We Aren't Worried About WeWork: DFW Office Experts Bet On Coworking's Strength
WeWork made 2019 topsy-turvy in the coworking space by capturing hundreds of headlines with its derailed IPO plans, huge financial losses and stories spelling the death spiral of America's most recognized coworking brand.
Whether the negative chitchat around the world's most publicized coworking concept is warranted or overkill is much disputed.
In Dallas-Fort Worth, office experts say WeWork's struggles are unlikely to disrupt coworking or the office sector substantially considering WeWork accounts for only 304K SF out of DFW's total 3M SF of coworking space, according to a report from CoStar Director of Market Analytics Paul Hendershot.
WeWork itself is betting on DFW with the firm announcing this week the opening of its 6900 Dallas Parkway location in Plano. This is the coworking giant's 11th DFW location and offers 53K SF of flexible-office space, WeWork said in a press statement.
The New York-based company entered DFW in 2017, when it nabbed 44K SF on McKinney Avenue in Dallas and then another 83K SF in Thanksgiving Tower downtown.
This year prior to the firm's failed initial public offering, WeWork signed another two DFW-area leases: the one that just opened in Plano and another on Knox Street in Dallas, which is slated to open in 2021, according to the CoStar report.
Even with this addition, Hendershot said WeWork makes up less than 1% of all DFW office space.
"WeWork’s trials and tribulations won't impact Dallas-Fort Worth's office market, at least not that much," he said.
Cushman & Wakefield analysts predict a squeeze on the amount of capital heading into the coworking space in the coming year or two, possibly causing the creation of new inventory to cool down.
However, any decrease in development is not considered bad news with existing inventory able to absorb demand at higher premium prices as supply evens out against demand, Cushman said in its report.
There is no reason to expect demand will wane too much in the coming years.
"Coworking memberships in the U.S. are expected to increase from approximately 750,000 today to 1 million by 2023," the report said. "More importantly, large corporate occupiers anticipate that about one quarter of their workforce will use coworking or flexible space in some capacity by 2023 — up from just 5% in 2018."
With this amount of pent-up demand, any recessionary impacts or slowdowns in coworking are more likely to just rightsize the market than to substantially alter it, analysts predict.
"Even though we have seen landlord sentiment become more cautious with the recent press surround coworking, the fact still remains that demand drivers for this segment of real estate continue to increase and that can’t be ignored," Cushman Global Flexible Workspace Advisors practice principal leader Ryan Hoopes said in a statement.
