The fast-growing coworking sector is changing the business and real estate landscape.
The startup and technology space is one of the major areas of demand for co-working and a recent study finds a link between markets that rank highly as ‘tech cities’ and higher coworking costs.
On a per-desk basis, real estate firm Savills found that San Francisco is the most expensive market at $1,050 just beating Stockholm at $1,000.
“For many start-ups and SME’s, particularly in the tech arena, being in the right location is vital in terms of profile, talent attraction and being close to businesses of a similar nature that will enable them to grow,” said Paul Tostevin, director in Savills World Research team. “As some of the markets towards the lower end of the ranking for coworking desk costs gain traction in this market and attract a greater variety of providers to the city, we would expect to see an increase in this cost.”
Following San Francisco, the next four cities have just $10 between each of them for coworking costs per desk: Paris ($980), Boston ($970), Toronto ($960), and New York ($950).
Many of the cities in the top 10 most expensive for coworking space are also top 10 in Savills’ Tech Cities Index which ranks markets for their attractiveness to the tech sector using diverse metrics including business environment, tech environment, city buzz & wellness, talent pool, real estate costs, and mobility.
These include San Francisco (number 2 in Tech Cities), Stockholm (9), Toronto (5), New York (1), London (3), Austin (8), Los Angeles (7), and Singapore (6).
One anomaly to this is Amsterdam, which ranked fourth as a Tech City but is just outside the top 10 in terms of coworking costs at $770 per month
for a desk in a private office, demonstrating why it is proving to be so popular with start-ups at the moment.
“Across the majority of the 30 countries that were analysed as part of Savills research, coworking is an expanding market that is supported by the growth of the tech sector across the globe,” said Cal Lee, global head of Workthere. “It is therefore not surprising that some of the most established and renowned coworking cities are seeing higher costs as demand increases. Coworking is a sector that has expanded at a fast pace and there is still room for it to grow further in line with changing occupier needs and the pace at which we are seeing start-up businesses enter the market.”