Forecasting the Future of Coworking
“The small scale of the groups within networks help them remain agile, while the many-to-many ties in the larger network ensure that even if 10 percent or 20 percent of its membership is eliminated, the network as a whole will continue to function.”
- @AndrewZolli, Resilience: Why Things Bounce Back
In the spring of 2011, Caique Tizzi and I opened the ground-floor doors of a charming red-brick factory in Neukölln, Berlin. We were immediately inspired by the potential of the space, and imagined ways that we could bring new life to its interior. At the time, Caique and I were running a bar called Hagestolz together, and upon seeing this building we decided to continue our journey into this new space. We both felt that the future would be one marked by disruptive change and knew that times of uncertainty would follow. From our previous experience with the bar, we knew that we were able to create a hospitable space for diverse groups of people to gather and feel comfortable, so we assumed that the same would be true of this new space. And so, we stepped out into the the unknown and knew that the answers to our questions would come over time as others connected their dreams and visions to this project, which would later emerge as Agora.
Nearly 6 years later, Agora continues to grow as a place where people around the world come to explore and experiment with contemporary practices and shape new visions for the future. Currently we are actively running the whole building at Agora Mittelweg and in parallel are developing a second project at Agora Rollberg.
When I stop to think about this process, which has been a very beautiful and yet difficult, there are a few things that I would do differently if we were to start all over again. Most importantly, I would have pursued alternative ways to finance the business, and explored other ways to monetise due the limitations of the standard coworking business model.
In this article I outline the limitations of the coworking business model and explore solutions that harness the power of community to create financial sustainability and social resilience. At a moment when the future of work is emerging, coworking spaces are in the perfect position to support the needs of freelancers, startups and companies in their quest to develop new ways of working by providing support that extends beyond shared desk space. By bringing community together, fostering trust and driving opportunities to their members, coworking spaces can become dynamic hubs that ground the networked global economy in local communities, thereby becoming the cornerstone of resilient business ecosystems.
Globally connected, locally embedded
Due to the impacts of globalization, trends towards urbanization and the technology boom, competition for talent has never been stronger. Multinational companies and local startups alike are all on the hunt for skilled workers who can provide nuanced understanding and expert skills to bear on messy problems in the world of work. Oftentimes, the search for talent begins in socials networks and existing communities. In this context, new technologies and platforms have emerged to support the increasing demand for networked, peer to peer lifestyles. This emergence has led to the development of the “sharing economy”, with companies like Airbnb, Uber, Blablacar, Transferwise and Upwork paving the way to connect people and pool resources in ways we have not seen before at such a scale. This new infrastructure makes it easier to engage and exchange with different types of people around the world, and enables us to imagine much more global, interconnected and flexible ways of living and working.
One could argue that this new infrastructure is still only catering to the privileged of contemporary society, but with our world in crisis and with the fast speed of change, these new models serve as inspiring examples of how the global economic paradigm could be restructured in ways that create more equitable access to economic opportunity. In this context, there’s no better place to observe these systemic global shifts on a local level than in coworking spaces. Like Agora in Berlin, coworking spaces around the world are like ports where people come to exchange skills, services and expertise in the context of community.
A sector on the rise
The coworking sector has been booming in recent years. Deskmag, one of the major magazines that covers the industry, projects in the 2016 coworking forecast that the sector will experience continued growth and expansion over the next 4 years, although at a slower rate than the current pace. As the chart below shows, we expect the number of global coworking spaces will grow from a bit over 11,000 this year to just over 26,000 in 2020. This is a compounded annual growth rate of 23.8%.
Despite the growth in the sector, coworking spaces still face a lot of limitations that could hinder the continual growth of the industry. According to Deskmag, on average only 40% of coworking spaces are profitable (Taking into account that while this research was published more than half of the co-working spaces were still younger than a year old). In addition, 74% of all coworking space operators maintain a second job in addition to their management duties, which demonstrates that the average turnover isn’t enough to keep the lights on both at work and at home.
Currently the majority of the revenue generated by coworking spaces (61%) comes from desk rental, while only one in ten spaces earns all of their money from this service. The average space earns ten percent of their revenue from renting out meeting rooms and event spaces (10% each). Food and beverages bring in an additional 5%, and the sale of tickets to workshops and events earns another 5%. Unlike business centers, coworking spaces live on a very small portion (3%) from virtual office services, like providing a mailing address and phone number.
While financially precarious businesses, coworking spaces have proven to be resilient through their ability to attract and build communities of talented people, many of which are freelancers. In this way, coworking spaces have inevitably become an important source of talent in their cities, which in turn creates a public reputation that can be leveraged to further support their development.
Harnessing the power of collective reputation
Indeed, coworking spaces have developed a reputation not only for what features and space they offer, but as well for the type and quality of people that they are able to accommodate and retain. Due their reputation, coworking spaces are constantly receiving introductions and requests from companies and organizations looking to hire talented people for both temporary and long-term work opportunities. Spaces such as Heimathafen in Wiesburg and Percolab in Montreal are harnessing this interest to generate additional revenue on top of their space rental business by acting as a job broker for their members.
We believe that this type of activity indicates a broader opportunity for the coworking sector to develop similar services that improve the lives of their members by investing in their personal and professional success. This type of development would also enable coworking spaces to grow their network beyond the walls of their building and provide a much more scalable revenue stream.
Built upon our experience with Agora and interactions with coworking spaces in Berlin and beyond, Coliga is building the tools that makes this type of interaction possible for any community. In this light we see a bright future for coworking spaces, where they serve a centerpoint for connecting the right people with the right opportunities.
Coliga gives coworking communities and other groups the ability to form their own job collectives, driving more jobs to members while accessing new revenue to reinvest into the community. If you are interested in joining our network, reach out at Community@Coliga.co or facebook.com/www.coliga.co.
Written by: Pedro Jardim
Edited by: Benjamin Riddle & Jorge Vega Matos
