A lasting boom
Cushman & Wakefield publishes a report about letting co-working spaces in Germany.
While the word ‘co-working’ is suffering from over-use at the moment, frequently stamped onto any type of office work in an attempt to make it appear innovative and of-the-moment, there is still no denying that, beyond the hype, there genuinely is a lot of activity in the market for flexible, shared office space. To separate fact from hype, Cushman & Wakefield has carried out a detailed analysis of the German market and published a report on the findings: Co-Working: A Worldwide Phenomenon.
Top co-working cities in Germany
The report identifies Germany’s five office lettings centres as the cities in which flexible working space market is currently concentrated, with Berlin, Düsseldorf, Frankfurt, Hamburg, and Munich offering a combined total of 610,000m² of co-working lettings (0.8% of the total stock of office space); a further 160,000m² are planned for 2019. When these figures are compared to statistics in other countries, it becomes clear that there is still a lot of potential in the German market: in business centres such as London or Amsterdam, co-working spaces now account for 4.6% and 5.9% respectively of the total office stock, and other cities such as Stockholm are already at 2.4%. The largest amount of space let as co-working concepts in the German market last year was to be found in Berlin, with around 75,000m²; growth was fastest elsewhere, however, in Düsseldorf (+87%) and Frankfurt (+61%).
Dominant positions for large providers
The Cushman & Wakefield analysis reveals that the co-working lettings market in Germany’s five major office space locations is currently dominated by the ten largest providers, who booked around 85% of the space let in the last two years. With 26% of the market, WeWork leads the pack, followed by Spaces (23%), Design Offices (16%), and rent24 (10%). In terms of the way co-working is changing the traditional office lettings business model, market leader WeWork, founded in New York in 2010, is a case in point: it currently operates ten spaces in Berlin alone, having just moved into a new site in the Friedrichshain district. Its dark-brick frontage and uniquely desirable river-side location house a light and airy atrium in which freelancers share desks and floor after floor of premium fitted office space let to companies for up to 100 workers. The interior is brightly decorated, with designer lamps and intriguing material mixes (wood, ceramics, stone), and the whole space looks more like a trendy café in a hip part of town or the lobby of a chic ‘boutique’ hotel; besides inspiring members to be even more creative, this stylish space is also intended to offer its business tenants support, e.g. in the form of networking events and workshops.
Co-working as a lifestyle choice
What the example of WeWork demonstrates is that co-working takes the business-like, no-frills world of classic office lettings up a level: WeWork is a lifestyle brand with a high degree of identification, which explains why – just like its competitors – it invests so heavily in prime locations, design and architecture, and services to make everyday office life better.
This concept is just what a new generation of companies (and their staff) is looking for. It’s no secret that Generation Z is a demanding cohort whose work is measures in bytes, not hours, and who can work from almost anywhere. As working patterns are become increasingly freed from hierarchies and open communication becomes a defining factor, traditional office space concepts with fixed floorplans and monotonous cubicle structures are no longer fit for everyday working life; open-plan offices, too, with their anonymous, standardised workstations have reached the end of the road.
A lack of co-working space
What is constraining growth in the current market is, first and foremost, a lack of suitable spaces in Germany’s urban centres: co-working requires large, open interiors which can be used to implement multifunctional space concepts – and the lofts in old industrial warehouses so beloved of the industry are now all but absent on the market. Office space from recent years is almost all organised in cells and cubicles, requiring substantial investment in order to turn it into co-working space. For this reason, it would be reasonable to expect that co-working will spread into less central districts of the cities where it already established – and into various second-rank cities (‘B cities’ in German real-estate parlance) and university towns. Another development in the coming years will be providers who focus on specific types of company or offer a specific set of services. In Berlin’s Kreuzberg area, for instance, a co-working space named Full Node has opened specialising exclusively on companies in the blockchain/crypto-currency space.
Co-working as a lasting segment in the market
The changes in the way offices are used and the rise in demand for new workspace concepts has become evident in the figures for new lettings: “While overall lettings went down by 7% on average in 2018 year on year, providers of flexible workspace increased their lettings by 20%,” explains the new Cushman & Wakefield co-working report; the rents agreed are also a factor pushing new concepts up the agenda, as flexible rental space lets for an average of €23.45/m² as against the overall market average of €18.30.
What the figures collated by Cushman & Wakefield show is that, even though co-working remains a niche product at the present moment, the direction of travel is towards an office-lettings market in which co-working is no longer an attention-grabbing novelty, but an established segment.
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