The increasing importance of shared workspaces in commercial property development.
Coworking Industry Transitions Towards Maturity and Growth
The coworking industry is undergoing a significant transformation in 2025, shifting from a phase of rapid expansion to one focused on consolidation, efficiency, and strategic growth. This transition is evident in key trends such as institutional investment, franchising, and government adoption.
Current State
The total number of U.S. coworking locations experienced a slight decline of around 1% in Q2 2025, marking the first post-pandemic drop in location count. However, the total coworking space footprint edged up marginally by about 0.3-0.4%. Operators are now favoring fewer but larger, well-amenitized spaces to meet the demands of hybrid work.
Corporate clients, seeking flexible workspace solutions, are poised to drive the next wave of growth in coworking. After a slowdown in new openings, early signs indicate a rising demand from enterprises.
Premium markets like Manhattan, Chicago, and Brooklyn hold large-scale coworking hubs, while emerging markets such as Long Island, West Palm Beach, Kansas City, and Detroit are expanding location sizes and demand.
Institutional Investment and Franchising
The industry is maturing with strategic mergers, exits by smaller operators, and a focus on operational optimization over rapid footprint expansion. The market includes a mix of operational models: franchises, independent operators, and managed spaces. Key companies such as IWG plc, WeWork, Industrious, Servcorp, and others are actively shaping the sector.
The coworking market is growing financially, valued at approximately USD 30.45 billion in 2025 with a strong projected CAGR of 9.6% to reach USD 48.15 billion by 2030, signaling sustained investor interest and operational viability in the longer term.
Government Adoption
While direct details on government adoption of coworking space are sparse, the maturation and regional expansion into commuter-friendly markets suggest that coworking is increasingly integrated into broader economic and urban planning ecosystems, often supported or acknowledged by local governments encouraging flexible work environments.
Looking Forward
Balancing consistency with customization will be critical as coworking becomes more institutionalized. Franchising meets this demand with speed and consistency, providing the data, tools, and enterprise partnerships that help franchisees succeed in a more complex environment.
The hybrid work revolution, accelerated by necessity during the pandemic, has become a mainstay of corporate real estate strategy. Franchisors must provide the necessary support to franchisees to navigate this complex environment.
Enterprise clients in coworking spaces typically have longer terms, larger footprints, and higher revenue per square foot. Franchise owners should leverage their local edge while operating with the mindset of high-performance hospitality brands, being agile, service-focused, and growth-oriented.
A survey from WeWork found that 72% of companies plan to expand their office footprint, with flexibility at the core of their decision-making, indicating a surge in enterprise and mid-market demand for flexible workspaces. The global coworking space market was valued at $9.2 billion in 2022 and is estimated to reach $34.5 billion by 2032, growing at a compound annual growth rate (CAGR) of 14.6%.
Franchising could play a critical role in the future evolution of coworking, supporting secondary markets, suburban cities, and up-and-coming innovation hubs that larger operators may overlook. The challenges faced by the industry include preserving agility and local relevance, navigating rising build-out and labor costs, and meeting evolving member expectations around flexibility, technology, and service.
The next evolution of coworking may include multichannel delivery (warehouses, residential, retail), deeper integration with proptech platforms, and a continued emphasis on hospitality-driven experiences. The coworking franchise model is well-positioned to support these evolutions.
The U.S. General Services Administration (GSA) has been piloting a program to convert federal properties into multiagency coworking hubs, signifying the adoption of the coworking model by the government. Franchising is another powerful force shaping the coworking industry, as it allows operators to bring global systems, brand equity, and enterprise partnerships into hyper-local markets without requiring massive real estate portfolios or balance sheet exposure.
Demand for quality space closer to home continues to rise as hybrid work continues to disperse across the workforce. CBRE has fully acquired Industrious for $800 million, and Yardi has agreed to take a 60% stake in WeWork through its bankruptcy exit, indicating a growing interest in flexible workspaces by major institutional players.
In conclusion, the coworking industry is experiencing growth and institutionalization, with landlords considering flexible partnerships, corporations freeing up capital, and investors viewing it as an established category with high potential for innovation. The question is no longer if coworking is here to stay, but how far it will go. Coworking is becoming a core component of how work happens, serving as a tool for governments, a platform for growth-stage companies, a strategy for the Fortune 500, and a pathway to entrepreneurship for franchise owners worldwide.
