D.C. trails only New York City in flexible workspace costs
The D.C. region has emerged as one of the most expensive cities in the nation for co-working spaces, behind only New York City, as the popularity of those kinds of flexible workspace options continues to rise in the District and cities across the U.S.
It costs an average of $1,022 per month for a desk at one of these centers in the D.C. area, compared with the Big Apple at $1,047, according to new data by market research firm The Instant Group. That represents a 17.2 percent spike in D.C.'s per-desk costs, and that leads Instant Group to conclude there is enough demand to support much more growth without slowing down the rapid increase in pricing.
Washington isn't the only city seeing such explosive growth, however, as Chicago, Denver, Philadelphia and Portland, Oregon, have also seen increases of 17 percent or more in the past year.
The notion shouldn't come as much of a surprise given the sharp uptick in co-working activity. WeWork might be leading that wave: It recently opened its new combination WeWork/WeLive center in Crystal City and has also committed to several other sites including Dupont Circle and the U Street corridor. Instant Group estimates there are about 55 such flexible workspace centers in D.C., an increase of about 7.3 percent.
The rise in popularity of co-working sites is a welcome development for the D.C. region's sluggish overall office market. Big space users such as law firms have been downsizing and moving to new, more efficient buildings, so co-working operations are picking up some slack. Such was the case for Boston Properties, which signed WeWork to a 117,000-square-foot lease at Metropolitan Square to offset the loss of Miller & Chevalier Chartered.
Co-working centers, however, still comprise less than a percent of the D.C. region's 387.3 million-square-foot office market, according to CBRE.
Daniel J. Sernovitz covers commercial real estate.