The pandemic has profoundly changed how people engage with the workplace, fueling the rise of remote and hybrid work and redefining the role of flexible office spaces, according to the latest CommercialEdge national office market report.
As businesses adapt to these shifts, the coworking sector has emerged as a key factor, offering solutions that cater to evolving workforce needs. Coworking spaces are growing steadily, with 7,538 locations recorded at the end of this third quarter—up 7 percent from the previous quarter. Total square footage reached 133.5 million, marking a 4.5 percent increase.
Cities like Los Angeles and Dallas-Fort Worth lead in the number of coworking spaces, while Manhattan dominates in square footage, with 11.2 million. Interestingly, as the sector grows, the average size of coworking spaces is shrinking, down to 17,711 square feet in the third quarter of 2024. This trend reflects a shift toward smaller, community-focused spaces replacing the sprawling, multi-floor setups of the past.
Pricing has remained steady, with dedicated desks averaging $300 per month. Open workspaces and virtual offices saw slight increases, highlighting consistent demand. Leading operators like Regus, WeWork and Industrious collectively control over a third of the sector, while new players like Vast Coworking are making waves through partnerships and acquisitions.
READ ALSO: Are Coworking Networks the Future of Office?
In October, office-using employment sectors shed 44,000 jobs, marking the fourth consecutive month of losses. Since June, the sector has seen a total decline of 118,000 jobs, with professional and business services losing 107,000 positions and the information sector losing 18,000, while financial activities gained 7,000 jobs.
The national office vacancy rate rose to 19.4 percent at the end of October, up 160 basis points from the same period in 2023, according to CommercialEdge. Tech markets continue to report some of the highest vacancy rates, as remote and hybrid work trends heavily impact the sector due to the adaptability of tech jobs. San Francisco’s vacancy rate climbed to 27.7 percent in October, an increase of 360 basis points over the past year. Seattle’s rate rose by 390 basis points to 25.8 percent, while the Bay Area’s reached 26.4 percent, up 630 basis points year-over-year.
National full-service equivalent listing rates averaged $32.79 per square foot in October, reflecting a 10-cent decrease from the previous month but a 3.3 percent increase compared to the same period last year. Some of the highest listing rates were recorded in San Francisco ($69.14 per square foot), Manhattan ($68.48 per square foot), the Bay Area ($54.20 per square foot), Boston ($53.35 per square foot) and Miami ($52.84 per square foot).
Office sales near $30 billion mark
As of October, the office construction pipeline continued to contract, with 60.8 million square feet underway—or 0.9 percent of total inventory, according to CommercialEdge data. This year has seen a significant decline in under-construction activity, with 43.9 million square feet delivered by October and just 8.5 million square feet breaking ground.
Boston led the nation with 10.7 million square feet of office space under construction, representing 4.3 percent of its total inventory. San Francisco followed with 3.8 million square feet, or 2.3 percent of its stock. Austin reported 3.5 million square feet under construction, or 3.7 percent of its total stock San Diego had 3.1 million square feet underway (3.2 percent of stock), closely followed by Dallas with 3.0 million square feet, or 1.1 percent of its inventory. Meanwhile, Miami had nearly 2.1 million square feet in progress, making up 2.9 percent of its inventory.
Office investment reached $29.2 billion year-to-date in October, with an average sale price of $177 per square foot, per CommercialEdge data. Manhattan topped the market with $3.3 billion in transactions, followed by Washington, D.C., at $2.5 billion. The Bay Area came in third with $2.1 billion in office sales.
Read the full CommercialEdge office report.