Hartford Business Journal

4 HARTFORDBUSINESS.COM | JUNE 2, 2025 Deal Watch (Main photo) International Workplace Group Area Vice President Ken Godek at a "Spaces" coworking location at Blue Back Square in West Hartford. (Top photo, right) Samantha Johns and Veronica Niedmann, of marketing firm eatbigfish, work regularly from a Spaces location in West Hartford. (Bottom photo, right) A portion of a new Regus location in East Hartford. HBJ PHOTOS | MICHAEL PUFFER While traditional office space struggles broadly, coworking giant IWG expands rapidly in CT And, the downsizing trend is likely to continue for at least a few more years as long-term leases expire, Grieco said. Backfilling office space will require new companies to enter the market — not a dependence on long-established employers reawakening to space needs, he said. Unfortunately, the Greater Hartford area is not attracting many large new employers in dynamic growth sectors. "We are trying to do things with insurtech and biotech, but there's not a gravitational pull for any robust industry where we will see new jobs," Grieco said. The Greater Hartford office market's availability rate stood at 26.4% in the first quarter of 2025, while the vacancy rate was 23.1%, up slightly from the previous quarter, according to Cushman & Wakefield. Some areas are struggling more than others, with the office availability rate in the region north of Hartford at 43.3%, and Hartford's central business district at 36.1%. IWG and similar companies have always served a niche customer base: small-space users, newly established businesses or firms testing the waters of a new territory, Grieco said. "They like the flexibility and the high polish that a Regus location can offer without a five- or 10-year lease commit- ment," Grieco said. "A lot of building owners don't want to lease 500 or 1,000 square feet, and they certainly don't want to do it on a short term." IWG wasn't as negatively impacted in the immediate aftermath of the pandemic as many other office land- By Michael Puffer mpuffer@hartfordbusiness.com T he post-pandemic world has been a struggle for many owners of traditional office buildings, as broader acceptance of remote work translated into far less demand for space. Conversely, for Switzerland-based International Workplace Group — a provider of small office and coworking space in over 120 countries — it has been a time of rapid growth. IWG has 31 locations in Connecticut, about double what it operated in 2019, said Ken Godek, area vice president for IWG. "Traditional office space in Connecticut is suffering a lot," Godek said. "Since COVID, a lot of people don't want to spend $30,000 a month to lease a floor in downtown Hartford. They proved during COVID that 90% of the workforce can work remotely, so why are they spending $30,000 a month to rent space nobody is going to use?" But, many professionals also don't want to work from home offices full time, Godek said. That's where the flexibility of a local coworking space can have some appeal. During the first four months of 2025, IWG — which operates under the Regus, Spaces, HQ and other brands — opened three new Connecticut locations in Stamford, Shelton and East Hartford. It expects to open at least seven more in the state before the end of the year, including locations in Enfield and New Haven this month. Godek said the COVID-19 pandemic accelerated IWG's growth by about seven years. "People who are up on their leases are not renewing," Godek said. "They are going with our concept because they can cut that cost of $30,000 a month to $4,000 or $5,000, so they can have those 10 or 12 people they need in the office come in. And they can do it on a 12-month term, so they have flexibility." In its first-quarter earnings report, IWG reported record global sales in March, even as the company expressed some concern about economic uncertainty in the U.S. First-quarter revenue was $1 billion, a 2% increase over the same period last year, while IWG opened 165 new locations globally during the first three months of the year. Traditional office market struggles While there are thriving pockets in the Greater Hartford office market, the region has generally not experienced a robust post-pandemic rebound in demand, said Joel M. Grieco, an execu- tive director with real estate brokerage Cushman & Wakefield. Employers are increasingly calling more workers back to the office for longer portions of the work week, but this has not translated into companies reclaiming space they yielded since 2020, Grieco said. Instead, companies are going with smaller workstations. The second-floor view of the Spaces location in West Hartford. HBJ PHOTO | MICHAEL PUFFER

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