New Breed of Shared Offices Revitalizes Co-Working Market

 

“A new breed of co-working is fueling an industry comeback.

 

The shared-workspace business was one of the hottest in commercial real estate a decade ago, tapping into booming demand for flexible workspace among small and midsize firms. By 2018, the industry leader WeWork occupied more Manhattan office space than any other company.

 

Then co-working got leveled by the office market's downturn when the pandemic upended demand for corporate space. Some of the industry's largest players were forced to seek bankruptcy protection, including WeWork in 2023.

 

Now, as companies adopt a mix of office and remote work, co-working is again one of the fastest-growing segments of the office market.

 

Economic uncertainty and the rise of artificial intelligence are compelling more companies to embrace flexibility for their workspace.

 

This time, it isn't only smaller firms or entrepreneurs flocking to these shared conference rooms and cubicles. Some of the world's largest companies are jumping on the co-working bandwagon, including Pfizer, Amazon.com, JPMorgan Chase, Lyft and Anthropic.

 

"When we go into a market, one of the first things we do is look for a co-working space," said Will Monaghan, global head of corporate real estate for WTW, formerly Willis Towers Watson, a commercial insurance advisory and brokerage with 350 offices worldwide.

 

And Co-Working 2.0 is increasingly dominated by single-site operators, rather than behemoths such as WeWork, which at its peak had more than 800 locations globally.

 

Today, co-working space in the U.S. totals 158.3 million square feet in nearly 8,800 locations. That is still down considerably from the years before the pandemic. But according to data firm Yardi, that number is up from 115.6 million in about 5,800 locations three years ago.

 

Shared offices allow employers to avoid long-term leases, adjust space quickly and offer employees the same amenities they use to lure workers back to headquarters.

 

Companies say short-term, flexible co-working helps them create satellite offices closer to where employees live. Those spaces allow workers to capture the benefits of in-office work -- collaboration, mentoring and access to amenities -- without the time and expense of long commutes to headquarters.

 

Currently co-working accounts for 2.2% of U.S. office stock up from 1.7% three years ago. Eventually that percentage could grow up to 10%, Yardi predicts. "Look at occupier surveys," said William Sandford, Yardi's director of co-working. "Forty to 50% say that 20% to 30% of their corporate portfolio will be flexible leases."

 

The U.S. co-working business started to grow in the late 2000s as startups and freelancers sought flexible alternatives to traditional office leases.

 

As its expansion accelerated, real-estate executives touted it as a game changer to their business. Tishman Speyer Chief Executive Rob Speyer said in 2019 that co-working "may be the biggest disruption to real estate since the invention of the elevator."

 

Much of co-working's expansion today is from smaller, independently operated locations. Single-site operators have grown 66% in the past three years to over 3,500 locations, according to Yardi, double the rate of the top 20 operators.

 

Independent operators are helping local companies in small and midsize cities adapt to hybrid work.

 

In Buffalo, N.Y., Uniland Development converted a former truck-parts warehouse six years ago into Hansa workspace, a 32,000-square-foot co-working facility.

 

Uniland initially expected demand for its suite space to come largely from growing companies seeking additional office space. Instead, most larger tenants have been firms looking for short-term, flexible space as they emerged from the pandemic and reduced their footprints to accommodate more remote work.

 

"It's predominantly folks that are downsizing from traditional offices," said Erin Fontenot, Hansa's community manager.

 

Industrious, a larger co-working firm, had a big growth spurt last year after CBRE Group acquired a controlling stake. The deal gave the co-working firm access to a long roster of corporate tenants and building owners connected to its new owner, the world's largest commercial real-estate services firm.

 

Industrious added more than 50 locations last year for a total of over 250 in the U.S. and Europe. Much of its recent growth has come from large companies seeking small satellite offices -- often with fewer than 100 employees -- that offer amenities comparable to those at corporate headquarters.

 

Before the remote work era, companies could get away with providing workers in satellite space little more than basic desks, conference rooms and break areas, and limited common space and food and beverage service. But today remote workers "are livid about it if you force them back to the office and it's a crappy experience," said Jamie Hodari, Industrious co-founder who is now a top executive at CBRE.

 

WeWork helped propel the co-working model into the mainstream, transforming co-working from a niche concept into a global office brand, led by its flamboyant CEO Adam Neumann.

 

But WeWork's rapid expansion -- fueled by long-term lease obligations, heavy capital spending and optimistic assumptions about demand -- left the company vulnerable to slow periods.

 

Now the company is taking smaller spaces and sometimes sharing risk with building owners.

 

"We're not going to take stuff that's going to choke you if it doesn't fill up right away," said John Santora, WeWork's CEO who took over in 2024 when the company emerged from bankruptcy protection with Yardi as its controlling shareholder.” [1]

 

1. New Breed of Shared Offices Revitalizes Co-Working Market. Grant, Peter.  Wall Street Journal, Eastern edition; New York, N.Y.. 27 Jan 2026: B1.