Could Co-Working Come Toppling Down?

Colliers International
Bisnow
Colliers International Atlanta Senior Vice President Jodi Selvey

There may be a shakeout coming to the co-working world, with the biggest players rising to the top.

Colliers International Atlanta Senior Vice President Jodi Selvey said at Bisnow's Future of the Office event in Atlanta Thursday morning that the industry could start to see some co-working operators shutter locations in the next 18 months.

“We'll see some of the bigger guys still around and some of the smaller guys not,” Selvey said. “I don't think they're all going to survive.”

To say co-working has exploded may be an understatement. Between 2012 and 2017, the number of co-working spaces worldwide jumped from just over 2,000 to 15,500, according to Statista.

This year, that number is projected to grow to nearly 19,000. And the biggest player in the industry, WeWork, hit a valuation of $20B last year.

Bob VoylesCEOSeven Oaks Company Brandon HoustonTWELVE24Brandon HoustonPrincipalTrammell Crow Company Mark Vollbrecht100 PEACHTREE & PREMIER PLAZAMark VollbrechtPrincipalZeller Realty GroupChris AhrenkielExecutive Vice PresidentSelig Enterprises
Bisnow
Trammell Crow principal Brandon Houston, Selig Enterprises Executive Vice President Chris Ahrenkiel, Zeller Realty Group principal Mark Vollbrecht and Seven Oaks Co. CEO Bob Voyles chatting about the future of Atlanta office.

“Like a lot of trends, you overshoot a little bit,” Selig Enterprises Executive Vice President Chris Ahrenkiel said.

When he was leasing Three Alliance Center for Tishman Speyer, at one point, 20% of his prospects were co-working operators, he said.

Before selling the tower to the Florida State Board of Administration for a record per-SF price, Tishman Speyer inked a deal with New York-based co-working outfit Serendipity Labs. Ahrenkiel said landlords have to be sure the co-working group they sign has a strong balance sheet.

Regardless of a shakeout, many of the panelists said co-working as an industry was not going away. Cousins Properties Senior Vice President Thad Ellis said he expected that a significant percentage of office space would one day be dedicated to co-working.

“What I do absolutely believe in is the co-working world is real and it's here to stay,” Ellis said.

While focusing on a co-working prospect's creditworthiness is important, Seven Oaks Co. CEO Bob Voyles said it is not foolproof.

“A lot of [us] had Regus in our buildings in the '90s,” Voyles said. In 2003, Regus' U.S. arm entered bankruptcy protection. "A lot of us got burned by Regus when the market turned."

Continue reading this story with a free account

Log in or register
Sign up for more articles like this
Subscribe to Bisnow's Atlanta Newsletters
Related Stories

Law Firms Drive Boston Office Rents To Record Highs

3 Houston Office Properties, Vacant To Nearly Full, Change Hands

Deutsche Hypo Finances Zadelhoff's Amsterdam Offices With €75M Loan

TikTok Inks 1M SF Warehouse Lease: The Atlanta Deal Sheet

SFF Realty Partners Extends Spending Spree With $82M Acquisition In Downtown San Jose

Drawbridge Realty Acquires 180K SF Office Building In Sunnyvale For $219M

Downtown Los Angeles Retail, Office Hub The Bloc Up For Sale

Distress Divide: How Private vs. Institutional Investors Are Thinking About D.C. Office

Interest Rate Hike Douses Outlook For Atlanta Developers

Chicago Office Deals Feature More Scrutiny, Added Tenant Protections

Tishman Speyer Retakes Chrysler Building, Plans $235M Renovation

Activist Investor Buys Stake In Empire State Building Owner