2019 Coworking Marketplace Forecast

By Amanda Fanoun · 11.01.2019 · 10 MIN READ

With over a decade of experience in the flexible workspace market, we at essensys have seen the market changes first hand. Last year we saw our workspace market predictions start to come to life. Now, with 2018 in our rearview mirror, we take a look at what’s ahead for the coworking marketplace in 2019.

Continued Focus on Service and Hospitality

It’s long been established that coworking spaces offer more than just a place to work and form part of a community. In today’s, and even more in tomorrow’s, coworking marketplace operators will put more effort into extending greater amenities and services for their members. Beyond the mere accessibility of amenities, from as essential as meeting rooms and events to as high-end as wellness and bike rooms, we expect operators to begin offering a level of hospitality consistent with a hotel concierge.

We expect these service and hospitality elements at smaller workspaces to take precedence over previously eye-catching amenities such as beer on tap or a foosball table. How members are received and treated during their stay (or residence) in a coworking office environment will be a crucial distinguisher from other spaces. Streamlining service delivery for members and tenants will be another objective for operators who will seek to continually improve the member experience to compete in a competitive market.

Shift Toward the Human Experience

Coworking spaces originally evolved out of a practical need for independent workers to share office space. From there evolved community, and then came the widespread attraction of the coworking concept thanks to the opportunity it allows people to connect and collaborate with a broader network of people. In 2019 we’ll see a greater emphasis on the human experience in the workplace. On the rise and picking up steam across the world are WELL Certified buildings that focus on human health and experience by setting standards for air, water, nourishment, light, fitness, comfort and mind components of a building.

Beyond the physical components of a building that contribute to a healthier workplace environment, CRE stakeholders are dedicating more resources to diversify in-building services and improve the overall tenant experience. Coworking will play a more significant part in the amenities that building owners and landlords offer across their portfolio. From common spaces and cafes to better-connected buildings and secure, fast Wi-Fi, landlords will spend a great deal of 2019 to implementing compelling workplace components to retain and attract tenants.

Increased Share of Flex Space in Investment Portfolios

A prediction over the last few years has been the increase in flex space offering across CRE portfolios. For 2019, that prediction makes the ranks yet again. Considering the global economic uncertainty due to UK’s Brexit movement and a looming economic slowdown in the US, flexible office space will continue to be a key consideration of companies of all sizes when it comes to business security. Investors and asset managers will continue to see the value of implementing flex space across new and existing portfolios, not only as a measure to occupy existing vacant spaces but as a means to capitalize on the growing coworking model.

JLL predicts that 30% of office space will be flexible by 2030. Most markets have quite a way to go as only approximately 1% of office space is considered flexible space. JLL projects European markets can grow as much as 30% per year over the next five years, citing Amsterdam as the city with the most flex space at 5.6%, far ahead of even the most mature US office markets. That percentage is expected to grow as corporate coworking will continue to rise in 2019 with coworking becoming more mainstream among conservative, traditional office occupiers. As in the past, corporate uptake will continue to increase, and we’ll see new locations by way of management agreements and landlords offering their own flex-space proposition.

Global Expansion of Coworking Providers

We predict 2019 will see the overseas expansion of national coworking brands. Those that have secured funding have greater resources to scale and grow to new territories. Flex space operators established across multiple global markets will seek to offer even more flexibility and mobility to their tenants. Asian-Pac based operators especially will look to Europe and the US, while US operators will eye Europe as a next objective. Meanwhile, commercial real estate companies with properties across the globe will begin to utilize coworking as a way to offer new and existing tenants a wider range of services.

Enterprise-grade Technologies

Coworking operators, especially ambitious and well-funded operators expanding to new coworking marketplaces, will dedicate more resources to enterprise-grade technology in 2019. With a multisite coworking operation, they will rely more heavily on technology to deliver an excellent member experience, simplify operational complexity, and offer reliable internet and security that members depend on.

While easy to access Wi-Fi has in the past sufficed for independent workers and small businesses, the expansion of coworking to corporate sectors means customers need a wider range of advanced technology products and services and a guarantee for network security. Conscious that many corporate tenants are subject to strict IT requirements and compliance standards of headquarter IT departments, operators will look to offering an enterprise-grade IT proposition.

For one, enabling Wi-Fi roaming across multiple sites regardless of the country will offer tenants a seamless and hassle-free experience, pre-authenticated and automatically connecting them to the wireless network. A softphone offering will keep tenants communicating from wherever they are on the map and a private cloud connection ensures enterprise-grade network security and business continuity for corporate tenants’ strictest demands. With coworking becoming the norm for office space, operators won’t want to take chances with a patched-together DIY IT system.

Expansion of Coworking across Non-Traditional Office Spaces

Coworking has been slowly but surely creeping its way into unexpected places. The fundamental driver is its ability to enable a new way of working across all sectors, company sizes and locations. For many non-traditional workspaces, it’s a traffic driver and revenue stimulator for underutilized space. For the same reason that technology has forever changed how people work, it has changed how and where people shop as well. Suffering retail centers, malls, and consumer squares with less foot traffic will become a new spot for coworking concepts in 2019 to fill vacant space. Malls and consumer squares with less foot traffic will become a growing target for new coworking concepts to fill vacant space.

