COWORKING A N D S E R V I C E D O F F I C E
RALEIGH/DURHAM
MARKET REPORT
Q1 2019
photo credit: SPACES at The Dillon
What’s Next in the Evolving World of Flexible Office Space
The demand for flexible workplace solutions has been surging in the U.S. and worldwide, resulting in providers adding millions of square feet of coworking space in 2018, an increase of more than 30% since 2017. In response, investors are pouring billions of dollars into coworking, while landlords are opening up collaborative spaces and provisioning their own flexible office solutions. Industry stakeholders are examining their approach not only to this emerging sector, but also to incorporating resiliency in real estate in general. The current report by Cushman & Wakefield (C&W) sees very few providers who are currently achieving
success in the sector with only a coworking model. Instead, the trend is toward hybrid solutions where operators supply not only open plan coworking space, but also fully demised private suites that can be customized and branded, known as managed and serviced offices (MSO). The average term is 12 months, a short as month-to-month, and as long as five years.
A number of factors drive this demand. For start-ups and small to medium sized enterprises (SMEs), the mitigated risk, avoidance of capital expense, and especially the short-term commitment are enticing. Entrepreneurs can allocate money, time, and resources to growing their business and not managing real estate. Moreover, not only do contingent workers (freelancers, independent contractors, consultants, or other outsourced and non-permanent workers) make up a larger share of the growing labor force, millennials find the coworking model compelling - they want to be located in urban areas and work in innovative workplaces that inspire them. Hence, larger established companies are now seeing opportunities in coworking facilities to retain and attract young talent. Many corporations are examining their workplace models in a bid to encourage creativity by providing a more unstructured and less centrally controlled environment than their traditional offices. They are also seeing value in the scalability that is intrinsic with flexible workplace solutions. Particularly when occupiers are growing or downsizing, a workplace strategy that includes some flexibility can make business and financial sense.
Going forward, coworking and MSO in real estate portfolio strategies will likely continue to gain traction. We all know that cost containment remains the primary focus for occupiers during periods of volatility and rising rents. Given this, more companies will embrace flexible workplace as a solution set. This has already been the trend in industries such as life science, financial services and insurance, and especially technology, which are all major drivers of office activity in the Raleigh-Durham market.
THE EVOLVING WORLD OFFLEXIBLE OFFICE SPACE
30%INCREASE IN
COWORKING AND MSO INVENTORY
IN 2018
photo credit: Industrious at Charter Square
Jen Dittmer VivoloDirector, Global Flexible Workplace Solutions
GLOBAL & U.S. FLEXIBLE OFFICE LANDSCAPE
1.5+ MILLION COWORKING MEMBERS WORLDWIDE
675X MOREGLOBAL COWORKING SPACE TODAY THAN IN 2008
50+ MSFTOTAL U.S. COWORKING SQUARE FEET
OVER THE NEXT DECADE, FLEXIBLEWORKSPACE WITHIN CORPORATE REAL
ESTATE PORTFOLIOS WILL GROW
5-10% (CURRENTLY 1%)
E ST I M AT E S P R E D I C T T H E R E A R E N OW C LO S E TO
SHARED WORKSPACE LOCATIONS WORLDWIDE
30,000
OF THE U.S. WORKFORCE NOW COMPRISES CONTINGENT WORKERS
40%
Going Corporate
Becoming a staple for
developers
A breeding ground for in-house
innovation hubs
Booming in Asia Pacific
Rapidly growing within all U.S.
metropolitan areas
Gaining momentum
through M&A
Cost arbitrage will not slowdown the momentum in emerging markets
GLOBAL COWORKING TRENDS
5%FLEXIBLE OFFICE NOW MAKES UP
APPROXIMATELY
OF ALL CLASS A OFFICE INVENTORY IN THE U.S.
Downtown Raleigh Downtown Durham
North Raleigh
RDU/RTP
CaryChapel Hill
SUBMARKET SHARE OF COWORKING SPACE
LARGEST OCCUPIERS OF NEW LEASES 2016-PRESENTNEW LEASES
LARGEST COWORKING OFFICES BY SQUARE FEET
WeWork
Regus
Spaces
Industrious
Spaces
Regus
Regus
Regus
Regus
Regus
HQ Raleigh
Regus
Regus
Amer Undgnd
HQ Raleigh
Local
National
International
COMPANY SIZE
MAJOR COWORKING PROVIDERS
23+24+33+5+15+H WeWork Spaces*
Industrious
Other
Regus*
RALEIGH/DURHAM FLEXIBLE OFFICE LANDSCAPE
23%
24%33%57%*
5%
15%
Source: Cushman & Wakefield Research
76,000
54,376
34,290
31,304
26,354
24,203
19,507
19,000
17,937
17,832
15,375
15,350
15,000
14,710
*part of IWG
ONE CITY CENTER
MERIDIAN PARKWAY
THE DILLON
STATION AT EAST 54
BRISTOL PLACE
EAST 54
34,141CHARTER SQUARE
3737 GLENWOOD AVE
REGENCY PARK
CENTREGREEN V
CAPITAL CLUB
BOA TOWER
FORUM I
TRUST BUILDING
311 S HARRINGTON
Coworking locations are well distributed throughout the Triangle, but the largest representation is in the downtown Raleigh market with 29% of the market’s share.
