The Momentous Rise of Coworking Spaces in NYC
Coworking is widely considered to be the face of the changing workplace. As The Atlantic reports: “By 2020, the Bureau of Labor Statistics estimates that 40 percent of the U.S. workforce will be freelancers, temps, independent contractors and entrepreneurs who single-handedly run their own businesses.” With an increasing emphasis on the “‘workplace of choice,’” the young workforce will inevitably transform what is now considered a trend into the new norm.
An entire industry has sprung up in the past decade to cater to the needs of this young entrepreneurial and independent-minded set. According to The Atlantic, “Shared workspaces first started as informal arrangements: Freelancers with extra space in their garage invited friends to work with them and groups of freelancers leased office space together to make it more affordable.” But new coworking spaces can offer much more than just physical accommodations: services, amenities, digital platforms, flexibility, networking opportunities, and–most importantly–a sense of community. As Tom Lloyd observes in Forbes, “‘Office work is transforming from one dominated by clerical processing to one where making the most of human capital is the ultimate goal. The knowledge economy is fueled by ideas, and ideas are fueled by collaboration.’”
In accordance with this idea, Inc.com notes that “the number of coworking spaces in America has gone from one to 781 since 2005.” The article references a report by the Commercial Real Estate Development Association, which also distinguishes coworking spaces from other startup organizations like incubators and accelerators. There is every reason to believe this growth will continue. Hiring in the tech, advertising, media, and internet industries is increasing one-tenth annually, and these sectors most often make use of coworking space, according to Jason Bram, economist for the Federal Reserve Bank of New York.
New York by itself has seen the emergence of more than 50 new coworking spaces to support its entrepreneurial citizens. This is partly thanks to an injection of venture capital–49% from 2014 to 2015, exceeding $7 billion–as well as a population of 4.7 million freelancers and the city’s signature “creative abilities to make the most out of tight spaces.” The explosive growth of New York-based WeWork provides an illustrative example: since it was founded in 2010, WeWork has “leased 3 million square feet in New York City alone, […] enough to fill the Empire State Building, with 200,000 square feet left over.” The number of New York WeWork locations is already in the double digits, not to mention its U.S. urban expansion and international outreach, and it has signed “20,000 tenants in less than five years.”
With widely-available communications technology, the burgeoning freelance economy (driven in part by the fallout of the 2009 recession), and a renewed focus on work-life balance, coworking spaces can offer benefits that traditional companies and office buildings cannot. Shlomo Silber, the founder of New York-based coworking chain Coworkrs, tells Crain that coworking ”’is about hospitality, in terms of focusing and taking care of the needs of our members.’” In fact, even big companies have recognized the perks of coworking spaces: benefits for employees such as networking and innovation as well as cost-savings on property rentals. According to Colliers International, “Fortune 100 companies are increasingly taking desks in temporary facilities, both as a cost cutting measure and as a bridge to attracting and retaining talent by providing environments that cultivate a mix of networking, training, team events, and ideation. WeWork is accommodating tenants with large numbers of employees by offering full floors and modifying space for security, reception, IT, etc.“
This kind of accommodation–as well as the meteoric rise of coworking companies such as WeWork–has led some freelancers and entrepreneurs to ironically label these chain coworking companies as ‘corporate.’ Indeed, several founders of successful coworking spaces have discussed the difficulty of manufacturing community. As Kevin Smith, founder of the Vault–a San Francisco-based co-working space–reflects, “‘Collaboration’ is a word you hear a lot, and it’s this almost-mythic concept. […] You’re supposed to put people in a building, and the collaboration will just happen; but it doesn’t unless someone is there directing the show.’” Adam Neumann, founder of WeWork, also comments in The Atlantic: “‘It’s a science. […] We cannot force community, but we can create an environment that encourages it. We’ve gathered massive amounts of data about how to design a space to foster collaboration.’ WeWork has done research into design questions as specific as the optimal number of couches and the ideal location of coffee machines to foster conversation.”
In the spirit of this collaboration, and as an additional service to members, coworking spaces–particularly chains and franchises such as Grind and WeWork–have developed exclusive digital platforms to connect their members. One user called the WeWork app “‘a real life LinkedIn.’” While the app enables these professional connections to happen in person, they are still digitally arranged, which raises the question of how well a digital overlay enhances community. Physical coworking spaces seem to have sprung up in part to circumvent virtual networks, so a digital platform can almost be seen as the antithesis of the community-centric mode of coworking.
In a period of such rapid growth and expansion, many have begun to try to regulate what constitutes a coworking space. “People like Tony Bacigalupo, the founder of New Work City, are working to codify the principles of coworking so that they are easier to incorporate into new coworking communities. ‘There is a sense in the Zeitgeist that coworking is more of a real estate opportunity.’” Another attempt has been documented by The Huffington Post: “LExC is a network of passionate, like minded coworking space owners with aligned business approaches. Led by Jamie Russo, founder of Enerspace Coworking in Chicago, the organization was formed to define acceptable standards for coworking spaces and elevate the industry as a whole. LEXC gives members the ability to work from any member spaces if they are traveling, and defines appropriate operating levels so visitors can expect similar experiences no matter where they need to work.”
One thing that most of these coworking spaces already have in common, though, is their urban roots. According to CityLab, “Downtown San Francisco now has more high tech startups that suburban Silicon Valley,” the birthplace of the tech start-up. Silicon Valley could not possibly hold all the startups that have arisen in its trailblazing wake, but the migration of start-ups to cities raises some issues. Cities and start-ups have a symbiotic relationship: entrepreneurs tap into urban networks and take advantage of the culture and amenities. Coworking spaces fit right into the sharing economy, a predominantly urban trend.
But startup culture and the coworking spaces that support it do not necessarily serve cities well, at least in terms of real estate. The acquisition of urban real estate in order to essentially rent to businesses that would otherwise find office space could lead to inflation.
San Francisco has famously seen inflation in its rental market and a high cost of living increase due to its proximity to Silicon Valley and its own startup scene. New York is currently evaluating the effect of Airbnb–a startup itself–on its unique real estate market.
For all the growth that coworking spaces can bring to New York City, it might be worth evaluating the impact of this new model and design regulations not only to preserve the sense of community intrinsic to coworking spaces, but also to monitor the scaling of such businesses.
This story was originally featured on BennatBerger.net.