Coworking Ascent Could Start Slowing Down In Manhattan Pretty Soon
The rapidly expanding coworking sector may soon be peaking in Manhattan, with some flexible office operators now looking at markets outside of New York as their next target.
In total, 6.6M SF across 133 different locations is dedicated to coworking in Manhattan, Bloomberg reports, citing Savills Studley data. That figure does not include office spaces offered by Servcorp, which provides high-end executive suites, or firms operating in the outer boroughs.
As of early July, there were 26 new leases signed in Manhattan alone across 1.3M SF, which means the sector could break records this year. Coworking operator Spaces, for example, has reportedly leased 101K SF at 287 Park Ave. South, which is the entire office portion of the building.
But just like traditional office landlords in the city, these coworking operators are offering concessions and incentives to close lease deals. Savills Studley predicts that while market could continue to expand to 10M SF by the end of 2019, it will then start to contract.
“The market is getting more fragmented as some hybrid models and different providers get into the space,” Savills Director of U.S. Real Estate Analytics Keith DeCoster told Bloomberg, adding that landlords are now “jumping in on the act,” which will create even more competition for coworking operators.
“Many shared-office-space providers are already starting to direct their attention to other markets that are not as saturated, such as Denver, Charlotte, Miami and Atlanta,” he said.