Why Real Estate Investors Are Turning to Coworking Franchises

Traditional commercial leases promised predictability. Lock in a tenant for five to ten years, collect steady rent, repeat. That model assumed businesses would commit to fixed space and absorb the cost of empty desks during downturns. It doesn’t anymore.

Demand is concentrating in suburban markets. Coworking spaces there expanded by 9 million square feet in 2024, while urban towers struggled with 20% vacancy. Real estate investors are capturing this suburban momentum: flexible workspace franchises serve dozens of businesses across multiple revenue streams, turning traditional single-tenant exposure into diversified income.

Instead of one tenant occupying 10,000 square feet, you’re serving dozens of businesses across private offices, coworking memberships, meeting room rentals, and virtual office packages. When one client scales down, two others might scale up, or five hold steady. The point is diversification. Risk disperses across multiple revenue streams rather than concentrating in a single lease.

The U.S. flexible office market reached $10.53 billion and is projected to grow to $52.6 billion, representing a 17.4% compound annual growth rate. Meanwhile, flexible workspace is expected to represent 30% of U.S. office stock by 2030.

Suburban markets offer what urban cores can’t

Office Evolution operates 79 locations serving thousands of members across suburban markets nationwide. The suburban-only focus isn’t incidental; it’s strategic positioning where demand is flowing.

Suburban positioning offers investors distinct advantages:

Lower acquisition costs: Suburban commercial space typically costs 30-50% less per square foot than comparable urban properties, improving entry-point economics for franchise investment.

Built-in demand: Remote workers, local entrepreneurs, and distributed corporate teams need professional workspace close to home. The model serves this audience with private offices, flexible coworking memberships, meeting rooms, and virtual office services.

Reduced competition: Major coworking operators concentrated in urban cores, leaving suburban markets underserved. This positioning creates stronger local market share potential.

Residential proximity: Suburban locations draw from established residential communities, creating consistent demand less vulnerable to corporate relocation or downtown office exodus.

Why vacancy becomes a diversification problem

Traditional commercial leases create binary outcomes: the space is either leased or vacant. A coworking franchise investment generates income across multiple channels simultaneously.

Office Evolution’s franchise model combines:

• Private office rentals: Month-to-month and longer-term arrangements for businesses needing dedicated space
• Coworking memberships: Flexible plans for remote workers and entrepreneurs
• Meeting room rentals: Hourly and daily bookings for businesses without permanent offices
• Virtual office services: Business address and mail handling for distributed teams

This diversified revenue structure means a downturn in one segment rarely impacts all channels simultaneously. During the 2008-2010 recession, flexible workspace occupancy declined by only 5.5%, demonstrating resilience when traditional commercial real estate faced severe pressure.

CBRE’s bet on flexible workspace

Real estate franchise opportunities gain credibility when institutional players commit capital. CBRE, one of the world’s largest commercial real estate firms, recently acquired full control of Industrious, a flexible workspace operator managing over 200 locations globally.

Major commercial real estate firms now treat flexible workspace as a strategic asset class, not a niche amenity. That shift opens capital access and validates the model for investors who follow institutional money.

Office Evolution operates within United Franchise Group, which runs over 1,800 franchises across 80+ countries with 35+ years of franchising experience. That infrastructure gives franchise owners established systems, comprehensive support, and operational frameworks refined across decades.

What real estate investors should evaluate

The Office Evolution franchise opportunity appeals to investors seeking semi-passive income models, but success requires evaluating several factors:

Market demographics: Suburban markets with growing populations, increasing remote work adoption, and limited existing coworking options offer the strongest potential.

Real estate selection: Location drives coworking success. Properties near residential communities, with strong visibility, and adequate parking perform better than isolated or inconvenient sites.

Operational commitment: While more passive than traditional business ownership, coworking franchises require consistent management attention. Investors should clarify whether they’ll operate directly or hire management staff.

Capital requirements: Beyond initial franchise investment, investors must account for tenant improvements, furniture, technology infrastructure, and working capital during the occupancy ramp period.

