Miami Has Become The Coworking Capital Of The World

Miami has emerged as the top coworking and flexible office market in the country, soaking up waves of corporate transplants looking for a quick foothold in buzzy South Florida. 

"You have companies that are calling us that are saying, 'Hey, I'm not there now, but I know I want to expand in Miami, can I get an office?'" said Melissa Bessler, Industrious' regional director of the Southeast-Midwest region. "And they’re signing without even seeing a location."

Such is the market in Miami, home to 1.6M SF of coworking space across 59 locations, according to JLL. But that number is growing as operators rush to keep up with demand.

Miami saw a 143% increase in demand for flexible office space last year compared to before the pandemic, according to The Instant Group. In 2022, coworking firms took 325K SF of Miami office space, according to CBRE data provided to Bisnow. That's more than in 2021 and 2020 combined and the third-most-active year on record.

The turnaround in demand was swift — in the first 18 months of the pandemic, Quest Workspaces founder and CEO Laura Kozelouzek was focused more on survival than growth. That changed at the end of 2021 and beginning of last year, she said.

"It happened so quickly," Kozelouzek told Bisnow. "That pivot, oh my goodness. Literally, it seemed like overnight where we were literally speaking to people trying to do anything just to help them stay in business and stay with us, to then just floodgates."

Quest opened three locations and expanded two others last year, and now has more space in South Florida than any firm other than Regus and WeWork, according to CBRE.

"It was like holy cow, and it happened very quickly," Kozelouzek said. "We saw higher demand and we saw a different attitude in terms of pricing and just people that, you know, they just wanted to be there no matter what."

The floodgates of office demand opened for Miami writ large last year — the market saw 48% more leasing activity in 2022 than it did in the average pre-pandemic year, according to JLL. Other than Atlanta, every other major market in the country hasn't seen leasing activity recover to where it was.

Law firms and financial giants have flocked to South Florida, with several striking deals for new long-term office leases in the past year, including Kirkland & Ellis, Winston & Strawn, Baker McKenzie, Citadel and Thoma Bravo. 

Vincent Mason, JLL’s newly appointed vice president and South Florida market lead with its project development services group, said it is fairly common for senior executives to work out of a coworking space before a permanent office is ready — a number of the leases signed are in under-construction towers like 830 Brickell.

"I'm doing a project now where senior leadership came down early, they're working out of a coworking space, and they're just waiting on their office to be built," Mason said. "And then once their office is built, what they'll do is they're going to have their employees come down, but they're just waiting on their office to be built first. But they're the ones who want to be here more than anyone, more than their employees."

WeWork’s Miami locations are 97% occupied, the fullest market for the firm that had 801 owned and franchised locations in 39 countries at the end of September, CoStar reported. Its Wynwood location, which debuted in 2015, is at capacity, and the company has a waitlist of companies looking to take space.

WeWork closed 40 underperforming hubs last year, the latest in a round of cuts as it tries to stem its losses — which hit $629M in the third quarter — but WeWork Territory Vice President Suzie Russell told Bisnow the firm is looking to grow its portfolio in Miami.

It has six locations accounting for roughly 270K SF, according to CBRE.

"Especially as the waitlist grows, we'll continue to look for ways to ensure that we can meet the demands of the market," Russell said. “We keep our options open. As spaces become available in Miami, we continue to look at all the options across the city, regardless of area.”

Industrious, WeWork's CBRE-backed competitor, isn't waiting to launch new locations. It has 154K SF open across four locations in South Florida: Miami’s financial district in Brickell, Miami Beach, Wynwood and West Palm Beach. In 2023, the company is slated to launch another 115K SF in new locations in Aventura and in Las Olas Beach in Fort Lauderdale, as well as a full-floor expansion of its Brickell location.

Bessler said the Aventura location is already 25% spoken for without yet having opened, and an Industrious spokesperson said there is a 1.5-year-long waitlist for its Brickell location (where insatiable demand has caused office rents to spike 33% in a year).

"When you’re talking about being able to meet the need for everyone, it’s really been construction," she said. "Everyone is trying to keep up, but there’s so much construction in South Florida. If we could build them even faster, we would, because people want it."

Overall, coworking accounts for 3.5% of Miami's office inventory, according to JLL, a sign that more growth is on the way. CBRE projects between 13% and 18% of the country’s office inventory will be converted to flex space by 2030.

In a JLL survey of 1,100 corporate real estate decision-makers last year, 43% said they plan to accelerate their use of flexible office space over the next three years. 

Even though economic headwinds are building toward a potential recession — with corporate real estate spending in the crosshairs — Quest Workspaces' Kozelouzek, a flexible office veteran of 30 years, said a downturn isn't going to crash the local coworking party.

"More uncertainty in the economy has driven more demand for us," she said. "The last thing a company wants to do or business person wants to do is lock into a long-term commitment when you can’t see clearly into the future about where things are going. We've got big, large groups that are doing deals with us because of the fact that they've got that built-in flexibility."