Originally published by Amy Hoak on MarketWatch
More Americans are freelancing, and a growing number of them are choosing not to work from their kitchen tables.
An increasing number of co-working spaces are popping up as a result, and JLL expects that the growth of the office-space niche will continue over the next few years. These are shared office spaces — often with free refreshments — that provide a place to work among other people, often hosting happy hours and networking events as well, said Julia Georgules, director of research at JLL.
Those amenities don’t come cheap: Cost at a co-working space averages $139 per square foot per year, compared with $49.59 per square foot for a traditional space in a central business district. Assuming that a person uses an average 50 square feet of space, that’s $6,950 for a co-working space annually. But there are various levels of membership, and terms can be flexible. For example, at WeWork, a company that operates co-working offices, an unassigned space at one of its offices in Chicago’s central business district starts at $400 a month ($4,800 a year), while a dedicated desk starts at $520 a month ($6,240 a year) and a private office starts at $750 a month ($9,000 a year).
“People see value in that,” Georgules said. “That’s the whole sharing economy — everything’s built up of networks.” And freelancers are willing to invest in their small businesses to make those connections in person, and not just over the internet, she added.
It’s also worth noting that while coworking business model has grown recently, it’s uncertain whether it will continue to grow when the economy faces its next downturn. The co-working industry totaled 27 million square feet of office space this spring, which is just 0.7% of the total U.S. office market, but substantial for a niche that barely existed just years ago, according to a JLL report.
Companies like Regus and WeWork dominate the industry, and both have experienced significant growth. “WeWork didn’t exist before 2010, and now they occupy 5 million square feet,” Georgules said. “Between 2013 and 2016, Regus has doubled its locations, and in addition to that acquired a brand called Spaces.”
And because of the unique environment that they offer — allowing employees to engage with people from other fields — some large companies are choosing to occupy a corner of a co-working office so that they can have employees mingle with people from other businesses, Georgules said.