Will Coworking Work in Secondary and Tertiary Markets?
The way we work today is much different from ten years ago. Many millennials have never worked out of traditional office space but only have worked in coworking environments. The question is, as coworking grows, will it be as successful in secondary and tertiary markets along with dense urban cities?
5 Reasons Why Coworking Businesses Thrive in The Suburbs
Let’s take a look at a few reasons why the suburbs may be prime locations for coworking spaces.
People Want to Live Close to Their Office
According to CBRE, coworking has excellent potential to positively impact secondary and tertiary markets because people who live in these markets are usually suffering from long commutes into the city and the primary reason they travel into the city is to connect with people and gain better experiences. In 2017, 51 percent of people surveyed, in the annual CBRE tenant said that one of the top reasons why they chose a coworking space was because it was located close to their home.
Millennials now outnumber baby boomers and are reaching an age in which they want to settle down and purchase homes. One might think that millennials want to live in these dense, urban areas, but they are finding the more affordable housing options in the suburbs. These millennials are settling down, buying homes and will be raising children and will want to ease their work-life balance.
These transplanted millennials will demand similar work environments as they experienced in their previous urban environments. Companies will be thinking about this thereby providing opportunities for developers to create coworking environments in these suburban and tertiary markets.
Investors are Flocking to Secondary and Tertiary Markets
According to Colliers International, investors are flocking to secondary and tertiary markets because they offer higher returns. Rising occupancy and rental rates in secondary and tertiary markets offer higher yields due to the lower investment needed for real estate acquisition. Cap rates are declining throughout the country, but remain higher in secondary and tertiary markets, making them prime locations for investors to create coworking environments and/or create joint ventures opportunities with operators.
Low Barriers to Entry
With so many new coworking companies are coming online, many coworking operators are facing heavy competition in urban areas. With secondary and tertiary markets, there is less competition allowing operators to establish similar environments while providing a more economic opportunity for its members. Not only does this place the coworking operators near residential rooftops, but they aren’t paying urban rental rates for their space.
The Economy Favors Risks
Another reason coworking will succeed in secondary markets is because the current economy is encouraging risk-taking. The improving national and local economies are encouraging investors and companies to enter markets they might not have previously considered. Investors are showing great interest in suburban office buildings as prices in CBDs are becoming too high for some, according to Colliers International.
Coworking is a trend that has transformed into a norm for office space. People no longer want to work out of a traditional office, but instead want to work in a flexible space that is close to home to avoid long commutes.
With the current focus on mixed-use developments, suburban and tertiary can provide similar walkable amenities as their urban counterparts. Due to the low barriers to entry in these secondary markets, a favorable economy and a generational shift, market analytics seem to indicate coworking will thrive in these markets as it has in urban cores.
Coworking Spaces in and Around Atlanta
SharedSpace is a regional coworking business focused on creating modern, professional, and energetic work environments to stimulate the creativity and productivity of entrepreneurial companies and their teams! Please don’t hesitate to reach out if your business is looking for creative opportunities to reinvigorate your workforce and brand with a modern coworking environment like SharedSpace. Visit our homepage to book a tour today!