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Ukraine has already got 100,000 sqm of flexible offices. 5 reasons why coworking spaces are popular in 2022

The share of flexible offices in the total supply of office space in Kyiv is already 5%. Photo: www.unsplash.com

The share of flexible offices in the total supply of office space in Kyiv is already 5%. Photo: www.unsplash.com

Due to the growing demand for a hybrid working format in 2022, the coworking market is experiencing active development, both in the world and in Ukraine. The total supply of coworking spaces in Kyiv is 5% of all office space and is growing rapidly even during the pandemic.

As the company Colliers International notes in a commentary to The Page, by the end of 2021, the figure of coworking space in Ukraine reached 99,000 sqm, which is 15% more than in the same period of 2020.

Regus, the major player among the co-working spaces in terms of the number of rented square meters, occupies about 20% of all space and continues its development: it recently opened a coworking space in the business center LUWR. Also, a co-working space of the chain Creative Quarter opened in the business center Mag.nett (stage 1), the only class A business center commissioned in 2021.

At the beginning of 2022, the coworking space Spaces of the transnational office space operator IWG (area of 2,700 sqm) will open in the innovation park LvivTech.City. The office space will be the first location of the company in Ukraine, located outside of Kyiv.

The analysts predict further development of the coworking space market in Ukraine: an increase in the overall supply, demand from the tenants, and the share of coworking spaces in relation to the standard offices.

Why coworking spaces are trending

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Hybrid working is driving the growth of flexible offices in the future. According to the company CBRE, the share of flexible offices in the total supply of office space in Kyiv is already 5%.

The analysts stress that after the quarantine periods, employees want to choose where to work. The sentiment to increase the use of the flexible offices by the corporate companies is growing. Small companies want to have a physical office but are less likely to turn to traditional real estate.

Firstly, the fears of the operators, landlords, and developers that offices would lose their popularity due to the pandemic did not come true. Studies show that people want to return to offices, are eager to collaborate, and require physical spaces for teams to meet. After the restrictions were lifted, it became clear that working from home was greatly overvalued, Viktoria Zhurbas, the founder of COworking COmmunity, emphasizes in a comment to The Page.

Secondly, the entrepreneurial spirit is quite strong in Ukraine. Despite the pandemic and restrictions, new startups are constantly created here and existing businesses are developing—and such companies need flexible office solutions, and not stable square meters.

"It is worth noting that local prospects were also highly appreciated by the global players. For example, in 2021, the international companies bizzabo, lyft, and itechart opened and began to increase R&D offices in Ukraine. And these teams are prejudiced in favour of flexible solutions, since even their central offices are located in coworking spaces or flex offices," the expert explains.

Thirdly, flexible workspaces have become the place where people spend most of their time away from home. The operators respond to this with a high level of comfort for the residents: kitchens, bars, common areas, lounge, reception, zones for sports, meditation, showers, etc. An important aspect is creating a community, event management, and activities for an internal client.

It is very important that Ukraine fully meets the global trends in the field of flexible offices and coworking spaces: there is a growing demand from the residents for local coworking spaces and locations near the house, within a few minutes of availability. So operators, despite the central locations’ prospects, will have to invent formats for local locations and locations in districts.

And fifthly, there are already about 30 local brands of co-working spaces and flex-offices in Ukraine. "The area of co-working spaces and the share of the advanced workspaces in the overall structure of the real estate market are growing every year. However, still—and this will be for a long time—the demand significantly exceeds the supply. We should expect both the expansion of existing players—the opening of new locations by international and local brands, and the emergence of completely new brands. An important nuance: in 2022, new locations will appear not only in Kyiv. Kharkiv, Dnipro, and Lviv are becoming powerful competitors of the capital and offer very cool locations," Zhurbas says.

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IT sector is no longer a key tenant of flexible offices

At the same time, experts assure that IT professionals are no longer the main tenants of the flexible offices. According to Focus.office, IT occupies no more than 28% of the leased space. The remaining flexible meters are reserved to the field of jurisprudence (13%), marketing (12%), trade segment (9%) and others.

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With the onset of the pandemic and subsequent quarantine restrictions, both the number of tenant companies and the amount of rented space did not decrease. At the same time, the number of employees working in the office decreased by 40%, according to the company Focus.office.

However, according to forecasts, this figure will soon begin to recover. According to Borys Martynenko, the founder at Focus.office, a lot of companies and representatives of small and mid-sized businesses cannot estimate the effectiveness of the team's work remotely, and this may impact the return of the teams to the offices.

Global trends expect upsurge in coworking spaces

According to the company CBRE Ukraine, in 2022, 1.9 billion people in the world will work in a hybrid format, and that will result in the active development of flex offices. By 2030, 30% of all office spaces are predicted to be flexible. The vast majority of jobs will include hybrid working supported by the steadily growing technologies.

"Flexible solutions are convenient both for large teams who do not want to focus on the operating activity of the office, and for companies at the nascent stage that at the moment do not understand how their business will develop. These solutions allow one to promptly adapt the office space to the specific needs, as well as use capital to develop and attract high-quality personnel," Anastasiшa Kachan, Senior Real Estate Consultant at CBRE Ukraine, says.

According to her, earlier the companies followed a single scenario—a long-term lease of a classic office space. Now one can work from home or alternate between the distant work mode and the office one.

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