This article originally appeared on Vancouver Sun website.
It’s been roughly five years since co-working companies took a firm grip on Canada’s big-city office markets.
In large international cities like London, Manhattan and Vancouver, the co-working brand WeWork says it is now the top occupier of office space, stoked by the rising relevance of start-up ecosystems, the gig economy and self-employment as major economic drivers.
It’s clear that Toronto and Vancouver are out well ahead of other Canadian cities when it comes to their overall co-working footprints, said Ross Moore, a senior vice-president with Cresa commercial property brokerage in Vancouver. It’s also clear which companies have gained control of those markets.
“There are really two 900-pound gorillas,” Moore told Postmedia on Tuesday. “It’s Regus and their (co-working) product Spaces, and then WeWork.”
Co-working concepts and companies emerged as a force following the global financial crisis, Moore said. They looked around and saw rising vacancy in gateway cities like New York, London and San Francisco. That meant there were good deals to be had for co-working brands to start gobbling up office space and a plethora of co-working members who were increasingly risk averse and uninterested in lengthy office leases with costly build-outs.
Co-working has become “the new reality,” said Moore, whose firm provided Postmedia with a list of the four Canadian metro cities with the largest amount of existing and proposed co-working space.
4. Calgary - 393,700 square feet
When WeWork began in 2011 they were able to secure a lot of affordable space that had been hollowed out in New York due to the financial crisis, Moore said.
Calgary, still struggling to fill its office towers left empty by retreating oil and gas firms, presents a similarly good deal for co-working brands, he said.
“Even though the demand might not be there today, I think they’re looking at Calgary and going … it’s somewhere we want to be one day,” he said. “There is so much vacant space. We can get some amazing deals.”
Calgary’s office market has maybe bottomed out, and when oil and gas firms and others start looking for space, flexible shared offices might be more attractive. “Going to month-to-month (with co-working memberships) might not be such a bad thing,” Moore said.
3. Montreal - 556,465 sq. ft.
Montreal represents a growing market for shared workspaces. While a larger office market than Vancouver overall, Montreal trails the Lower Mainland of B.C. in its overall co-working stock.
But it might be able to catch up, given it has more vacancy than Vancouver and Toronto have to play with.
“Montreal is known for its creative industries, whether it’s design or architecture or whatever,” Moore said. “Freelance, tech, design, social media and video games are (all) huge in Montreal,” Moore said. “It’s got a decent inventory, it has got the size, but more importantly, it’s got the tenant profile.”
2. Vancouver - 1,700,865 sq. ft.
When co-working brands like Spaces and WeWork initially assessed Vancouver, the city likely ticked every single box in their criteria, Moore said. “Vancouver is punching above its weight.”
Vancouver has a sizable collection of regional or branch offices which gravitate toward co-working situations, he said. Those vanguard or satellite teams are usually small and have less predictable futures, which makes a flexible office space attractive. Vancouver also has a “very robust” tech scene and an expanding creative class of entrepreneurs and freelancers.
Meanwhile, the city’s downtown office market is facing historically low vacancy, which means long-term leases are harder to come by, and increasingly pricey.
1. Toronto - 1,832,616 sq. ft.
“It’s the business capital of Canada. It has the largest population (and) the largest office inventory,” Moore said.
Moore said it’s a bit surprising that Toronto doesn’t have a larger co-working footprint than it already does, and the likes of Spaces and WeWork probably would have more space in the city if there was any space left to lease.
“They just don’t have the (empty) inventory,” he said. “The vacancy rate is incredibly low."