Coworking Industry Report Q1 2024: National Supply Increases 6%, Prices Steady & HQ Continues to Grow Portfolio
The dynamic characteristics of the U.S. coworking space market demand creative solutions to facilitate the needs of both enterprises and individuals. For this reason, CoworkingCafe analyzed the development of the coworking industry as seen through the flex workspace inventory, the square footage attributed to it, the median coworking prices and the top operators. Moreover, to better understand the industry’s evolution across the top 25 markets in the U.S., CoworkingCafe compared the data for Q1 of 2024 to the information recorded in Q4 of 2023.
National Inventory Shows Significant Growth, Salt Lake City Sees 15% More Coworking Spaces in Q1
The first quarter of 2024 logged a significant 6% increase in supply with 346 new coworking spaces across the country. This placed the national inventory at exactly 6,597 spaces and demonstrates a consistent expansion of the market from the previous 6,251 registered at the end of 2023.
Of the top 25 markets, 20 registered increases in their numbers of coworking spaces in Q1 of 2024. In the case of Salt Lake City, there were 15% more flex workspaces, putting it at 71 spaces in April. At the same time, Minneapolis-St. Paul increased its supply by 13% in the last three months, while San Diego rose by 12%.
Notably, among leading U.S. markets, only one-fifth had decreased their numbers of coworking spaces with the sharpest drop of -8% (10 fewer spaces) in the Bay Area. Meanwhile, Manhattan, N.Y.; Washington, D.C.; Miami; and Philadelphia each reduced their coworking supplies by a minor 1%.
Virtual Office & Open Workspace Rates Remain the Same, Dedicated Desks See Price Reduction
Overall, coworking prices remained stable in Q1 with some changes regarding the dedicated desks. First, virtual offices maintained their median rate from the previous quarter at $119 per month. Additionally, four of the top 25 markets logged subscriptions below the $100 mark for virtual offices. Namely, Dallas-Fort Worth; Denver; and Brooklyn, N.Y.; each recorded a median price of $99, while Washington, D.C. topped all markets in terms of affordable virtual offices at only $79 per month — $1 less than at the end of 2023.
Conversely, there were also markets above the national median in this category with rates approaching the $200 mark: New Jersey’s virtual office subscription was set at $199 per month, while the rate in Chicago was $195. It’s worth mentioning here that both of these markets experienced reductions from $205 in Q4 of 2023.
As for the median rate for open workspaces, it increased by $1 in Q1 of 2024 from the previous $150 per month. Remarkably, some markets even saw sizeable increases in the prices of open workspaces. For instance, rates in Manhattan and Brooklyn increased to $299 — almost double the national median — from $225 and $255, respectively, in Q4 of 2023. Similarly, in San Francisco, the rate went from $200 at the end of 2023 to $299 in Q1 of 2024. That said, Washington, D.C.; Boston; Seattle; Miami; and Austin, Texas, reached a median monthly rate of $199.
At the opposite end of the spectrum, five other top markets logged affordable rates for open workspaces in Q1 of 2024: In Philadelphia, the monthly median price stood at $120, while in New Jersey, Phoenix, Salt Lake City and Indianapolis, the subscription went for only $119. What’s more, the median decreased in price since Q4 of 2023 for some markets, such as Salt Lake City and Indianapolis.
In the case of dedicated desks, the national median rate decreased to $309 from $322 at the end of 2023. In Indianapolis, the price was $209, while in Salt Lake City and Chicago, it stood at $269. Of course, Manhattan was the sole place to surpass the $500 mark at $510 per month, even with a $10 decrease from the end of 2023. Next were Brooklyn at $455, San Francisco at $450, and Miami alongside Austin with subscriptions of more than $400 in this category.
For insights on coworking prices at the metro level, check out the subscription prices analysis for 2024.
Top Coworking Markets by Number of Spaces
Gap Between Los Angeles & Manhattan Widens as LA Takes Lead in Number of Coworking Spaces
The leading market, Los Angeles, registered 270 coworking spaces with a modest 1% increase in the first part of 2024. Across the country, its challenger, Manhattan, scored 263 spaces with a 1% decrease in the same period. A similar pattern was observed at the end of 2023 when Manhattan was surpassed by LA, albeit by just one coworking space.
Similar cases of 1% decreases in inventories during Q1 were registered in New Jersey, Washington, D.C. and Philadelphia. That said, a particularly significant change was in the Bay Area, where an 8% decrease was registered. That equated to 10 coworking spaces that were dropped in Q1, leaving the area with 123 spaces in April 2024.
