Chicago's Flexible Office Sector Keeps Rising
WeWork’s parent company recently took the first step toward an IPO, a move that will probably bring more attention to the flexible-office sector. And even though some have raised questions about the long-term profitability of the sector, especially if a recession hobbles the office market, there is no doubt its providers play an increasingly important role in the Chicago area.
According to a new national report from CBRE, the city’s flexible space footprint grew 17% to 3.2M SF in 2018, giving Chicago the nation’s fourth-largest flexible-office sector, trailing only Manhattan, Los Angeles and Washington, D.C.
And providers like WeWork are also playing an outsized role in growing some of the city’s fastest-expanding office submarkets.
Officials from the New York City-based coworking company recently said it would open a new 53K SF location at 1 South Dearborn St. in September and by 2021 another 140K SF in 167 North Green St., a 17-story tower under construction in Fulton Market. Opening these locations, the company’s 10th and 11th in Chicago, would increase its local portfolio to more than 930K SF across the Central Business District, including sites in River North and the West Loop.
Chicago may have the potential for significantly more flexible space. These providers now account for 1.37% of Chicago’s total office inventory, according to CBRE. That is just below the national average of 1.48%. Manhattan’s flexible office sector grew 30% in 2018, and now comprises 3.31% of its office inventory, and both Los Angeles and Seattle just saw flexible offices grow to more than 2% of their respective markets.
Flexible-space operators across the nation are in the market for more than 6M SF, according to the CBRE report.
“Growth since the start of this cycle has been constant and is showing no signs of slowing,” the report said.