More Coworking, Less Space As Denver’s Flex Office Market Evolves

The coworking sector in Denver continued to grow in the fourth quarter, even as traditional office properties faced mounting distress. 

The market added four new coworking spaces by the end of the quarter, reaching 232 locations — a 14% year-over-year increase — despite an overall decline in square footage.

Denver’s total coworking square footage fell 3% quarter-over-quarter to 3.55M SF, according to CoworkingCafe’s latest national report. Average size also dropped 5%, signaling a shift toward smaller, more flexible footprints. 

Pricing remained relatively stable, with open workspaces dropping $1 to $150 and dedicated desks rising $19 to $319.

Multiple forces are behind the continued growth of coworking. 

“We’re seeing sort of a perfect storm,” Andreea Neculae, a writer and researcher for CoworkingCafe, told Bisnow.

Rushed return-to-office pushes have left companies struggling with space constraints, making coworking an attractive overflow solution, she said. A surge in business creation — more than 5.5 million new applications nationwide in 2023, according to the Census Bureau — has also fueled demand, particularly from so-called solopreneurs who value community without long-term leases.

Cost-efficiency remains another major draw. 

“In the long term, they can save big bucks,” Neculae said, as users pay only for the space and time they need.

The focus has also shifted from perks to productivity, with operators investing in soundproof phone booths, wellness rooms and high-quality furniture over free coffee and beer taps.

Long-embattled WeWork is again betting big on coworking’s momentum, both nationally and globally. The company launched its national Coworking Partner Network in Q4, expanding member access to third-party locations across the U.S. and Canada through a partnership with Vast Coworking Group. 

That includes 12 additional spaces in Denver.

“In Denver, we have seen strong momentum as more companies and workers return to the office,” Luke Robinson, WeWork’s regional president for North America, told Bisnow. 

WeWork’s on-demand bookings in the city increased nearly 30% year-over-year, he said, while foot traffic at its Tabor Center in the central business district rose 14%.

Despite the increased demand for coworking, traditional office owners continue to struggle. A wave of building relinquishments continues to rock the office space. Denver commercial properties had entered delinquency at a higher rate than the national average as of July.

On the national front, some $38.1B in CMBS loans were delinquent as of December, up 41% from the start of 2023. That equates to about $17B in distressed office CMBS debt, surpassing the 2012 record of 10.7%, according to a Trepp analysis.