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The flexible space sector has grown by 335% since 2010 and is on pace to reach 4 million s.f. by the end of 2018

• The flexible space market is now the main driver of office occupancy growth across the region, responsible for 42% of gains since the beginning of 2014.  

• In the city, the growth of the flexible space market has been driven by coworking. Four recent leases by coworking providers in the CBD and East End have helped backfill >250,000 s.f. of former law firm-occupied space, while six recent leases by coworking providers have generated >270,000 s.f. of leasing at new or renovated product in the emerging markets of The Wharf, Ballpark, Market District, Eastern Market, Dupont-Logan-Shaw and H Street.

• In Northern Virginia, flexible space was historically driven by executive suites. From 2000 to 2013, executive suites accounted for 478,401 s.f., or 79% of the total occupancy growth in flexible space. By contrast, since 2014, coworking has dominated the growth in flexible space, with 424,966 s.f. of occupancy growth, or 61% of all flexible space. The top three coworking providers have each comprised 16% of the gains. Beyond the top three, nine different coworking providers have taken space, with each representing less than 4% of the gains. 

• Leasing activity among coworking providers within Suburban Maryland has increased significantly in the last 12 months as three global coworking providers have each committed to opening their first coworking locations in Maryland. These tenants will help drive close to 68,000 s.f. of occupancy gains and increase the Suburban Maryland coworking supply by almost 15%.

• Even though the amount of flexible space providers continues to grow weekly, the top six providers have
increased their market share from 444,694 s.f. in 2009 to 2.3 million s.f. today, representing 64% of the market today. With active requirements out in the market projected to shift that market share to 70% of the flexible market by the middle of 2019, the remaining 70+ regional providers could face challenges in this increasingly evolving environment. 

Source: JLL Research

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