2020 | DECEMBER

INTRODUCTION

The impact of COVID-19 has accelerated a number of flexible workspace trends which have now expanded on a global scale.

Trends such as and decentralization, a boom in wellness offerings, and a revival of suburban workplace locations have quickly emerged in 2020. Additionally, the expectation for highly-amenitized assets is driving new office development, with coworking operators quickly adapting to meet these needs and provide best-in-class hospitality.

To understand the major impacts that the coworking industry has faced this year as a result of COVID-19, this report will examine 7 of the key markets on Coworker — the leading platform for booking coworking spaces worldwide.

In April of this year, Coworker witnessed a dramatic shift in demand for private offices globally, moving from 30% of inquiries pre-April to 50% in May. This number has been sustained ever since, with global interest in coworking returning to its January 2020 highs this month, following a linear recovery week over week from May onward.

Through the examination of these markets, we will pinpoint how markets are continuing on the path to full recovery, with some regions already surpassing pre-COVID-19 levels of demand, and what the future of coworking in these markets and on a global level will look like. 1 2020 | DECEMBER

Sydney,

DEMAND IS RISING AMONG ENTERPRISES FOR LOW-RISK, SCALABLE FLEX WORKSPACE.

The market in Sydney is highly additional sites over the next 18 reflective of the emerging trend of months, with 5 corporate options enterprises looking to coworking in Sydney alone. to meet social distancing requirements, reduce space, and Beyond these large-scale save costs. Last year, JLL operations, independent coworking predicted that coworking would brands such as Workit Spaces and account for 30% of Australia’s Work Club have developed thriving office market by 2030. cowork communities in Sydney, which illustrates the statistic that In Sydney in particular, major 25% of all Australian coworking players such as JustCo and spaces listed on Coworker are WOTSO WorkSpace have seen a within the city’s limits. sharp increase in companies looking to leverage the Hub Australia, for example, advantages of flexible space-as-a- recently opened a new location in service and decentralization. As a Sydney’s historical Customs result, certain operators are House. Despite the effects of expanding to new locations in COVID-19 and the rise of work from Sydney and elsewhere to meet the home, the recent expansion seen in rising demand from enterprises. Sydney is representative of the importance of low-risk, agile, and One such example is Victory scalable workspaces for enterprise Offices, who recently listed on the clients. ASX and plan to open 14

2 2020 | DECEMBER

WITH CORPORATES TURNING TO COWORKING, LANDLORDS ARE SEEING NEW INVESTMENT OPPORTUNITIES.

APAC’s leading flex office broker, The South Morning Sun Office Hub, confirmed Hong Kong reported several examples of this has shown the most resiliency of landlord-turned-operator any country in 2020. phenomenon. The landlord of V- Point in Causeway Bay, for For example, The Executive instance, established V-Co to Center, a high-end flex office operate the facility after Campfire operator, leased 33% more desk surrendered a planned nine-floor space in Q1 than a year earlier in center in the building. And China Hong Kong. In the first three Resources, the landlord of China months of the year, the operator Resources Building in Wan Chai, grew by about 9% across its 135 has been operating the coworking mostly Asian workspaces. space since its previous tenant, Regus, moved out. Though WeWork and IWG have both handed back massive square More recently, Henderson Land has footage in Hong Kong in 2020, transformed a space abandoned by demand from will WeWork in H Code, Central into keep the sector afloat. New trends CodeWorks, a coworking space it such as landlords capitalizing on owns and operates. vacant space will also fuel a speedy recovery.

3 2020 | DECEMBER

pune,

EXPANSION IN GRADE A VACANCIES AND PREDOMINANTLY RESIDENTIAL MARKETS WILL CONTINUE.

