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DC MarketView: Sharing Space - DC's Rising Coworking Inventory

With tenants continuing to shed space in the Washington, DC market, the East End has seen a 162% increase in available sublease space over the past five years alone.  Law firms, associations, and professional services firms alike are seeking to streamline footprint, adding several large sublease blocks to the already elevated availability in this submarket.  With the majority of this space in class A buildings, it gives tenants in the market seeking flexibility an alternative lower-cost option to the class B market.

Coworking Nearly Triples In Five Years

Currently, there is 1.4 msf of space leased by coworking providers in DC’s office inventory – operating now or slated for future occupancy. This figure is just within the District itself and does not include a significant amount of space also leased in the suburbs. This amount has nearly tripled in the past five years, increasing by 191% from 2012, when coworking stock totaled less than 0.5 msf.

Approximately 20 separate providers are included in this inventory with WeWork standing out as the largest user, occupying nearly 0.5 msf across eight locations. These providers target new construction (like MakeOffices at the Wharf) and existing buildings alike (like Industrious at One Thomas Circle) and have served as a significant source of net new growth.

Still, it is no surprise that coupled with this rise in shared space, the market has also experienced an increase in available sublease space as these organizations provide an alternative for users seeking smaller spaces and flexible terms that would typically sublet.  As these groups expand and become more established, they are beginning to attract larger, more mainstream, users for longer terms, growing out of their start-up focused reputation.

 

Coworking Leased Inventory (SF) 2000 - 2017

 

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Sarah Dreyer

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