Chicago’s co-working market has tripled in the last four years, adding some 1.8 million square feet of shared office space Downtown and on the Near North Side.
Totalling less than 800,000 square feet at the start of 2014, the city’s co-working market now has 99 locations that occupy nearly 2.6 million square feet, according to a new report by Colliers International.
Co-working space now makes up 1.8 percent of the central business district’s office space, meaning the industry’s health is now critical to the city’s office market, according to the report.
The face of the city’s co-working market has undergone dramatic change as well.
In 2014, Regus dominated the local co-working market, accounting for 54 percent of the city’s 788,898 square feet of co-working space. But as WeWork began to dominate the industry, Regus’ share began dwindling. By the second quarter of this year, Regus controlled 15 percent of the market.
Other co-working firms include Spaces, a sister company of Regus, that recently signed a lease to occupy 80,000 square feet at 620 North LaSalle Street. Another, Rent24, a European co-working company, has signed on to a 100,000-square-foot space at 500 North Michigan Avenue, according to Colliers.
WeWork, the industry leader, is also the biggest in Chicago. It will have opened eight locations and will control 23 percent of the market by the end of 2018, the report said.
Chicago has also undergone a change in the type of co-working space available. While Regus now has 18 locations compared to WeWork’s eight, WeWork controls more than 200,000 more square feet in the city.
That’s because modern co-working spaces are larger and more amenity-heavy than in years past, as new players enter the market and seek an edge against the competition: WeWork has an average office size of 75,116 square feet, compared to Spaces’ 48,944 and Regus’ 21,834.
“The dramatic transformation experienced within Chicago’s co-working market is a microcosm of the co-working industry’s recent upheaval,” according to the report. The industry, it said, “is shifting from almost exclusively catering to traditional users such as small financial services firms and boutique law firms to providing dynamic, flexible workspaces in amenity rich environments.” Those environments are increasingly geared to a younger workforce in the gig economy, it noted.
The city’s co-working offices are heavily concentrated in some of the area’s hottest real estate markets, the report said.
River North and West Loop each have 23 co-working spaces, though River North has 30 percent of the city’s total co-working office space while the West Loop has 24 percent.
The burgeoning Fulton Market has drawn 7.5 percent of the city’s co-working space — eight offices totaling about 193,000 square feet — despite having much less office inventory than other submarkets, according to the report. The Loop has 18 co-working offices totaling more than 375,000 square feet of office space, good for 15 percent of the city’s total co-working space.
In early July, WeWork leased more 200,000 square feet of office space at 515 State Street and 330 North Wabash Avenue in River North.
The company’s occupancy rate across its 283 worldwide locations hit 82 percent in the first quarter of 2018, having doubled both its membership and revenue year over year.