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Co-working spaces continue to have a big moment in the commercial sector as more businesses are drawn to flexible and short-term solutions amid COVID-19 and its latest fast-spreading delta variant.
Technology companies are reportedly one of the major industries that are snatching up co-working spaces, such as WeWork, The Wall Street Journal reports. Their rental contracts may be for “hot desks” or for more than 50,000 square feet leases that span just a month.
Some companies are turning to such short-term solutions while they make decisions on return to work policies in the pandemic. Many companies had originally planned for this fall, but a surge in COVID-19 cases may put that timeline in jeopardy.
“In a time of uncertainty we provide flexibility to corporations and small businesses trying to figure out what their employees want,” Melinda Holland, WeWork’s head of sales for the U.S. and Canada, told The Wall Street Journal.
WeWork, a giant in this space, has seen business quickly climbing in the pandemic. It generated $215 million in revenue in July, one of the strongest desk sales months on record. Industrious, another shared space firm, also reported some of its strongest sales in the company's nine-year history last month.
“Inquiries are off the charts with very short lead times,” Debra Larsen, chief executive and founder of WorkHouse, which rents out desks in New York. “Companies are solving for September.”
Companies are using flexible spaces to give employees who are working from home another option for work. Some firms are using these spaces as a substitute for their pre-pandemic headquarters that may congregate a higher number of people. Or they’re using it as a way to recruit more employees—without relocating them—by offering them workspaces all across the country.
While co-working spaces take off, leasing activity in the office market has been recovering much more slowly. Office vacancy has climbed to 18.5% in the second quarter, which is nearing a 19.7% record that was reached in 1991, according to Moody’s Analytics.
"Companies are still in that discovery phase that work is going to be done differently," Julie Whelan, global head of occupier research at CBRE Group, told The Wall Street Journal. "The beauty of these [co-working] providers is that if something doesn't work they can bail and try something new."