What happened: A report published by The Instant Group revealed that New York City, Boston, and Miami are the priciest markets for coworking spaces. While office leasing has seen a decline of almost 50%, the demand for flex spaces has surged considerably. In New York City, flex space rent per desk increased by 9% QoQ to reach $898. What the numbers say: The report attributed the rent increase to a supply and demand imbalance. According to the report, southern states of the U.S. are experiencing a higher demand as businesses relocate to Miami, Phoenix, and Austin, owing to a warmer climate, improved lifestyles, and tax breaks. The average length of stay in a flex space increased to 8.4 months compared to 6 months in 2019. Denver, Dallas, Tampa, Las Vegas, and Atlanta saw a decline in demand for flex space.
Relevance: The increase in demand for flex spaces implies the need for office property owners to introspect and pivot from their rigid 10-year lease term. The average contract length for flex spaces has increased by 40% this year, while 48% of traditional office space owners expect the average lease length to shorten in the next five years. |
