Impact of COVID-19 on the Global Coworking Spaces Market

Impact of covid 19 on global coworking spaces

The global coworking spaces market is expected to decline from $9.27 billion in 2019 and to $8.24 billion in 2020 at a compound annual growth rate (CAGR) of -12.9%.

This is according to a report  “Coworking Spaces Global Market Report 2020-30: COVID-19 Growth and Change”.

The decline is mainly due to economic slowdown across countries owing to the COVID-19 outbreak and the measures to contain it.

The market is then expected to recover and reach $11.52 billion in 2023 at CAGR of 11.8%. Europe was the largest region in the coworking spaces market in 2019.

The increase in the number of people working from home or remotely owing to COVID-19 lockdown limits the growth of the market.

For instance, in March 2020, many companies working from home owing to COVID-19 pandemic, operators of coworking spaces have seen an almost 50% decline in footfalls. Furthermore, according to Business 2 Community publication in April 2020, the number of people working remotely has grown by 44% in the last five years, with 7 million people (3.4% of the population) were working remotely in the USA before the arrival of COVID-19.

Nevertheless, the number of people working remotely is tremendously increased owing to the coronavirus outbreak over the last few months. Consequently, declining the revenues generated by the coworking spaces market during 2020.

The coworking spaces market is majorly determined by the increase in the number of start-ups globally. According to thegeniuswork.com publication in October 2019, the global startup economy was worth $ 3 trillion in 2019, with a rise of 20% from 2017 and 2018.

Moreover, according to ENTRACKER magazine published in February 2019, the number of startups in India increased from 7,000 in 2008 to 50,000 in 2018, recording a growth of 7.14 times in a decade.

The growth is backed by the expansion of internet space, exposure to the knowledge of entrepreneurship outside the boundaries of the country, and improved literacy rates. Besides, advanced manufacturing and robotics, agriculture technology and new food, blockchain, and artificial intelligence, big data, and analytics were the fastest growing startup sub-sectors globally.

Therefore, the rise in the number of startups across various industries globally increased the demand for coworking spaces, driving the market during the forecast period. The development of sustainable coworking spaces is a major trend shaping the coworking spaces market.

Coworking spaces are implementing eco-friendly measures in the workplace to attract entrepreneurs concerned with environmental issues such as global warming.

Sustainable practices adopted by the coworking space providers offer substantial benefits and are economically feasible.

For instance, CoCoon in Hong Kong has a floor made of natural bamboo and uses non-toxic paints and LED lights. In addition to this, drought-resistant plants are part of the interior and exterior.

Another such example is Green Spaces in Denver uses about 160 solar panels on the roofs of its offices. These allow significant cost savings at Green Spaces. Thus, sustainable coworking space is a key trend in the coworking spaces market.

In January 2019, a Los Angeles based workspace provider Cross Campus, announced the acquisition of San Diego’s coworking space provider DeskHub, for an undisclosed amount.

This acquisition helps the company to increase its footprints in San Diego and Scottsdale, AZ, providing an opportunity to broaden its services in the region. DeskHub is committed to creating a premier network for coworking workspaces across the USA.

Impact of COVID19 on Real Estate

Apart from coworking, the impact of COVID 19 has also hit hard in the general  Real Estate Sector. In yet another research on Real Estate by Knight Frank a space that coworking is quickly disrupting, Google’s COVID-19 community mobility index across the East African region, which tracks trends in movements, shows that as a result of the government interventions there has also been a decline in activity in areas associated with workplaces and retail and recreational destinations.

In the period between March and Mid-April 2020, retail and recreational activity declined the most as residents adhered to strict new social distancing protocols.

Workplaces in general also witnessed a decline, however as certain economic activities are deemed critical, there has not been the same decline in workplace activity as compared to the retail and recreational sector. As expected, activity in residential areas increased considerably over this period.

However, these trends are not uniform across countries and are reflective of the severity of government interventions.

Countries, such as Rwanda and Uganda, which have imposed total lockdowns, recorded strong declines in their respective retail and workplace activity and considerable growth in their residential activity.

Kenya, as a result of its night-time curfew and movement bans in the Nairobi Metropolitan area, Kilifi, Kwale and Mombasa have also recorded significant declines in its retail and workplace activity and growth in its residential activity.  This also largely affected the operations in most coworking spaces as it saw some clients pause their membership.

Tanzania is yet to issue any restrictions and as such, there were only slight declines recorded in its workplace generally and retail activity and only slight growth in its residential activity.

Impact of COVID 19 on Coworking spaces in Africa

In the last few years, the coworking space industry in Africa was experiencing a dynamic increase in the coworking industry and was expected to continue to grow compared, since its inception in the mid-2000.

From about 23 coworking spaces in 2013 to over 250 coworking spaces in Africa, with 80% of these spaces springing up in the last 3 years., there was definitely a positive trajectory of growth in coworking spaces in the last few years.

According to research done by Coworking Africa, the coworking business is expected to see a boom. This exponential growth is attributed to 70% of the total population of Africa which is the millennials and also the many opportunities currently flooding the continent. Here’s an overview of how the coworking industry is doing in some African countries.

However, with COVID 19, most coworking spaces like Co-Creation Hub and Passion Incubator-owned LeadSpace in  Nigeria opted to suspend their operation for some time. However, others like Nairobi Garage chose to remain open.

Coworking spaces thrive on community and with such some spaces have now been forced to keep their communities engaged through webinars/virtual events. In our case, we opted for a series of webinars as well as leveraging more on email marketing even as our members opted to work from home.

Spaces across the continent were suddenly closed, services members had paid for were cancelled or unavailable, and even now some are starting to open again people are still social distancing and fearful of the virus.

What the future holds for co-working spaces is still unclear. Nobody knows how long the COVID-19 crisis will last, and whether or not it will usher in permanent behavioural changes when it comes to how, and where, people work.

We are hopeful and confident that co-working will recover, as such spaces provide real value and support to entrepreneurs.