If you’ve kept up with the SmallBusiness.com coverage of the shared-office or shared-workspace concept called coworking, you know it is booming. Emergent Research has recently updated their on-going research into the growth of coworking. Once again, we thank Emergent’s Steve King, a regular contributor to SmallBusiness.com, for bringing us up to date with Emergent’s forecast of the future of coworking.
Coworking is growing and hybridizing so fast, we’re having a hard time keeping up with it. Emergent Research recently released our 2016 coworking forecast and we are projecting continued rapid growth over the next four years, although at a slower rate than the industry’s current dizzying pace.
Future global growth in the number of coworking spaces
(Note: Coworking facilities describe themselves with different names (places, facilities, locations, etc.). We’re using the term “Spaces” in this article.)
11,000 | Number of coworking spaces (locations) available now (2016)
26,000 | Number of estimated coworking spaces available in 2020.
23.8% | Compounded annual growth rate in coworking spaces, 2016-2010
Future global growth in the number of coworking space members
976,000 | Global coworking members in 2016
3.8 million | Global coworking members in 2020.
41% | Compounded annual growth rate in coworking space members, 2016-2020
Why is the rate of growth of members higher than the growth rate of facilities?
Because coworking spaces are getting bigger, both in size and number of members
- New coworking spaces tend to be much larger than older spaces
- Existing spaces are expanding by adding more space and members
- Coworking operators are focusing on better designs that serve more members per square foot of space
- Emergent is forecasting a 77% increase in the average number of members per space over the next 4 years
Why will the rate of growth of new spaces slow?
The number of spaces is forecast to grow 18% in 2020, down from a 41% growth rate in 2016. This, in part, reflects larger sizes of coworking spaces. But it also reflects a maturing market and the challenges associated with rapid growth as an industry grows larger. Member growth also slows over the forecast period but is still growing at a very brisk 26% pace in 2020.
Bottomline | Coworking still has a lot of room for growth
In terms of share of the market, coworking will still be small to tiny in 2020 depending on your market definition. The real estate firm JLL says coworking spaces represent only “0.7 percent of the total U.S. office market” and less than that outside of the U.S. (Our forecast would bump that up to about 2% in 2020.)
Here’s another way to think about the growth potential of coworking spaces.
23,000 | Number of Starbucks locations globally | 2016
34,000 | Number of McDonald’s locations globally | 2016
We think it’s reasonable to believe coworking could be bigger than Starbucks. Interestingly enough, by 2020 some Starbucks stores might be considered coworking spaces.