Transaction sizes decreased by 29 percent and average desk rate was down eight percent in the U.S.; however, demand rose 21 percent in second half of 2020
Lifestyle cities that reportedly saw an influx of new workers during the Covid-19 pandemic also that saw increases in flexible workstation rates in 2020 over 2019, according to The Instant Group’s U.S. Market Summary. The cost-per-desk in Phoenix rose 39 percent, in Nashville 14 percent), in Denver 11 percent, and in Austin three percent. Alternatively, the biggest dips in cost-per-desk were seen in New York City’s Midtown market (-29 percent), in Washington, DC (-23 percent), in Boston (-22 percent), and in Los Angeles (-18 percent).
Similarly, cities with rising workstation rates also saw increased demand. The second half of 2020 showed a 22 percent increase in demand in Denver, and a 20 percent increase in demand in Austin, when compared with the first half of the year. In San Francisco, demand dropped by nine percent and by eight percent in Chicago in the same time period.
“The pandemic made agile workspace a requirement for major landlords and corporations alike moving forward, and we saw that play out almost immediately in the numbers,” said Joe Brady, CEO Americas, The Instant Group. “In secondary cities and suburban markets where people flocked to hunker down during Covid-19, we saw parallel demand for agility as companies and operators rushed to adjust. We expect this, together with landlords becoming involved in the industry by partnering with providers or going it alone, to drive the industry’s next growth phase. Today, flexible work in the U.S. encompasses more than 159 million square feet. By 2025, we think that will be 300 million square feet.”
Nationally, as demand for agility in office space selection increased in 2020, the average flexible workspace requirement size decreased by 29 percent, and average initial term length dropped by one month, according to The Instant Group’s U.S. Market Summary.
NEW YORK AREA
While demand decreased by 14 percent in New York City in 2020 over 2019, it increased significantly in the suburbs surrounding it.
- Greenwich, CT: +60 percent demand change;
- Newark, NJ: +26 percent;
- Harrison, NY: +200 percent;
- New Rochelle, NY: +250 percent;
- and White Plains, NY: +50 percent
“Providers who had been bullish on rapid expansion pre-pandemic faced challenges that were well-reported; however, we’ve found that the smaller operators suffered the most,” said Joe Brady, CEO Americas, The Instant Group. “In Chicago, which mirrors much of the U.S., small operators saw locations decline by 19 percent while the top 20 operators actually expanded their market share.”
Instant also surveyed operators of 186 flexible workspaces in the U.S. to analyze how the flexible office industry is changing to occupier needs.
For more information, please visit http://www.theinstantgroup.com.