CHICAGO – News of retail store closings, led by the demise of Toys“R”Us, has dominated recent headlines. However, retailers can take some comfort from a Forbes story that predicts coworking space in malls, streetfronts and other retail properties will grow at an annual rate of 25% through 2023 to reach about 3.4 million square feet.
JLL, a commercial real estate services firm, recently studied 75 U.S. coworking retail spaces totaling one million square feet. Its study shows that coworking is a viable solution for vacant retail space since it decreases vacancy and drives additional foot traffic with a guaranteed daytime population.
The millennial-driven sharing economy—think of Uber and Airbnb—makes a strong case for continued growth of coworking space. JLL predicts that “flexible space” will grow to 30% of all office space by 2030, with 43% of the employed U.S. workforce working remotely at least some of the time.
Since 2010, the amount of flexible working space has risen an average of 23% each year, outpacing the 1% annual average occupancy rate of the overall U.S. office-property market.
The JLL study found coworking retail spaces tend to be in areas where the average household income within a three-mile radius is about $100,000. Playing well to the needs of millennials with declining car ownership, nearly 80% of the retail coworking spaces are either very or somewhat walkable, according to the study.
In addition, the study found that the retail and coworking relationship is mutually beneficial. Coworking space hosts are increasingly including retail space as a perk for members. There’s also a growing trend for these spaces to play the role of “retail incubators,” giving retail startups and online brands easy access to consumers to test demand without being saddled with traditional long-term retail leases.
“Retail-based coworking spaces are successfully integrating work and play; bringing makers, workers and consumers together; and bringing new life and experience to retail locations,” the study concluded. “We expect further growth in these hybrid spaces.”