In upcoming quarters, market Corporate Park in Pune in October fundamentals in India will remain of this year. The deal, which is the promising, with strong demand largest to-date in the city, was potential despite some facilitated by JLL. consolidation of operators at the enterprise level. Due to Pune’s low vacancy and limited future supply of Grade A While markets have slowed, JLL projects, Simpliwork selected the India has indicated that the affluent neighborhood of Viman country’s top 6 cities will require Nagar in eastern Pune as its next an estimated 5 million seats in location owing to its proximity to coworking spaces, while 8.5 the airport, upcoming metro, huge million of the projected demand residential catchment, and will be in Tier II and Tier III cities. established social infrastructure. Further, the rising number of Grade A vacancies in cities such The predominantly residential as Pune have sparked new market is already a sought-after expansion projects in areas that destination among MNCs and large are residential or suburban in Indian corporates—a trend that is nature. sure to fortify in coming months. Expansion into areas that are on For example, one of India’s key the outskirts of urban centers will players in the coworking arena, occur on a global scale, now that Simpliwork Offices, announced a employers have seen the benefit of new lease for 230,945 sq. ft. eliminating commute times. Grade A office space at Sky One

4 2020 | DECEMBER

, england

AFTER FACING A DROP IN 2020, OCCUPANCY RATES WILL STABILIZE AND GRADUALLY INCREASE.

London was at the forefront of the London is one of several capital global coworking revolution in markets to illustrate this surprising 2019, with estimates from trend of occupancy resiliency Coworking Resources revealing during Covid-19 and a quick return the UK capital had seen more to high levels of demand. Coworker openings of new spaces than any data shows there was a +420% other city in the world last year. increase in lead volumes for However, demand plummeted to London this September, despite 20% of pre-pandemic levels in the lows in May. UK in April of this year, according to data from Instant Offices, rising While most industry experts would to just 25% in June. agree that markets in APAC (like Hong Kong) have been sturdiest of Despite this drop, actual all, cities in the UK are in better occupancy levels remained fairly shape than their European peers robust, with Savills’ flexible office because they started from a higher advisory division citing only a 15% base. drop in occupancy between March and June—down to 77% from 92%. By the end of August, operators This fact negates the assumption had expected a contracted by valuers that customers will occupancy rate of 71%, leave flexible assets during a demonstrating that even if people downturn. On the contrary, aren’t going into their coworking dropping by only 15% in the worst offices, they are still paying rent. possible recession is very With resiliency like this, London positive, demonstrating a unique may even get back to its pre-Covid and well-positioned resiliency in growth of one new space opening London in the long term. every five days in the city.

5 2020 | DECEMBER

lisbon, portugal

OPERATORS WILL PRIORITIZE WELLNESS OFFERINGS TO MEET THE DEMAND AMONG PROFESSIONALS FOR SAFE, HEALTH-FIRST WORK ENVIRONMENTS.

Lisbon has quickly become a Moreover, this focus on wellness is leading capital for coworking also becoming important to globally, with Portugal containing enterprise teams. Well&Work’s around 1.36% of the world’s share largest office is leased by a data of flexible workspaces. Since the company from Lisbon, who wanted onset of Covid-19 in the country, to offer a “beach” location to their operators have noticed a new employees to support their well- development: more Lisbonites are being and allow them to work near venturing to work in places that home. According to another promote well-being. Portuguese operator, IDEA Spaces, people are concerned about safety Urban residents are looking to protocols and often inquire about coworking spaces to provide an them before visiting the space. experience that goes beyond fast Wi-Fi, offering wide-ranging With a third space opening this flexible options and plenty of safe year in Lisbon, IDEA Spaces has community building. Just outside found that reinforcing their health of Lisbon, spaces like Well&Work and safety measures for former in Paco de Arcos, for example, members and new remote teams is have seen a 78% increase since at the forefront of their June 1 in remote workers booking communications strategy. This has day passes. led to 50% of day-pass users signing up for extended This is because professionals now memberships. Clearly, Lisbon has expect coworking brands to witnessed a boom in wellness directly appeal to their values— offerings, a trend that is very likely which in today’s working world to continue in the ‘new normal’ as translates to promoting health, people seek out communities that safety, and sustainability. promote health-first working.

6 2020 | DECEMBER

new york, new york

OPEN-STYLE OFFICE LAYOUTS WILL BECOME INCREASINGLY OUTMODED.

