Flexible offices concept continues to gain ground
Sector evolving in effort to appeal to more than small businesses and freelancers
Coworking began as a solution for freelancers and entrepreneurs to do business outside of a home office or coffee shop.
But the sector is evolving. It’s not just one- or two-man shops renting desks in a shared office anymore. Even very large companies — the Googles and Spotifys — are increasingly turning to renting flexible office space instead of signing a traditional five- to 10-year lease.
According to the inaugural Canadian Flexible Real Estate Report, released last week by commercial real-estate and investment firm CBRE Canada, the rapid growth of companies like WeWork, Regus and Breather is becoming a vital component of the office market in major centres across Canada, Montreal included.
In 2014, coworking spaces across Canada occupied only 1.5-million square feet of office space. Today, the sector has grown more than 300 per cent to 6.1-million square feet, with still more expansion expected in the near future. More than three-quarters of the square footage in Canada’s flex office centres is in Toronto, Vancouver and Montreal.
Avi Krispine, CBRE Quebec’s executive vice-president and managing director, said although coworking is the best-known type of flexible office arrangement, the sector is evolving to offer a greater variety of choices.
While many flex office providers still offer desks by the hour, week or month for freelance creatives and coders, they are also seeing growing demand from mid- and large-sized companies to rent private offices, sometimes even whole floors, on terms that are more flexible than typical office leases.
“It’s all about flexibility. The reason why entrepreneurs really enjoy being in these flex spaces is that the economy is growing at such a fast pace that they can’t predict if they’ll need 10,000 square feet or 100,000 square feet a few months from now,” Krispine said.
Of the 10 largest office deals nationally this year, four were by flexible office operators, the report noted. Some of this year’s notable transactions included WeWork taking 171,000 square feet in BentallGreenOak’s 1090 West Pender in Vancouver, Spaces taking up more than 260,000 square feet across two locations in Toronto and WeWork’s 64,000 square feet of space in Humaniti’s 385 Viger in Montreal.
Although the growth in coworking and other flex office solutions is impressive, Krispine noted that it still represents only a fraction of the overall office market: about 1.2 per cent of the total office stock in Greater Montreal and 1.4 per cent downtown.
In the Greater Montreal Area, CBRE counted 95 flex office locations, which represent 959,000 square feet of the total office supply. More than half of this, 621,000 square feet, is downtown, where there are 46 locations.
The biggest fish in Montreal’s coworking pond is WeWork, which controls more than one-third of the square footage devoted to flex office space in the city. The company is also
expanding rapidly; it has grown its footprint by 158 per cent since 2017. Competitors like Montreal-based Breather and Regus are gaining ground, however, and new entrants like iQ Office Suites are poised to enter the market in the next year or two, Krispine said.
As big as it is, WeWork doesn’t have a lot of empty space in Montreal. WeWork’s space is almost completely occupied, he said.
“There are a lot of small companies and new organizations out there trying to see if their businesses can make it in the world,” Krispine said. “The runway for coworking spaces is massive, and at this point in time the future looks bright for coworking.”