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Can Coworking Work For You?

March 2, 2015

People may see commercial real estate as an investment in bigger business — as something that deals in expanses of square footage and promises of grand development. With talks of “big box” stores, warehouses and complexes,  it can certainly seem as though smaller, startup businesses or solopreneurs are left out. But a trend that started in the mid-2000s has changed that idea, and it’s opening opportunities for real estate investors and small, startup businesses alike.

The concept is called coworking, and it’s catering to the 53 million Americans that count themselves as independent workers. Coworking spaces provide office amenities like conference rooms, a reception area, private offices and even lunchrooms to the freelance professionals, contract workers, temps and startup companies that currently make up 34 percent of the workforce.

Coworking appeals to such an audience because of the low costs and opportunity for collaboration, along with added value propositions that may be unique to the property or landlord. Access to parking or public transit, proximity to affordable housing and convenient services all play into the equation as they would for any development. But some developers are offering perks like networking opportunities, insurance discounts, mobile apps or event planning services to attract more tenants to their space.

So, why should real estate investors consider coworking over a single-tenant arrangement or traditional strip mall setting? The flexibility of coworking gives lessors more opportunities to attract businesses to their space — they can serve individuals as easily as small businesses. Any segmented economic hardship would be easier to weather with a varied list of businesses on the lease. Plus, as small business tenants develop their operations, the coworking space becomes a feeder for other commercial real estate investments.

Finally, investors should consider the fact that the opportunities to serve this market are growing. By  2020, the Bureau of Labor Statistics predicts that 40 percent of the U.S. workforce will be independent workers. And, as of 2013, the Commercial Real Estate Development Association identified only 781 coworking spaces across the nation.

To learn more about the coworking trend, or to discuss commercial real estate options that could adapt to serve this growing market, contact the professionals at Intelica.