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Coworking Continues to Boom in U.S., But Not Where You Think

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Rigid commutes and fluorescent-lit monotony are no longer the default background for the average office worker’s weekdays. That said, not even coworking spaces — the flagships of the modern flexible workstyle — have been able to break free from one fundamental law of big city life: Location remains gold. Still, this doesn’t mean that the same central locations yield the best value for every business.

According to a recent report by CoworkingCafe ranking some of the most important central business districts (CBDs) by their coworking sites, the U.S. flex workspace market is experiencing a dynamic shift that prioritizes adaptability over traditional downtown-focus. Specifically, while downtown areas continue to be an important front line for operators, the coworking clientele’s desire for short commutes creates plenty of business opportunities outside of the business districts, too.

NYC Still King, But the Court is Expanding

New York City’s business districts maintained their coworking crown (and significant buffer over all other markets) with more than 160 flex spaces across Midtown Manhattan and the Financial District alone. However, not even the Big Apple is immune to change as its CBD coworking inventory experienced a 10% year-over-year contraction from last year’s total of 178. At the same time, the overall inventory increased by 20 new coworking spaces across the five boroughs in the last year.

This trend was also mirrored across the nation with cities like Chicago and Los Angeles also showing a decline in the number of coworking spaces in their CBDs. For instance, the Windy City’s Loop area counts 16 fewer spaces than last year, while LA registered six fewer spaces compared to last year’s same period. And, although Chicago managed to keep its second position among the top CBDs for coworking, Los Angeles slid back one place to the fifth spot.

A graphic of U.S. coworking markets.

Washington, D.C. Chases the Pack & Philadelphia Makes a Move

With Chicago’s CBD shedding a significant part of its coworking inventory, the race for second place heated up: Now, Washington, D.C. has only one less CBD coworking space than Chicago, all while showing signs of a mature market by holding on to all 54 of its CBD flex workspaces.

Meanwhile, Philadelphia muscled its way into fourth place thanks to growth in both CBD and non-downtown areas. It added five new flexible workspaces downtown and another five in other parts of the city. The fact that Philly has 32 of its 51 flex spaces in the Center City area also placed the city among the most downtown-focused coworking markets.

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Sunbelt Heats Up, West Coast Shifts Gears

Among the Sunbelt business districts, Houston emerged as a potential challenger for the coworking crown with 19 CBD spaces — a significant year-over-year increase versus last year’s total of 15. This means that Space City already has more flex workspaces in its business district than San Francisco, and it’s also closing in on Los Angeles. Additionally, Houston was one of the few cities on the list that registered a slight inward migration in the distribution of its coworking spaces.

Not to be outdone, downtown Orlando also saw a rise, climbing two spots to seventh place due to both its own growth and dips seen in other markets. Now home to 14 downtown coworking spaces, the total number of flex spaces throughout other parts of Orlando also dropped by 14, making the Central Florida city one of the rare cases where the downtown focus has increased significantly year-over-year.

On the opposite coast, San Francisco presents another interesting case: Although the city’s overall coworking scene thrived with 17 new spaces, the CBD witnessed a decrease. This highlights a shift toward suburban and non-traditional locations — a trend echoed in several large cities across the U.S.

A graphic of U.S. coworking markets.

Beyond Skyscrapers: 3 Cities Where Urban & Suburban Coworking Rules

Atlanta took the prize for the lowest concentration of downtown flex workspaces, registering a mere 7% of the total coworking inventory within the CBD. Similarly, coworking users in San Antonio (8%) and Las Vegas (9%) also clearly favor areas outside of the traditional downtown core.

The Importance of Location – A Matter of Context?

While modern businesses that have adopted a flexible workstyle and embraced membership-based solutions may continue to require a prestigious downtown address, remote and hybrid workers at the individual level clearly prefer proximity to home and lower costs. And, as this CoworkingCafe report highlighted, operators are capitalizing on this shift by increasingly offering high-quality work environments in convenient urban and suburban areas and decreasing their focus on downtown locations.

It’s safe to say, then, that the very definition of ‘prime location’ is being redefined as we speak — at least in an industry like coworking, where flexibility is not just a buzzword, but literally the foundation of the business model itself.

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Coworking Insights is the go-to source for trends, data, advice and insights for coworking industry professionals.

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