The world’s biggest coworking companies are starting to close money-losing locations across the globe, signaling an end to years of expansion in what had been one of real estate’s hottest sectors, the Wall Street Journal reported. The retreat reflects an effort to slash costs at a time when the coronavirus is reducing demand for office space, and perhaps for years to come. It also shows how bigger coworking firms, in a race to sign as many leases as possible and grab market share, overexpanded and became saddled with debt and expensive leases. The share of coworking spaces that have closed is still small. In the first half of the year, closures accounted for just 1.5 percent of the space occupied by flexible-office companies in the 20 biggest U.S. markets, according to CBRE Group Inc. Scott Homa, head of office research at brokerage JLL, says the impact has been modest partly because some operators have been able to get rent relief and because closing locations takes time. But JLL estimates that of the roughly 4,500 coworking locations in the U.S. a fifth, or about 25 million square feet, will likely close or change operators. IWG PLC, the world’s biggest flexible-office firm by number of locations, said recently that it had closed 32 locations in the first half of this year because of the coronavirus pandemic. The company plans to close around 100 locations in the second half of the year, or 4 percent of its total spaces, according to its chief executive, Mark Dixon.
