By Jeff Lessard and the Strategic Consulting team
A transformative change has taken place in recent years – with the concept of coworking evolving from an alternative to a traditional office lease for start-ups and freelancers to becoming an integral component of bona fide corporate real estate portfolios. Here are eight key concepts for 2018 and beyond.
- Flexibility is King. Flexibility tops the list of popular benefits of coworking amongst freelancers, small businesses, and even large enterprises according to Cushman & Wakefield’s market research. Coworking companies provide short-term leases at various square footages, allowing tenants to determine the most appropriate workplace strategy for their business without a long-term obligation. Coworking drives cost efficiency with tenants avoiding the significant upfront capital cost of building out space and the long-term risk of paying for space they do not need.
- Rapid Growth. The number of coworking locations worldwide has increased from 1,130 in 2011 to 13,800 in 2017. Over the same period, the number of members has drastically increased from 43,000 to 1.2 million. Current forecasts provided by the largest coworking conference operator GCUC and Emergent Research indicate the number of coworking members will rise to a staggering 3.8 million by 2020 and 5.1 million by 2022.
- Design Drives Engagement. The best coworking spaces are immersive and offer captivating design, delivering unexpected elements of fun and comfort. Coworking design benefits businesses by encouraging interactions between customers, which can lead to more formal business relationships. For example, WeWork and Convene have recently introduced design innovations like coffee shops, amenity floors, retail pop-ups, educational institutions, and fitness centers.
- Connectivity Drives Growth and Innovation. Coworking spaces generate heightened connectivity amongst different businesses, presenting an opportunity for innovation to occur at the intersection of different disciplines and mirroring the balance between intellectual harmony and tension made famous at AT&T’s Bell Labs in the late 19th century. This historic project employed tactics that would later influence the coworking movement by housing “thinkers and doers” in a shared space, emphasizing an open door policy, and encouraging close physical proximity of diverse professions.
- A Hotel, a University, and a Home. Coworking operations blend the best aspects of a boutique hotel with the social atmosphere of a university and the comforts of a home, under the mantra of “space-as-a-service,” as WeWork’s Head of Product Research Josh Emig describes. Providing personal amenities, hospitality services, individualized spatial design, IT services, and social programming is a critical factor in differentiating coworking brands and one that allows members to solely focus on their professional endeavors.
- A Cure for Loneliness. In recent years, remote workers have increasingly voiced a significant challenge to this workplace concept: loneliness due to a lack of human interaction. Providing a venue for the exchange of human capital by implementing innovative solutions for workplace interaction has set shared space apart from the idea of working remotely. Nearly 83 percent of respondents in an Emergent Research survey about coworking indicated that they are less lonely as a result of joining a coworking space, further proving the growing desire to “work alone together.”
- The New Venture Myth. Despite the belief that freelance and independent workers most commonly occupy coworking space, reports indicate that 50 percent of enterprise companies will be involved in the shared space industry by 2020. With 15 percent of the S&P 500 taking up coworking space, companies like Facebook, E&Y, JP Morgan, IBM, and Microsoft signify a market trend that is expected to continue.
- Where Does the Real Estate Community Stand? As WeWork and other coworking companies continue to attract large corporations, traditional landlords and real estate firms are adapting to this industry disruption by shifting their focus toward the employee experience and offering the best qualities of a coworking experience: redeveloped office space, short-term leases, happy hours, and varied workspaces.
If you are exploring cowork as an option for your portfolio please contact us.
Jeff Lessard is a senior managing director with Cushman & Wakefield’s Strategic Consulting practice. He specializes in helping client deliver business benefits through location, workplace, and master planning strategies.