Why Coworking is Such a Big CRE Hit

MIAMI—How is coworking impacting the commercial real estate industry? Big coworking brands like NextSpace and WeWork are seeing a rapid rise thanks to venture capital, but is this really a seachange in the office space industry?

We asked David Behin, CEO and co-founder CityFunders, for his take on the question. He is also a partner and president of investment sales and advisory division at MNS Realty.

“Coworking spaces like WeWork and CoWork.rs are having a tremendous impact on the commercial real estate industry,” Behin tells GlobeSt.com. “It is essentially the minimization of an individual space paired with a sharing of common space.”

As space becomes more expensive, he says, this formula will allow for a continuous flow of new occupants into the office market such as startups, companies in the growth stage. From where he sits, it will also make room for established companies choosing this office model over the traditional. In Miami, Pipeline Brickell is expanding rapidly and winning established brand as clients.

“From a cost perspective, because coworking spaces are affordable enough for more companies to have offices, it has increased the demand for commercial real estate, raising the price per square foot for office space throughout New York,” Behin says. “From a design perspective, coworking spaces have also paralleled what's trending on the residential side of the business. For years, as residential land and buildings have become more expensive, developers have been shrinking individual spaces—bedrooms—and adding to common spaces, either in the apartment or by having more shared spaces within buildings like game rooms, common rooms that tenants can meet, as well as roof decks.”