Commercial real estate brokers are less threatened by WeWork and the overall co-working trend than they were a year ago, but they’re even more convinced that co-working is here to stay and that the market for flex office lease space will grow in the next 10 years. That’s according to the latest Apto National Broker Buzz Poll, which was conducted during the past two weeks by commercial real estate software company Apto.
Commenting on the poll results, Tanner McGraw, founder of Apto, says: “WeWork as a company may be facing challenging times, with their IPO now up in the air, but the overall market for co-working and flex office space is real and will continue to grow over time, likely becoming a substantial share of the office lease market. Real estate as a service is here to stay.”
McGraw adds: “Perhaps surprisingly, for all the attention WeWork has gotten in the past year, commercial brokers are less threatened by the growth of the co-working market than they were a year ago. I suspect this is because brokers are more comfortable with the idea of real estate as a service, and many have figured out how they can profit from the trend.”
Another question in the poll indicates that while corporate/credit tenants continue to sign industry standard medium- and long-term leases, tenants are increasingly asking for more flexible lease terms. “This is a direct result of the co-working trend,” McGraw notes. “Tenants may not seek flex space specifically, but increasingly they want their leases to be more flexible. Brokers as service providers no doubt are trying to accommodate this desire as part of their negotiations on behalf of tenants and landlords. Our presumption is that landlords are, too, in the interest of keeping corporate tenants in traditional leased space.”
Full Poll Results (Questions & Answers)
“How much of a threat is WeWork to the CRE brokerage business?”
Not a threat: 56% (up from 49% a year ago)
Somewhat of a threat: 40% (down from 44% a year ago)
A major threat: 4% (down from 7% a year ago)
“How concerned are you that tenants, over time, will opt for co-working space versus traditional lease or sub-lease space?”
Not concerned: 49% (down from 63% a year ago)
Somewhat concerned: 46% (up from 35% a year ago)
Very concerned: 5% (up from 2% a year ago)
“Compared to a year ago, are corporate/credit tenants now more likely to ask for more flexible lease terms, including shorter leases?”
“In your market, has the inventory of co-working space significantly affected the availability of standard office lease space?”
“In your market, has the inventory of co-working space significantly affected the pricing of standard office lease space?”
“Looking ahead 10 years, what percentage of the overall office lease market will be co-working or flex space?”
Less than 10%: 38%
More than 25%: 17%
More than 50%: 1%
Thanks to those members of the commercial real estate brokerage community who participated in the poll, which included Apto customers and non-customers.
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