The Rise, Fall and Renewed Potential for Coworking in Montreal

It’s a Tuesday afternoon at the 1010 Sainte-Catherine Ouest coworking space in Montreal. As a freelancer taps away on her laptop seated on a colourful couch soaking up some sunshine, a group of tech workers sip on kombucha while discussing the launch of a new app.

With all the talk about the death of the office, the great debate around coworking and flexible office space has been pushed to the sidelines. In Montreal, however, the sector has evolved and has a particularly bright future.

Montreal’s Coworking Evolution

“The coworking sector is changing rapidly,” says Nari Aznavour, an office leasing specialist at CBRE Montreal who oversaw leasing at WeWork for many years. “But that’s nothing new. The sector’s whole modus operandi has always been change, flexibility and adaptability.”

Coworking started off as an ideal solution for startups and small businesses that didn’t want to shell out the money to lock themselves into a long-term lease and spend substantial capital to build out office space.  

Eventually coworking’s flexible short-term leases and size options gained appeal with bigger firms like Cossette and Novartis, which used coworking spaces for satellite offices in new markets or as temporary spaces to accommodate growth.

The coworking world took a major blow at the end of 2023 when WeWork, which at its peak had 777 locations in 39 countries, filed for bankruptcy, leading some to wonder whether the coworking concept could survive.

New Model

In the wake of its bankruptcy, WeWork cut costs across its business, renegotiated leases around the world and surrendered some space back to landlords. In Montreal the company released two floors at 1010 Ste-Catherine Street Ouest, putting 60,000 sq. ft. back on the market.

WeWork’s one-time rival, IWG, which owns the flexible workplace brands Regus, Spaces, HQ and Signature, announced a new model to partner with investors and act purely as a service provider. Both WeWork and IWG are also expanding their Canadian footprints by partnering with other coworking operators to give members access to additional locations.

This was the case for its most recent Montreal location at Rue du Square Victoria, where Spaces has more than 65,000 sq. ft. of space. “There’s potential in that model as long as everyone involved is aligned,” says Aznavour.

Options Abound

Higher office vacancy across Canada in recent years has meant tenants have more options than they did pre-pandemic.

Some are opting for furnished subleases with shorter lease terms and competitive rents without having to spend exorbitant amounts to build out the space. Other tenants are choosing direct space as landlords are more willing to negotiate and offer shorter-length deal terms or termination options in a bid to fill buildings.

But the coworking sector remains active, with deals being done across Montreal. Earlier this year CBRE’s Liam Mayes helped tech giant Plusgrade find a temporary space at iQ Offices as it awaited the delivery of its new headquarters at Maison Alcan.

More recently Aznavour worked on a tech consulting firm deal with Regus and closed deals for a recruitment agency and a global investment management company with WeWork. “We’re starting to see coworking deals for more than 100 employees,” she says. “The demand is picking up so coworking providers are leaning in on their strengths to attract major players.”

Although coworking rents tend to be steeper than conventional office rents, coworking spaces offer the flexibility of amenitized plug-and-play spaces that can accommodate teams of all sizes, from a sole freelance proprietor to hundreds of employees. “It’s an elastic model so it’s great for companies that expect to grow or shrink quickly,” says Aznavour.

The coworking model also provides a shared office ecosystem, eliminating the need for firms to hire office administrators, buy coffee for employees, or build out large boardrooms – all of that comes standard at most coworking spaces.

Coworking also encourages connection through events and with open-concept workspaces. “Employees will work alongside professionals from various backgrounds,” says Aznavour. “That can be a real asset when they need a graphic designer, lawyer or web developer, for instance.”

Tertiary Opportunities

Aznavour believes tertiary markets offer ample opportunity for coworking providers.

“There is demand for flexible workspaces in suburbs and small towns, but it’s been mostly untapped by the major coworking companies,” she says. “Mom and pop shops can capitalize on 5,000 sq. ft. to 10,000 sq. ft. spaces to serve these markets.”

Some smaller coworking firms are joining forces to establish standards of practice and consistency across markets. Recently ClickSpace, Lauft, Werklab and Cowork Halifax teamed up to introduce a network of 11 flexible workspaces in Vancouver, Toronto, Montreal and Halifax.

“Part of the beauty of coworking is being able to access workspaces anywhere you go,” says Aznavour. “Providers that create alliances and think beyond geography will see their businesses benefit in the long run.”