Coworking Sector Marking Swift Return

Nationwide, there are some 117.5 million square feet of shared space, with more than a third in the top five markets, according to the latest CommercialEdge report.

After a long period of uncertainty about the future of shared space, coworking has emerged as a viable solution to fill the gaps created by hybrid work, as well as a cost-saving alternative for struggling office tenants. According to the latest CommercialEdge office report, the nation’s shared space inventory as of July encompassed some 117.5 million square feet of space, representing 1.7 percent of total stock. More than a third of this inventory was concentrated in the top five markets, with Manhattan leading the way in this aspect (15 million square feet).

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The office-using sector continues to mend, having added 115,000 new jobs in July, led by the Professional and Business Services sector (89,000). Meanwhile, the Information and Financial Activities sectors each gained 13,000 positions. Year-over-year, the office-using sectors added more than 1.5 million new jobs, accounting for a 4.6 percent increase. Sun Belt markets ranked first in office-using employment recovery, with Dallas, Austin and Atlanta—an emerging tech hub benefitting from high levels of domestic in-migration—ranking at the top of the list.

Some 149.5 million square feet of office space was under construction across the nation at the end of July, accounting for 2.2 percent of total stock. Year-to-date deliveries amounted to 28.7 million square feet as of July, with nearly 42 percent of the active pipeline located in the suburbs, according to the CommercialEdge office report. However, development in the suburbs is expected to decline in the upcoming years, as only 31 percent of the new stock currently under construction is situated in suburban submarkets.

Construction’s Big Question: Will Costs Stabilize?

Asking rates hold firm

The national office vacancy rate clocked in at 15.1 percent in July, up 10 basis points from the same period last year. Meanwhile, national average full-service equivalent listing rates averaged $37.75 per square foot at the end of July, down 230 basis points year-over-year but 17 cents more than in June.

Full-service rates increased most in markets with a strong footprint of office employees who must perform in-person work: In Charlotte—a metro encompassing a high concentration of employees in the finance sector—full-service rates recorded a 16.8 percent year-over-year jump. Asking rates had double-digit increases in life science hubs such as Boston (15.2 percent) and San Diego (13.9 percent).

Read the full CommercialEdge office report.

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