In 2018 we saw how coworking is creeping into non-traditional office space with the Workonomy concept by Office Depot. It debuted in their Los Gatos, California location and is being rolled out to 141 locations as an effort to expand their business services platform. Similarly, Staples Canadian locations are rolling out coworking and cafes to provide more resources, and business needs to their customers.

In the same way, flexible space is rejuvenating retail, it’s driving traffic to hotel lobbies. The ACE Hotel in New York is widely known for its trendy and chic coworking café by day and popular cocktail bar by night. It’s a multiuse space that offers tourists and visitors a good taste of the local flavor and a place for New Yorkers to meet for coffee and touchdown with their laptops. In 2019 we can expect more hotels to follow suit as they seek to offer more amenities and keep visitors in their space, consuming their services, especially Wi-Fi.

Increased Concern for Secure Network Connectivity

The growth of coworking throughout both office and non-office spaces in 2019 means more people connecting to Wi-Fi networks and putting their data and security at risk. Operators of shared and flexible workspace spaces – coworking spaces, hotels, and co-living spaces alike – will be inclined to reevaluate their wireless networks. Compromising data and securitynot only puts personal identities and business information at risk but also the reputation of workspace brands.

In a recent interview, essensys CTO Bryn Sadler described the importance of network security: “It’s important to be able to separate different tenants within a site to ensure there’s no danger of one tenant snooping on another’s data in transit, and also to prevent the spread of viral infections that can seriously compromise users’ devices. Insufficient measures can leave operators and their tenants vulnerable to having private financial, personal and business information stolen, shared or misused.”

With the rise of corporate tenants across coworking and flexible workspaces, the need for enterprise-grade technology and strict compliance requirements will be a focus of IT directors and CEOs of coworking brands across the board. At the end of the day, in a coworking space, the most essential service after real estate is the internet. As Serendipity Labs CIO and Head of Platform Services Delivery, Vinay Kantak, puts it, “without good internet service and Wi-Fi there is no coworking. You can build the best physical facilities, furniture, the best design but if the Wi-Fi breaks or the internet doesn’t work members leave.” For more information on how to keep your networks safe and compliant, speak to a specialist.

Big Data on Coworking Trends

Coworking is a relatively young industry, albeit an evolution of the age-old business center and executive suites concepts. The popularization of coworking as a sustainable and profitable workspace offering has stimulated the need for more, reliable data on services and space consumption patterns and how end-users interact with a shared workspace. Furthermore, with CRE stakeholders, investors and asset managers taking part in market growth, data is more critical than ever.

2019 will see an increase in data-driven business decisions supported by smart technologies that track services usage and occupancy across multiple locations. Knowing where your members are using the most services and when, for example, serve as key data points for how to implement the next step in an expansion plan or a marketing strategy. CRE stakeholders are increasingly looking for data on how tenants consume workspace so they can tailor services to specific needs. Comprehensive management platforms that integrate multiple systems and data sources help to give operators both a high-level and granular view of business performance.

PropTech will become a Household Term

In 2018, Proptech began infiltrating flexible workspace and coworking news channels. The logical association between the two is an indication that Proptech will become even more mainstream in 2019 when it comes to coworking. PropTech has been defined as technology for real estate that is positioned to change the way property is bought, sold, and managed. With specific regard to coworking, there will be a greater focus on technologies that can facilitate the delivery of the coworking concept, from prospect to tenant. Think booking systems, onboarding tools, service delivery, and consumption tracking, billing and invoicing, and the many moving parts of a coworking operation that must be managed for things to run smoothly.

Furthermore, these technologies will be expected to deliver scale and unburden complex multi-tenanted operations, while also driving a hospitality-focused proposition. Secure, integrated and open-API software platforms capable of simplifying a complicated coworking operation across a wide-ranging CRE portfolio will be in high-demand in 2019.

All Eyes on Asia-Pac

Coworking marketplaces in the Asia-Pacific region are the fastest growing in the world. In 2018, Bangalore, Singapore, and Hong Kong saw the highest rates of growth (20%, 19%, and 19%, respectively) according to a recent report by Instant Offices. Demand is expected to rise in the region as population rates climb, startup communities increase, and businesses seek to lower costs and reduce risk when it comes to overhead. A couple of years behind the US and UK markets growth spurt, Asia Pac is going to see increased demand from the enterprise business sectors, and we’ll see operators take more space in 2019. Coworking operators in India alone are expected to lease between 8 and 9 million square feet. The Asia-Pac region demonstrates excellent potential for the coworking market.

For more insight and resources, stay tuned to news from essensys.


About essensys

essensys is the leading global provider of software and technology to the office space sector. Our Flex Services Platform is specifically designed to solve the unique challenges of operating and scaling next-generation office experiences. To learn more, contact us.

About the Author

Amanda Fanoun

I've been writing content about flexible office and technology for essensys since 2015. My focus is to bring engaging and insightful perspectives to the flexible workspace sector of the commercial real estate industry.