Denver Has Shed 244K SF Of Its Coworking Space Since 2019
Metro Denver’s inventory of coworking space has decreased by 8.7%, or 244K SF, since before the pandemic, bringing the total to 2.6M SF across the region, according to a new analysis by CBRE Group Inc.
The decrease mirrors the rest of the country, with coworking providers shedding 9% of their space nationwide following the onset of the pandemic in early 2020, with total inventory now reaching just over 80M SF.
Shared space operators were hit hard early in the pandemic as stay-at-home orders kept users at home, drying up leasing revenue. Even after limited reopening was allowed for offices, coworking spaces had to ensure social distancing, proper cleaning and other precautions to make tenants feel safe, actions that were complicated by the signature open-plan design of the spaces, meant to encourage socializing before the coronavirus.
Among the first Denver coworking locations to close in the wake of Covid-19 was Charley Co., a women’s-only workspace occupying nearly 6K SF inside The Source. Charley Co. had been open for less than a year when the pandemic hit, and it was an example of the extent of the challenges faced, especially by newly established providers.
And the best-known coworking provider, WeWork, dealt with a double whammy in early 2020 in the form of a pandemic paired with the fallout from a failed initial public offering in September 2019. Before Covid-19, WeWork was the largest single occupier of coworking space in metro Denver with 29% of the market share, and it was growing quickly, leasing space in some of the city’s newest and most iconic buildings.
But in 2021, as the executives placed in charge of the company following the failed IPO scaled back operations, WeWork said that it would close four Denver locations, totaling a reported 230K SF, although it later reopened one. It is unclear now how much space WeWork currently leases in metro Denver.
Despite its scaling back, local executives don’t expect coworking to go away. Denver has the seventh-highest percentage of coworking space relative to the overall office supply at 2.2%, according to CBRE’s data. Instead, the industry is in the midst of a reconfiguration, much like the larger office market.
“Flexible office space can play a valuable role in a company’s real estate portfolio,” CBRE Senior Managing Director and Colorado Market Leader Katie Kruger said in a press release. “It provides a nimble way to expand and contract, which is never more important than now as companies implement hybrid work strategies and assess how their employees will use the office moving forward.”
CBRE predicts that 2022 will be a growth year for coworking in terms of occupancy and square-footage gains, as large companies look for flexibility in their return-to-office strategies.