When WeWork nearly collapsed in 2019, the assumption was that coworking had been a bubble. Overvalued, oversold, and unsustainable. But a funny thing happened: the underlying demand for flexible workspace didn’t go away. It accelerated.

In Australia, the coworking sector has grown to over 1,200 locations as of early 2026. That’s a 40% increase from pre-pandemic numbers. And the profile of who’s using these spaces has shifted dramatically.

Not Just Freelancers Anymore

The stereotype of coworking—a bearded freelancer with a laptop in a converted warehouse—was always an incomplete picture. In 2026, it’s almost entirely outdated.

According to JLL Australia’s Flex Space report, enterprise clients now account for over 60% of flexible workspace revenue in major Australian CBDs. Companies like Atlassian, Canva, and Telstra all use coworking spaces as satellite offices, project hubs, or overflow capacity.

The logic is simple. A company with 500 employees might have 200 who work from home three days a week. Maintaining 500 permanent desks makes no financial sense. Instead, they lease 300 permanent desks and book coworking space for the days when more people come in simultaneously.

This “core plus flex” model is becoming standard practice for Australian companies with 50 or more employees. The permanent office handles the baseline. Flexible space handles the variation.

The Regional Story

The more interesting trend is what’s happening outside the capital CBDs. Coworking spaces in regional centres—Geelong, Newcastle, Wollongong, Ballarat, the Sunshine Coast—have grown even faster than their city counterparts.

This makes sense when you look at migration patterns. The pandemic triggered a significant population shift from Sydney and Melbourne to regional areas and smaller cities. Many of those movers kept their city jobs but needed somewhere to work that wasn’t their kitchen table.

A software developer who moved from Sydney to the Central Coast still needs reliable internet, a quiet workspace, and separation between home and work. The coworking space in Gosford or Erina gives them that for $300-400 per month, which their employer is often willing to subsidise.

Businesses helping companies navigate digital transformation, like Team400.ai, have observed that distributed team setups using coworking hubs often outperform centralised offices on both productivity and employee satisfaction metrics. The key is having the right infrastructure and communication patterns in place.

For regional economies, this matters. Every remote worker using a coworking space is also buying lunch locally, getting coffee locally, and spending money in the regional economy rather than in a CBD. The coworking space becomes an economic anchor in a way that a home office doesn’t.

What It’s Doing to Commercial Real Estate

Australia’s commercial office market is still digesting the implications. National CBD office vacancy rates sat at approximately 14% at the end of 2025, according to the Property Council of Australia. That’s well above the pre-pandemic average of 8-9%.

Some of that vacancy is structural. Companies that downsized during COVID and adopted hybrid work aren’t coming back to full office capacity. The space they’ve released is, in many cases, being subdivided and repurposed—some of it into flexible workspace.

Landlords who once viewed coworking operators as tenants of last resort are now actively courting them. A coworking operator taking a floor of a B-grade office building improves occupancy rates and building amenity in ways that an empty floor obviously doesn’t.

The premium office market is a different story. A-grade and premium buildings in prime locations are maintaining low vacancies because companies that do want permanent offices want the best available space. The flight to quality is real: companies are leasing less total space but better space.

This bifurcation means we’re heading toward a market with high-end permanent offices for companies that value physical presence, and flexible workspace filling in everywhere else. The middle market—average buildings with average amenities and long lease terms—is the segment under the most pressure.

The Social Function of Workspaces

There’s an aspect of coworking that gets overlooked in the commercial real estate analysis: these spaces are social infrastructure.

Remote work solved the productivity problem and the commute problem. It didn’t solve the isolation problem. Surveys consistently show that loneliness and lack of social interaction are the top complaints among fully remote workers.

Coworking spaces provide accidental social contact. You chat with someone in the kitchen. You overhear a conversation that’s relevant to your work. You attend an event hosted in the communal area. None of these interactions are planned, and that’s precisely what makes them valuable.

For solopreneurs and freelancers, coworking spaces provide something even more fundamental: a professional identity. Working from a named office feels different from working from home, both psychologically and in how others perceive your business.

Where It’s Heading

Coworking isn’t a trend anymore. It’s a structural feature of how Australia works. The question now isn’t whether flexible workspace will grow—it’s how it integrates with broader infrastructure planning, transport policy, and urban design.

Cities that plan around distributed work—investing in regional connectivity, ensuring zoning supports commercial activity in suburban and regional centres, improving local transport—will capture the economic benefits of this shift. Those that keep planning as though everyone commutes to the CBD five days a week will find their plans increasingly disconnected from how people actually live and work.

The office didn’t die. It just stopped being the only option.