The co-working craze may soon hit its peak in Manhattan.
A Savills Studley report said the growing business — dominated by players like WeWork and Knotel — is poised to hit a wall in the next couple years, Bloomberg reported.
“The market is getting more fragmented as some hybrid models and different providers get into the space,” Keith DeCoster, the firm’s director of U.S. real estate analytics, told the publication. “Many shared-office-space providers are already starting to direct their attention to other markets that are not as saturated, such as Denver, Charlotte, Miami and Atlanta.”
In New York, co-working companies have already started offering concessions, such as no-rent periods, the report said. While there’s a similar trend in San Francisco, the premium for space in the city makes it more difficult for companies to scale up.
Manhattan has 6.6 million square feet dedicated to co-working, as of early July, according to Savills. That could grow to 10 million square feet by the end of next year, before potentially slipping back.
That’s still not stopping some shared-office space providers from growing. WeWork is reportedly seeking to raise money at a $35 billion valuation. In April, the company sold $700 million in bonds. The startup doubled its revenue last year to $886 million, as it fends off competition from peers like Knotel. [Bloomberg] — Meenal Vamburkar