The global co-working space market is on a constant rise since past few years and is expected to grow at a CAGR of more than 4.7%. It is clear to see how rapidly the flexible workplace niche has expanded since 2001 - in terms of the number of sites, volume of space (sq m) and number of operators in cities across Europe. The big jump in expansion has been in the last five years, between 2014 and end of 2018, where the number of flexible workspace sites expanded by more than 205% while the number of operators expanded by more than 138%. The increasing demand from Entrepreneurs, start-ups, and freelancers with focus on convenience, price, flexibility and growth as a startup with less than 50 employees can save up to 25-30% in rental costs is the cause for rapid growth of the market. Millennial generation coupled with growing start-up culture is creating the need for low-cost flexible co-working spaces worldwide.
Key Market Trends
Increasing deals for coworking spaces in London and Paris
The co-working and serviced office sectors have grown considerably in central London over recent years. In 2018, about 183,000 m², 13% more as compared to 2017, of space was leased to co-working and serviced office operators. When it comes to London submarkets, the City (40% of deals for flexible office space in m² in 2018), the West End (28 %) and the Midtown (17%) have attracted great interest. The demand comes down to tenants seeking workspace that offers the ability to be flexible on leasing whilst saving costs. This may include changes such as shortening lease lengths, increasing incentives, or acting more as ‘service providers’, rather than simply ‘space providers’.
In France, co-working initially faltered but soon proved to be a real boost for the office real estate market with 28 deals in 2018 representing about 118,000 m²,19% more than 2017. The Paris market has already seen plenty of investment by domestic and international companies. Nevertheless, supply remains very concentrated.
The Evolving Corporate Trends
Co-working continues to evolve and is becoming more professional. Indeed, co-working space providers are renting increasingly large units and introducing strategies to address both self-employed workers, but also larger groups. Many companies seek to maintain flexibility to be able to respond to business change. This is often in the shape of project-based teams which can adapt and flow in terms of their size and staff/skills composition. The natural fit for these teams is to use flexible workspace options that give them the space and freedom to operate as they want. Also, millennials and fresh talent view companies offering ‘well-designed/cool’ flexible space options as increasingly desirable companies to work for. In the race for talent, providing these flexible workspace options could be a deciding factor in winning or retaining talent as the evolving Millennial workforce likes change, and many expect to move jobs within a 2-3 year timeframe, or have more than one job in an increasingly collaborative world.
The industry is quite fragmented with many players existing in the coworking spaces market, also many more are entering the market to fulfill the rapid demand for casual environment offices. Some other major players in the market include - Regus/IWG, WeWork, Matrikel1, Deworkacy, The Office Group, Scalehub, DBH Business Services, Klein Kantoor, Morning Coworking and MeetDistrict. From September 2017 to 2018, IWG and WeWork were ranked first and second, respectively, as the biggest corporate foreign direct investors globally. IWG created 221 projects between September 2017 and August 2018, an increase of 200% on the previous 12-month period. Western Europe was the main destination market for IWG, where it made 92 investments, and it was also the top investor in emerging Europe and Africa. Almost two-thirds of these investments were made through the company’s subsidiary, Spaces, a high-end co-working firm founded in Amsterdam that IWG acquired in 2015.
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Table of Contents
1.2 Scope of the Study
4.2 Market Drivers
4.3 Market Restraints
4.4 Porters 5 Force Analysis
4.4.1 Threat of New Entrants
4.4.2 Bargaining Power of Buyers/Consumers
4.4.3 Bargaining Power of Suppliers
4.4.4 Threat of Substitute Products
4.4.5 Intensity of Competitive Rivalry
5.1.1 New Spaces
5.2 By Business Model
5.2.1 Sub-lease Model
5.2.2 Revenue Sharing Model
5.2.3 Owner-Operator Model
5.3 By End User
5.3.1 Independent Professionals
5.3.2 Startup Teams
5.3.3 Small to Medium Sized Enterprises (SMEs)
5.3.4 Large Scale Corporations
5.4 By Country
5.4.1 United Kingdom
5.4.6 Rest of Europe
6.2 Company Profiles
6.2.1 Regus/ IWG
6.2.5 The Office Group
6.2.7 DBH Business Services
6.2.8 Klein Kantoor
6.2.9 Morning Coworking