Nevertheless, the majority of markets experienced promising growth in their coworking inventories. In Salt Lake City, that meant an increase of 15% quarter-over-quarter, whereas, for Minneapolis-St. Paul, it was a 13% surge in inventory to jump from 85 spaces at the end of 2023 to 96 in Q1 of 2024. Likewise, San Diego had a 12% expansion that took the number of spaces from 108 to 121 at present, while Phoenix and Nashville, Tenn., also grew their inventories by 11%. Not to be outdone, Seattle had a 10% increase in Q1 of 2024.
Top Coworking Markets by Square Footage
Majority of Markets See Growth in Coworking Space Size, Indianapolis Expands by 13% Compared to Previous Quarter
At the national level, the total square footage attributed to coworking spaces grew once again by another 3% in Q1 to reach 124,792,346 square feet. The current total represents 1.8% of the total office space in the U.S.
In Q1 of 2024, the total coworking square footage increased in 15 of the top 25 markets. To that end, Indianapolis’ 13% growth contributed to what is now 1.54 million square feet of coworking space in the city. Meanwhile, in San Diego, there was a 12% rise to 2.03 million square feet belonging to flex workspaces. Then, following close behind with a 9% rise in total coworking square footage were Denver (3.66 million square feet); Nashville (1.76 million square feet); and Minneapolis-St. Paul (1.66 million square feet).
Even so, there were also minor decreases in square footage in 10 markets at the beginning of 2024. At this end, Brooklyn was the most significant with -6%, while the rest ranged from -0.01% drops in total square footage (Atlanta) to -3% (Chicago).
As for Manhattan, the market led in terms of coworking surface with an impressive 12.55 million square feet. Even after registering a 1% loss in its coworking surface, Manhattan still doubled Los Angeles, where the coworking space inventory held 6.47 million square feet. Third in line was Washington, D.C. with 6.12 million, then Chicago (6.1 million) and Dallas-Fort Worth (5.13 million).
As Coworking Spaces Grow in Numbers, Most Markets Witness Declines in Average Square Footage
Similar to the end of 2023, the average square footage of individual coworking spaces in most markets also dropped in Q1, showing a change from 19,331 square feet per market to 18,917 (down 2% from the previous quarter). This situation applied to 18 of the 25 markets. But, taking into account that the total coworking inventory and the total square footage rose, this average focused on smaller coworking spaces.
In the ranking, Manhattan, N.Y., led the sector with a remarkable 47,727 square feet of coworking spaces. Next was the 27,969 square feet attributed to San Francisco, which took the runner-up position from Brooklyn as Manhattan’s neighboring market decreased its average square footage by 7% to take third place.
In terms of the highest quarter-over-quarter growth in square footage, the Bay Area led with 7.6% more coworking surface per space. Not far behind was Miami with a 6% increase in the average coworking surface, followed by Indianapolis’ growth of 5%. Minor rises were also noted for Dallas-Fort Worth (2%), Manhattan (1%) and San Francisco (0.2%).
As for the steepest drops in square footage, the most prominent was in Salt Lake City, which presented a decrease of 8% in its average square footage, despite registering increases in both its number of locations and total square footage. A similar situation regarding reduced average square footage was seen in Phoenix (-9%).
Top Coworking Operator Distribution
HQ Expands Portfolio by 17% in Leading Markets, Further Establishing Position Among Top U.S. Operators
Similar to the end of 2023, the top leading coworking operators in the U.S. market were Regus, WeWork, Industrious, Spaces and HQ. They registered the highest numbers of coworking spaces both within the top 25 markets analyzed (a cumulated quarter-over-quarter increase of 3%) and at the national level (a cumulated quarter-over-quarter increase of 2%).
HQ maintained its ascending path, despite only entering into the top operators at the end of 2023. Additionally, HQ had the fastest portfolio expansion registered quarter-over-quarter with 17% more spaces among the top 25 markets and 14% nationwide. Within the main markets, HQ had 91 spaces and a total of 190 across the nation.
Similarly, Regus noticed 4% growth in Q1, which translated into 957 spaces across the U.S. to lead in terms of numbers of a single operator. Next was Industrious with a 3% increase and 142 spaces nationwide, while Spaces had a 2% rise nationwide, even after a 1% reduction within the top 25 markets.
Conversely, WeWork registered a 9% decrease nationally and in the top markets. More precisely, WeWork lost 16 spaces throughout the nation, which made it a singular case between leading operators.
To see the extended methodology used for this study, access the original article here.
