The Emergence of Co-working and its Future in the Puget Sound
The co-working industry has gained nationwide popularity and is growing at a stunning rate, on pace to occupy more than 2 million SF in Seattle and the Eastside alone. Colliers International identified 58 co-working spaces in the Puget Sound market totaling 1.96 million SF — 2 percent of the market’s office inventory. WeWork is by far the biggest player in the industry, occupying just over 975,000 SF as of Q1 2018. According to a study conducted by DeskMag, two-thirds of co-working spaces are looking to expand their footprint by nearly 70 percent in the next few years.
The co-working industry first entered the Puget Sound region in 2008 as a means for developers to counter the high vacancies (20.7 percent in 2010) and low rents ($25.68 in latter half of 2009) stemming from the economic recession. This shared-space option gave small, un-established companies the ability to obtain office space. These companies included start-ups unable to commit to long-term leases and independent contractors seeking to grow their practices. Co-working demand in the Puget Sound is widely driven by the successful large tech companies that frequently produce spin-offs and require flexible office space.
Today’s shared space sector has evolved concurrently with the tech industry, spearheaded by one of the most successful co-working space providers; WeWork. WeWork’s model seeks to operate locations more as business incubators that companies can use to collaborate, network, and even recruit new talent in super cool space with a trendy vibe. The folks at WeWork have perfected the optimal combination of place, people, and concept. Colliers International Senior Vice President Bill Cooper commented: “For companies looking for flexibility and ease, co-working spaces provide a lot of value.” NPR described the industry as “a bit like home- or ride-sharing, but with office space.”
The new model caters to the Millennial generation’s entrepreneurship and technology use. Co-working has been able to tap into the needs of this demographic and provide a foundation to grow their businesses from the ground up within a professional business space with numerous amenities. Enterprise clients are also beginning to utilize the co-working model, usually as temporary office space or when expanding to a new market. For example, Seattle venture capital firm Madrona Ventures is utilizing this business model by doubling down on its co-working initiative. Madrona’s space will focus on attracting start-ups and entrepreneurs looking to build companies as opposed to temporary office space. Microsoft is undertaking a drastic renovation of its Redmond campus and will also look to incorporate co-working spaces in its modern design.