The market for innovative space solutions at the workplace remains dynamic, the demand for so-called flexible office space, or to use the now established term "coworking", is increasing. There is no doubt that this is less a product than an industrial transformation process. A measurable detachment from long-term space ties on the part of companies, towards short-term rental structures.
However, a paradigm shift has taken place here: The drivers of this development are now increasingly corporates, i.e. large companies that set up their own campus structures. Except for start-ups and freelancers, our experience shows that the so-called medium-sized businesses are currently largely immune to these trendy offers – at least so far. Important: This is less about fancy office furnishings with table football, "beer after four" & Co. than about a fundamental view of space, space and time use. The locations sought are therefore primarily the areas close to the city center, the trendy districts and the business centers.
Catella Research has again dealt with the market for flexible office space in Germany and Europe. It is becoming increasingly clear that the hunt for efficiency improvements within office structures will obviously be the central issue in the coming years. At the same time, office space is becoming scarce in existing structures. Both factors are boosting the coworking market.
We have identified an interesting development with regard to locations within the German and European urban economy:
- At the beginning of the coworking cycle, the supply of space is concentrated primarily in the classic business districts close to the city center. As the cycle progresses and the number of coworking capacities increases, coworking capacities expand into other locations as well as into the periphery, and the market diversifies.
- At an advanced stage and in the cities with the highest number of coworking offers, providers are again concentrating on the business district (CBD). The reasons lie in the high tenant demand for urbanity and connections to local public transport.
- Despite the continuing growth of the coworking market, supply is still at a very low level compared to the overall supply of office space. For 2019, we expect a share of around 4.8 percent of flexible workspaces in Germany measured against the total office space market.
- A look at the top 8 locations in Germany shows: With 103 coworking spaces, Berlin leads the city rankings, followed by Frankfurt (43 spaces) and Hamburg (37 spaces). The monthly costs for a permanent job range from 150 euros in Leipzig to 500 euros in Stuttgart.
- The European coworking market offers an extremely heterogeneous picture. London leads the ranking with a total of 257 offers and is already at an advanced stage of the coworking cycle. 70 percent of the offers here are in the CBD, the rest in peripheral locations. Barcelona (164 spaces) and Madrid (157 spaces) follow by far.
- In 2019, Catella Research estimates the proportion of flexible office space in Europe at around 2.9 million m². Based on the total European office space market at A locations of around 275 million m², this would be around 1.05%.
Coworking is a structural factor in renting in all European metropolises, even if the model is still in the lower single-digit percentage range in a comparison of total floor space. Although it is a global, i.e. comparable, real estate product, it is still in its early stages of brand development. WeWork is currently only one lifestyle brand on a global level. At the same time, however, coworking is only one building block in global urban development: urban coliving offerings as well as public space developments should also be part of it.