Having significantly gained in popularity in the last years, especially due to the rise in remote and hybrid work, coworking continues to expand across the U.S., with more operators entering the market and more spaces opening every month. In fact, the growth of this industry is notable even just in the span of a few months, as researchers at CoworkingCafe found out in their Q2 market report.
To determine the current state of the coworking industry, as well as its evolution throughout 2023, CoworkingCafe used proprietary data to look at the coworking space supply in the top 25 U.S. markets, as well as their sizes, distribution, and the top operators.
National Inventory Reaches 6,100+ Coworking Spaces in Q2, After a 10% Growth from the Previous Quarter
The national coworking inventory is one of the most relevant metrics when looking at the evolution of coworking across the nation and data shows that an impressive 10% growth was registered in the span of three months alone. As such, the total inventory of 5,612 coworking spaces registered in March of 2023 has now reached 6,163 coworking spaces at the end of June.
Like in the first quarter, the leading markets in terms of the number of coworking spaces are still New York, Los Angeles, and Washington, D.C.; however, throughout Q2, all of these areas registered growth in their coworking supply, of 5%, 2% and 7%, respectively, accounting for an extra 37 spaces in total.
Among the top 25 markets, Houston is the one to register the highest increase in coworking spaces, an impressive 16% compared to the first quarter of 2023. Conversely, the most significant decrease in the stock of flex workspaces was noted in Raleigh, NC, which went down by 8%.
More Than 120 Million Square Feet Are Occupied by Coworking Spaces Nationwide, a 6% Increase Quarter-over-Quarter
As of June 2023, the total number of coworking spaces across the U.S. totals 120,617,339 square feet, or 1.74% of all office space in the country. This is a 6% increase since March, when coworking spaces stood at a total of 113,742,866 square feet, accounting for 1.67% of all office space at that time.
Median Prices for Coworking Go Up in Q2, but Virtual Offices in Washington, D.C. Remain Below National Rates
The national median cost of a virtual office was $143 at the end of Q2, whereas dedicated desks stood at $329 and open workspaces at $149. Notably, in the second quarter of 2023, rates increased for all three main subscriptions, with virtual offices experiencing the biggest increase. More specifically, since March, when the median charge for these kinds of coworking arrangements was $94, the cost has increased by 51%.
Perhaps surprisingly, virtual office rates in the nation’s capital stood well below the national rates, at only $80/month, which is also the lowest price among all the 25 markets analyzed. However, in terms of open workspaces, Washington, D.C. stood at a monthly price of $225, significantly above the national median for this coworking arrangement, of $149.
Houston Registers 16% Growth in Coworking Spaces & Manhattan Exceeds 300+ Flex Workspaces
Keeping their leading position in Q2 as well, Manhattan, Los Angeles, and Washington, D.C. still share the podium regarding the highest numbers of coworking spaces. In fact, Manhattan is the first to surpass the 300 spaces threshold, registering a 5% increase since Q1, while Los Angeles reached 269 coworking spaces in June and Washington, D.C. logged 20 more since March, reaching a total of 261.
Chicago and Dallas-Fort Worth round out the top five markets with the most coworking spaces, having 234 and 231 flex workspaces, respectively. However, the most significant growth in the second quarter of 2023 was seen in Houston, where the coworking space inventory grew by 16%, reaching a total number of 208.
As compared to Q1, two markets entered the top 25, overturning Fort Lauderdale, FL, and Kansas City, MO. More precisely, Indianapolis, IN, and Salt Lake City, UT, took the last two positions on our list, with 64 and 57 coworking spaces, respectively.
National Coworking Supply Grew in Square Footage by 6% in Q2, with Manhattan Still Logging the Most Space
Manhattan claimed more than double the total square footage allotted to shared flex spaces, as compared to Los Angeles. This revealed a notable disparity in coworking space sizes between the two areas, with Manhattan boasting—perhaps surprisingly—much larger rooms than LA. In addition, Manhattan’s coworking square footage increased at a rate of 6% in June 2023, following the national trend, whereas Los Angeles saw a 1% decline in the same period of time.
Of course, Houston’s 13% gain in the number of coworking spaces led to an equally impressive increase in square footage; the market saw the most increase in this metric, now logging more than 4,160,000 square feet of coworking space. Minneapolis-St. Paul and Nashville saw a 10% increase in the total area allotted to coworking spaces, with more than 1,500,000 total square feet each, despite ranking lower in the top 25 markets.
While Supply Increased, the Average Square Footage in the Top 25 Markets Indicates Focus on Smaller Spaces
The size of coworking spaces increased in Q2 in half of the top 25 markets analyzed. Manhattan topped the list, with an average of about 47,000 square feet, which is double the national average of roughly 19,000 square feet.
Interestingly, coworking spaces in San Francisco appear to be expanding as well; average space sizes in the area have increased by 7% from the previous quarter to 28,000 square feet, outpacing Brooklyn’s 1% growth from the previous quarter. The largest growth, however, was seen in Raleigh, NC, where the average coworking space size has increased from 2,600 square feet to 23,150, a 13% year-over-year rise.
Conversely, while coworking space sizes increased in half of the markets, they decreased in the other half. Denver, the Bay Area and Seattle, all had 6% declines in the average square footage, while Philadelphia saw a 10% drop. Also declining by 3% was the national average, which fell from 20,268 in March to 19,571 in June. Given the decrease in average square footage and the growth in the number of coworking spaces, it’s likely that the industry is placing a stronger emphasis on smaller coworking spaces across the country.
Top Coworking Operators Regus & WeWork Reduce Their Portfolios
In Q2, Regus, WeWork, Industrious, Spaces, and Premier Workspace continue to lead the pack of operators with the most coworking spaces nationwide, having more than 60% of each of their portfolios distributed across the top 25 markets.
Specifically, the portfolios belonging to Regus, WeWork, and Premier Workspaces were slightly thinner in the second quarter of 2023: they all experienced declines in the number of spaces they provided, both nationally and in the top 25 markets across the U.S. Among the top 25 U.S. markets, Regus and WeWork both had a 3% Q-o-Q decline.
Industrious held its position, with the top markets seeing a slight 1% growth. However, with increases of 7% and 6% in the top markets and nationally, Spaces was the only one making notable progress. In fact, data from June revealed seven more coworking spaces attributed to Spaces, as compared to March.
To see the full study and methodology, go to CoworkingCafe.com.
