The U.S. coworking market has been growing steadily this year, helped by demand in mid-tier markets, reports show.
The market reached 9,136 locations at the end of March, up 3.2% quarter over quarter and 16.5% year over year, with 1,296 more coworking units in the U.S. than the first quarter of 2025, a CoworkingCafe report says.
The numbers match up with a report by Yardi Matrix, which found coworking space rose to 164 million square feet as organizations opt for flexible office solutions. Initially necessary during the pandemic, flexible space has become more common as employers reduce their space to accommodate hybrid work arrangements, Yardi Matrix says in its national office outlook report for April.
Much of the growth is in smaller-format spaces, with the national average site size down from 18,000 to 17,945 square feet, the Coworking Cafe report says.
“Albeit a marginal change, [the smaller size] nevertheless points to a broader diversification of formats beneath the surface,” the company says.
Despite the growth, coworking remains a fraction of all office space types — 2.28% of total U.S. office inventory, up from 2.22% in Q4 2025, Coworking Cafe says. That shows “just how much run-way remains for the sector,” it says.
Sector shift
Many of the world’s largest companies are using coworking space for satellite offices, a Wall Street Journal article says. The shift comes as physical office occupancy, as a result of hybrid arrangements, hovers around 55%, according to a “back to work” barometer that Kastle Systems tracks. Office attendance ranges from 66% on high days to 38% on low days, the barometer shows.
Faced with this low office utilization, many organizations are negotiating more favorable terms at lease renewal, helping to drive a market shift, Yardi Matrix says. Property owners are “left with little option but to adapt and provide concessions, especially as underperforming properties sell at record discounts,” it says.
As a strategy to retain tenants, some owners are adding a coworking option, with terms and conditions focused on flexibility — shorter leases, leniency for early lease termination and changes to floor plans to provide workspaces that fit the size and financial means of smaller tenants, according to Yardi Matrix.
“Some are even partnering with established coworking operators to facilitate this transition through networking and management agreements,” Yardi Matrix says.
Industrious, the CBRE coworking space affiliate, is benefitting from the shift. The number of Industrious units that CBRE is adding is exceeding expectations of the business, CEO Bob Sulentic said on CBRE’s Q1 2026 earnings call last week.
“We are quite pleased with the pace at which we are adding those [flexible] units, and we expect it to continue this year and into the foreseeable future,” Sulentic said. “We bought that business because we thought it was a premium offering that would be interesting to corporates in addition to small and medium-sized businesses, and we are seeing that play out.”
WeWork is trying to grow the coworking market by pushing its boundaries into new types of spaces. Earlier this month it launched WeWork Go, which provides private office pods for focused work in high-traffic areas like airports and convention centers.
Traditional office space remains dominant, particularly at the enterprise level, but smaller building operations will need to adapt to the changing needs of tenants to remain competitive, Yardi Matrix says.
It points to AI-driven workplace disruptions and economic uncertainty as forces that could compel them to shift away from traditional office leases to flexible options.
Office-using sectors of the labor market lost a combined 16,000 jobs in March, Yardi Matrix noted based on data from the U.S. Bureau of Labor Statistics.
“Smaller, strategically located office spaces with abundant amenities and flexible accommodations will better serve the needs of the current workforce, especially during economic uncertainty,” Yardi Matrix said in its report.
It’s not just the biggest urban markets seeing more coworking units, CoworkingCafe says. Philadelphia, Tampa-St. Petersburg, Florida, and the Inland Empire in California are among the areas with growing inventories of the units.
“These markets share a common profile,” CoworkingCafe says, “secondary or tertiary status; favorable real estate economics; and a growing hybrid workforce that had previously been underserved by national operators. Taken together, they point to a coworking industry that is no longer content to grow only where it’s already ballooned.”