Along with London, seek safer, health-conscious work continued to dominate the options. worldwide market in 2019, accounting for 22% of global As demand for private offices coworking stock between them continues to surge, reaching 71% and taking the top spots for the of all leads on Coworker for the most coworking spaces in the city in September, coworking world. However, as one of the operators are redesigning the most densely populated cities in layouts of their spaces on a global the world, the city was particularly scale. While navigating closures, hard hit by the onset of Covid-19. many have taken the initiative to According to a recent report by update their spaces and offer more Colliers, more of the office market private, enclosed spaces in in is available for accordance with new health and sublet now than at any time in the safety regulations. last decade. Insights from top NYC architecture After three months of outbreak firm, Fogarty Finger, confirm and hardship, however, New York design elements such as adequate City reopened businesses in June spacing, touch-free fixtures, and with nearly 400,000 people sanitizing stations have become a returning to work. Compared to top request since March. This April, where booking inquiries for demonstrates a change in hot desks in NYC on Coworker perspective; to provide an dropped to an all-time low, environment where people can statistics show a gradual recovery work and feel safe, coworking in the market from June onward. operators now and in the future Moreover, there has been an will need to minimize open-style increase in the number of private office layouts and instead offices requested, a trend that has prioritize private offices. taken hold globally as more people

7 2020 | DECEMBER

dubai, uae

MORE HOSPITALITY BRANDS WILL LOOK TO COWORKING FOR NEW PARTNERSHIPS AND HOTEL-BASED WORKSPACES.

Between 2014 and 2020, flexible as UK-based VWORKS operating office supply in Dubai more than entirely out of hotels, Covid-19 has tripled. As of the latest estimates, created the landscape for more the emirate is home to 40 different hospitality brands to enter this operators of flexible offices, arena. (Already in 2020, Radisson including multinational chains Hotel Group, Accor Hotels, and such as Servcorp and IWG’s Scandic Hotels announced new Regus. But Dubai also offers an hybrid coworking locations, among interesting case study of the rising others.) trend of hotel-based coworking— an innovation that’s gaining WitWork, a leading coworking newfound momentum as a result provider in UAE, announced a of Covid-19 in the form of large- strategic partnership earlier this scale partnerships between flex year with Rotana Hotels. With over office and hospitality brands. 40 coworking spaces in its portfolio, WitWork now offers In 2017, Dubai became home to members the opportunity to work one of the world’s first full-service from 8 additional Rotana Hotel coworking spaces integrated with venues in Dubai, and 11 others in a major internationally branded Abu Dhabi, Al Ain, and Sharjah. hotel: NEST in the Tryp by What this illustrates is the shift in Wyndham Dubai. Over the years, coworking becoming a lucrative NEST has been deemed a prime venture for hospitality companies. example of hotel-based coworking By pivoting to coworking, hotels done right, sparking competitors and operators can join forces to to make coworking a focus in offer an even greater network for many UAE hotels. Now that the users, making productive work as proof of concept is there, with accessible and central as possible. coworking chains such

8 7 P R E D I C T I O N S F O R C O W O R K I N G I N 2 0 2 1

1. Demand is rising among enterprises for low-risk, scalable flex workspace. - As Sydney has shown, coworking operators have seen a sharp increase in companies looking to leverage the advantages of flexible space-as-a-service and office decentralization.

2. With corporates turning to coworking, landlords are seeing new investment opportunities. - Though landlords have typically avoided coworking expansion in the past, Hong Kong’s market shows them capitalizing on vacant space to meet new demand from large enterprises.

3. Expansion in Grade A vacancies and predominantly residential markets will continue. - Projected demand will fortify in Tier II and Tier III cities in India and elsewhere, as residential coworking locations become more desired.

4. After facing a drop in 2020, occupancy rates will stabilize and gradually increase. - For many key markets, such as London, occupancy levels have remained fairly robust despite demand plummeting in April of this year.

5. Operators will prioritize wellness offerings to meet the demand among professionals for safe, health-first work environments. - As big-city life becomes less appealing, coworking spaces in Lisbon are establishing brands that focus on overall work-life balance and wellness.

6. Open-style office layouts will become increasingly outmoded. - Design elements such as adequate spacing and touch-free fixtures will be prioritized as operators update their workspaces and offer more private, enclosed offices in accordance with new safety regulations.

7. More hospitality brands will look to coworking for new partnerships and hotel-based workspaces. - Leading hotel groups such as Rotana Hotels in Dubai will link up with coworking providers to offer greater access to flexible work options at their properties. 9 about coworking insights

Coworking Insights is the leading source for data, advice, and trends in the flexible office industry.

Founded in 2015, Coworking Insights is Coworker's partner publication that is committed to sharing expert insights on the coworking industry's evolution and latest news. All data is based on information shared with Coworker by the platform's member coworking spaces, which has expanded to include over 15,000 spaces in 170+ countries.

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