Co-Working Space Takes Off in OC

Jay Nugent

The co-working trend is finally hitting Orange County. During the final quarter of 2018, Orange County saw an increase in co-working leasing activity, according to a new market report from Newmark Knight Frank. During the same period, however, direct office leasing absorption slowed, down 74.7% year-over-year. Despite the slow down in leasing activity, absorption remained positive for the eighth consecutive quarter, driving the vacancy rate down slightly to 12%. Co-working users signed major leases throughout the year, with WeWork taking up 150,000 square feet in the market and Regus picking up an additional 62,000 square feet.

“In addition to the co-working trend happening all across the US, I believe the primary reason it is increasing in our market has been the incredible success of the existing co-working operations that have come to Orange County,” Jay Nugent, senior managing director at Newmark Knight Frank, tells GlobeSt.com. “I know the two biggest,  WeWork as well as Spaces, have achieved very successful lease up rates at the locations that have opened and those locations have performed better than projected.  This has given them as well as their competitors confidence that this Orange County region right now is “under supplied” as it relates to co-working space.   It is simple economics, when you are at or close to 100% leased the only way to drive more revenue is to open up more locations and that is what we are seeing.”