

Sharedspace.co.nz founder Matt Knight said the sector’s growth trajectory demonstrated its resilience and adaptability in the face of an economically challenging few years.

Co-working spaces were primed to flourish in the current environment where many businesses were downsizing their office space due to under-utilisation, and the hybrid workplace trend, he said.

“The co-working providers who have adapted to this are booming, but providing flexibility to members so they can make use of the space on offer according to their changing needs is key.

“A business might have 30 staff, but many of them will not be in the office every day. Co-working spaces allow them to lease shared space for staff to use among themselves flexibly, rather than pay for the permanent lease of space that is under-utilised.”

It was a set-up that enabled them to downsize, and save some money, but also provided the capacity to easily scale up or down to meet changing staff numbers, he said.

“That is a bonus for many businesses in this uncertain economic climate, and it also means they have access to facilities, such as meeting rooms, and extra amenities, such as cafe-bar areas.”

While some co-working spaces were struggling after a tough year, most were optimistic, and reported strong demand and an increase in enquiries, Knight said.

“Encouragingly, the report shows 56% of co-working space providers plan to expand their businesses, and that indicates a positive outlook for continued growth and innovation within the industry.

“In the year ahead, we expect to see 20% to 25% more spaces around the country, and well-located, well-operated spaces with the right price points will do well.”

Providers reported high occupancy rates, but there had been a change in the type of occupancy that was most popular, the report showed.

While private offices within co-working spaces had an average 88% occupancy rate nationwide, the permanent desk occupancy rate was at 66%.

Knight said demand for private offices within shared, community-driven environments had increased significantly, and reflected the economic times and the changing nature of the office.

“As co-working spaces continue to redefine the traditional notions of work, they play a pivotal role in fostering collaboration, innovation, and community among professionals.'

There were some future co-working space trends to look out for, he said. They included more health and wellness offerings, such as on-site gyms, a greater range of space targeted at specific business sectors, and greater integration of hospitality amenities.

Alex Sykes, from co-working space giant IWG, said the global shift towards hybrid working was a mega-trend, and research was forecasting that 30% to 40% of white-collar workers will work in this model.

That meant the co-working industry was booming, and IWG was growing at the fastest rate in its over 30 year history, he said.

“The positive impact of the fast-growing hybrid model on people, profits and the planet is becoming increasingly clear.

“It has fast-tracked the demise of the long-distance daily commute enabling employees to achieve a greater work-life balance, while productivity and profits are boosted, and carbon emissions are radically reduced.”