Coworking: AViable REI Strategy EVEN DURING THE PANDEMIC, THIS STRATEGY IS WORKING
by Terri S. Turner
ome real estate developers and investors grimace when discussing coworking or flex space. Some
The study concluded: 1 Coworking has only just begun to disrupt the traditional office sector. 2 Equity investors anticipate membership growth among both large and small operators. 3 To meet market changes and increased demand by companies looking to offer flexibility to their workers, coworking providers will be shifting toward management and partnership agreements with landlords. COWORKING DURINGTHE PANDEMIC While commercial real estate investors and experts remain cautious about the coworking model, the flexible, shared office paradigm makes sense in a post, work- from-home (WFH) environment. Faced with economic uncertainty, corporations and mid-sized enterprises look for business solutions that provide flexibility. They seek short-term leases, the ability to downsize or grow within a space, a sense of community and an outlet for social interactions following months of quarantine.
admit they don’t understand the concept. However, many forward-thinking real estate professionals and landlords are considering coworking and flex space a viable invest - ment strategy. In 2019, Ropes & Gray commissioned a study to determine how the coworking phenomenon is driving change in the real estate industry. Study findings revealed: • Coworking is forcing traditional commercial real estate (CRE) models to evolve. Eighty-nine percent of study respondents say landlords have borrowed “real estate as a service” model from coworking. • Real Estate Investment Trusts (REITs) are natural long- term buyers of coworking • Two-thirds of equity investors, those who invest indirectly via a fund or directly via a joint venture, cite two drivers for their interest in coworking as an investment: Increased desire for corporations to reduce capital expenditure and growth of mixed- use developments that incorporate a live-work-play environment.
78 | think realty magazine :: november 2020
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