Support infrastructure: United Franchise Group’s experience provides systems for site selection, lease negotiation, build-out, and ongoing operations, reducing the learning curve for investors new to the workspace sector.

The portfolio diversification case

Real estate investors traditionally diversified across property types: retail, multifamily, industrial, office. Coworking franchise investment introduces diversification within the office sector itself, hedging against the structural challenges facing traditional commercial leases.

Workspace demand isn’t disappearing; it’s fragmenting. Some businesses still want traditional leases. Others need flexible month-to-month options. Many require both as they test new markets or manage seasonal fluctuations.

Flexible workspace franchises capture this fragmented demand through adaptable offerings. Rather than waiting for a single tenant to commit to 10,000 square feet, you’re serving 30 businesses using 300 square feet each, with the ability to adjust as their needs change.

Understanding the risks

Coworking franchise investment offers compelling advantages, but sophisticated investors evaluate risks alongside returns:

Market saturation: Institutional players like CBRE are entering suburban markets, intensifying competition. Office Evolution’s suburban market focus and 80+ location head start provide positioning advantages, but investors should assess local competitive dynamics before committing.

Operational complexity: Unlike triple-net leases requiring minimal landlord involvement, coworking demands active management. Member services, facility maintenance, community programming, and customer service require consistent attention. United Franchise Group’s established systems compress the learning curve, but investors unwilling to hire quality management staff may struggle.

Remote work volatility: Corporate return-to-office mandates could shift demand patterns. The suburban focus mitigates this risk by serving local entrepreneurs and distributed teams rather than depending solely on corporate clients. Even if corporate flex demand declines, the residential base remains.

Economic sensitivity: During the 2008-2010 recession, flexible workspace occupancy declined just 5.5% while traditional commercial real estate faced severe pressure. The diversified revenue model (private offices, coworking, meeting rooms, virtual services) lets operators adjust their service mix and pricing to maintain occupancy where single-tenant leases can’t.

Why Office Evolution specifically

Real estate investors evaluating coworking franchises face multiple options. Office Evolution’s strongest differentiation is institutional infrastructure.

United Franchise Group operates 1,800+ franchises across 80+ countries. That infrastructure means franchise owners don’t build administrative systems from scratch, don’t negotiate first-time landlord relationships, and don’t test marketing frameworks in their market for the first time. The learning curve compresses significantly.

Site selection guidance draws from data across 80+ existing locations. Lease negotiation support leverages established landlord relationships. Technology platforms handle member management, billing, access control, and communications without custom development. Marketing frameworks are refined across multiple markets rather than tested experimentally.

Two additional factors strengthen this foundation:

Suburban market expertise: Unlike competitors adapting urban models, the franchise system has refined site selection, demographic analysis, and operational approaches specifically for suburban dynamics. With 80+ locations exclusively targeting suburban markets, the playbook is purpose-built rather than retrofitted.

Scalable operational model: The franchise structure allows semi-passive involvement. Owners can hire managers for day-to-day operations while maintaining oversight and strategic direction. This differs from fully passive real estate investments but offers more flexibility than owner-operator businesses.

These advantages don’t guarantee success, but they matter more than building independently or competing in urban cores.

Commercial real estate investment trends point to flexibility

Investors are prioritizing adaptability over long-term lock-in. Suburban markets are absorbing demand that once concentrated in urban cores. Multiple revenue streams are replacing single-tenant dependency.

The suburban positioning, diverse revenue model, and institutional backing through United Franchise Group align with these trends. For real estate investors seeking alternatives to traditional commercial leases, the flexible workspace franchise model offers portfolio diversification, reduced vacancy risk, and recurring income potential across market conditions.

Flexible workspace will claim a larger share of commercial real estate. The data confirms that trajectory. Suburban markets remain underserved relative to demand, but institutional capital is recognizing the opportunity. Investors who position portfolios now capture market share before competition saturates local territories.