Why do they go to the peripheries?

Abstract

Purpose
The study was designed to investigate the bidirectional causation between the real estate market characteristics (residential property prices/rents (including PTR), office rents) and the rise of coworking spaces (CSs) in the peripheral areas of Germany.

Design/methodology/approach
Based on the desk research, the authors constructed their own database of 1,201 CSs. The authors gathered data on the residential and office prices and rents on a district level. To identify real market differences between districts with and without CSs, the authors applied the t-test for independent samples.

Findings
The second-highest number of CSs were found to operate in the office market peripheries. This phenomenon should be explained by a search for lower office rents, which CSs seek. Most CSs in the peripheral areas of Germany were only recently established in tourist-oriented regions in the south and north of Germany. In this paper, the authors confirmed that the strength of peripheral CSs lies in the hybridity of their operations: for the majority of CSs, running a CS is a non-core business. The authors argue that the role of CSs is rather limited in attracting real estate investors and boosting the real estate market in the peripheral areas of Germany.

Practical implications
The research shows that peripheral locations are attracting CSs to significant extent. The study shows that CSs can be part of corporate real estate or workplace strategies. As the majority of peripheral CSs are located in tourism areas, the subletting of vacant spaces could be a lucrative business model for hotels, particularly in the times of pandemics. Therefore, further research should focus on the role of tourist areas in the implementation of CSs model.

Originality/value
The focus of this study (CSs in peripheral areas) is original. Additionally, applying the real estate perspective to study the location of CSs is novel as well.