WeWork, the flexible workspace provider that emerged from bankruptcy protection in June, is expanding in North America's suburbs, but not through signing expensive leases at the cost of profit — the operational strategy that led to its previous troubles.
As property professionals see higher demand for flexible workspace outside big downtown markets, WeWork introduced what it calls a “Coworking Partner Network” that gives some members access to third-party workspaces around the country. That's beginning with a new agreement with Vast Coworking Group, billed as the world’s largest privately owned coworking franchisor, WeWork said Tuesday in a statement.
The partnership allows select WeWork software users access not only to WeWork’s global portfolio of over 500 locations, but also to Vast’s coworking locations under brands Venture X, Office Evolution and Intelligent Office. Vast’s fast-growing suburban markets complement WeWork’s footprint in major metropolitan areas as WeWork said it seeks to respond to “growing demand for flexible workspaces from hybrid and distributed teams.”
While Vast has coworking locations in cities such as Washington, D.C., many are located in suburbs such as the New York suburb of Parsippany, New Jersey; the Boston suburb of Worcester, Massachusetts; the Toronto suburb of Richmond Hill, Ontario; and the Chicago suburb of Deerfield, Illinois, according to its website.
“Joining forces with the [Vast] expands our Coworking Partner Network and unlocks new value for our WeWork Workplace users,” WeWork Chief Executive John Santora said in the statement, adding that the move will give WeWork members “even more flexibility in where they work.”
Even though WeWork has locations outside city centers in suburbs such as Arlington, Virginia, or Bethesda, Maryland, the company’s locations for the most part are in core business districts, a WeWork spokesperson told CoStar News.
Select access
WeWork’s traditional private office clients who use its Workplace space management software will have access to the new locations in the partner network, the spokesperson said, while all-access and on-demand users will not.
WeWork plans to expand the network with more locations and other partners in the future, the spokesperson said, adding that WeWork shares revenue with its partners.
Workplace software users will now also have access to over 75 Vast-franchised brands’ locations in more than 50 new markets across the United States and Canada, WeWork said.
“With most of our spaces located in high-demand suburban markets, this collaboration allows us to provide their members with the variety and convenience they need to thrive in today's dynamic work environment,” Jason Anderson, president of Vast, said in the statement.
Vast is an affiliated company of United Franchise Group, which also owns franchise brands including sign company Signarama and The Great Greek Mediterranean Grill restaurant chain, according to its website. Vast was founded in 2023 by Ray Titus, founder and CEO of United Franchise.
Shift in demand
The partnership comes as the hybrid and remote working trend has spurred demand for flexible workspace. Companies are adjusting their space needs but also seek to bring their employees amenities offered by the likes of companies such as WeWork, industry professionals have said.
The majority of remote, hybrid and fully-in-office companies said they plan to increase their office space in the next two years, primarily through flexible workspace, according to a September survey of 500 business decision-makers in the United States and United Kingdom conducted by WeWork. For instance, 59% of companies that plan to expand their workspace in the next two years chose flexible over traditional offices, including nearly three-quarters of remote companies.
WeWork isn’t the only flexible workspace provider seeking to expand its members’ access. WeWork’s major rivals including Spaces parent IWG and Industrious have also been expanding, including taking over some former locations of WeWork in markets including its hometown of New York.
The total number of U.S. coworking spaces at the end of the second quarter rose by 444 from the first quarter to reach 7,041 spaces, according to industry tracking site CoworkingCafe, adding that the number of U.S. coworking spaces rose by 7% in the second quarter after a 6% growth in inventory in the first quarter.
At the same time, industry professionals have also said there’s growing demand for flexible workspace where people live outside traditional office clusters.
This year, suburban areas account for 45% of the total coworking spaces in the United States, a 1% increase from the previous year, according to a separate CoworkingCafe study released in May, adding that the growth rate “is a testament to the fact that flex spaces in suburbia are not only here to stay — they’re also gaining a slow, but steady popularity.”
For example, regional flexible-space provider TailoredSpace said earlier this year it plans to nearly double its location count with up to eight California openings slated for 2024.