200,198 sf
143,619 sf
80,730 sf 73,237 sf55,507 sf
131,013 sf
SAS 419,994 sf
Syneos Health258,250 sf
Lab Corp221,988 sf
IWG (Regus/ SPACES)187,691 sf
Teleflex163,568 sf
MetLife219,002 sf
Relias Learning184,378 sf
WeWork156,000 sf
Allscripts234,470 sf
Duk
e U
nive
rsit
y30
2,0
15 s
f
Source: Cushman & Wakefield Research
BELOW THE NATIONAL AVERAGE
~2/3 OF ALL CURRENT COWORKING SF HAS COME INTO EXISTENCE
SINCE 2016
RALEIGH/DURHAM
39%
60%
RALEIGH/DURHAM AVERAGE MONTHLY COSTSM
AR
KE
T C
OM
PAR
ISO
NA
vera
ge
Cla
ss A
Ren
tal R
ate
$82.91
$79.27
$61.47
$41.94
$39.36
$33.16
$43.96
$31.89
$30.31
$30.01
$29.74
$27.00
$22.46
New York (Midtown)
San Francisco
Washington D.C.
Miami
Boston
Seattle
Chicago
Denver
Atlanta
Dallas / Fort Worth
Nashville
Raleigh/Durham
St. Louis
$250Virtual Office
Use of an address and access to
business functions, such as phone answering and
conference room rental, without
physically occupying the space.
TO SPEC*
Managed Space
Similar to direct space, a branded, turnkey,
and customized workplace solution
leased and managed by a third-party from buildout to ongoing daily management.
$575*
Serviced Office
Exclusive access to defined and secure office(s)
or demised suite, often with 24/7
keyed access and some signage such as lobby directory.
$300Membership
Touchdown desk on fixed monthly
or annual fee, includes the cost
of desk space, access to pay-per-use services and
networking events.
$350Coworking
Access to a desk in a shared area,
but not dedicated. Availability is
not guaranteed. Resources and
services are pooled, both for efficiency and to encourage
collaboration.
$450Dedicated Desk
An assigned desk in a shared area but is often located in close proximity to
the coworking space. Includes lockable filing
cabinet or locker.
S H A R E D P R I V A T E
*per person, in 2-person, 120 sf window office,
12 month term
*solution for 10+ people and commitment term of 12 months
or longer
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DURHAM
RALEIGHCARY
CHAPELHILL
]\̂495
]\̂85
]\̂440
]\̂540
]\̂40
0/501
0/401
0/70
0/15
0/64
0/1
FALLSLAKE
B EVERETTJORDAN
LAKE
BEAVERDAM LAKE
LAKE CRABTREE
LAKE JOHNSON
PARKERS CREEK
WILLIAMB UMSTEADSTATE PARK
FALLS LAKESTATE
REC AREA
LAKE CRABTREECOUNTY PARK
SEAFORTHPOPLARPOINT
CROSSWINDS
WHITE OAK
APEX COMMUNITY PARK
FRED G BONDMETRO PARK
REGENCY PARK
LAKE JOHNSON PARK WALNUT CREEKPARK NORTH
CARL ALWIN SCHENCKMEMORIAL FP
SHELLEYSERTOMA PARK
BLUE JAYPOINT
COUNTY PARK
OLD CHATHAMGOLF CLUB
PRESTONWOODCOUNTRY CLUB
UNIVERSITY OFNORTH CAROLINA
DUKEUNIVERSITY
NORTHCAROLINA STATE
UNIVERSITY
MEREDITHCOLLEGENC ST
COLLOF VETERINARIAN MED
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RALEIGH-DURHAMINTERNATIONALAIRPORT
´
0 52.5Miles
# Company Name SF Occupied Opening Date
1 WeWork 81,032 5/1/19
2 WeWork 76,000
3 Regus 54,376
4 Spaces 52,619 4/13/20
5 Spaces 34,290
Industrious 34,141
6 Spaces 32,000 12/16/19
7 Spaces 31,304
8 Regus 26,354
9 Regus 24,203
11 Regus 20,000 4/1/19
12 Regus 19,507
13 Regus 19,000
14 Regus 17,937
# Company Name SF Occupied
15 HQ Raleigh 17,832
16 Regus 15,375
17 Regus 15,350
18 American Underground 15,000
19 HQ Raleigh 14,710
20 Regus 14,288
21 CrossRoads Business Center 11,300
22 Access 10,200
23 Regus 9,010
24 American Underground 8,842
25 Regus 6,903
26 Office Evolution 6,441
27 Office Evolution 5,000
28 Intelligent Office 2,000
LOCATIONS 1 15
2 16
3 17
4 18
5 19
6 20
7 21
8 22
9 23
10 24
11 25
12 26
13 27
14 28
WeWork Spaces
Industrious
Other
Regus
TO LEARN MORE ABOUT COWORKING AND THE RALEIGH/DURHAM OFFICE MARKET, PLEASE CONTACT:
Copyright © 2019 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple
sources considered to be reliable. The information may contain errors or omissions and is presented
without any warranty or representations as to its accuracy.
JEN DITTMER VIVOLO
Director, Global Flexible Workplace Solutions
+1 919 645 3591
JOSHUA CHILES
Research Analyst
+1 919 645 3590
photo credit: WeWork at One City Center
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