Coworking, 10 years later
When the first spaces popped up in San Francisco for the first time around 2007, coworking was a brand new concept. Sharing workspace with like-minded strangers was the answer for a specific tech-focused community struggling with rising real estate market environment. Definitely not something for work-from-home moms or traditional corporations. Things have changed.
We attended this year’s edition of GCUC — short for Global Coworking Unconference Conference, pronounced “juicy” — and here are our take aways.
After years of evangelization, WeWork turned a grassroots community into a mainstream business. It is no surprise that companies have followed the WeWork playbook and raised large amounts of VC money to open multiple locations in an impressively short time: Galvanize, Industrious, Serendipity Labs, Bond Collective… The list keeps growing.
Not only coworking is a commodity in large cities but is also booming in smaller, less urban areas. New players target small business owners, far away from the tech hub geography and demographics. With more than 30% of America’s workforce made of freelancers, the market for alternatives to home office and Starbucks is everywhere.
A cheaper way towards rapid expansion, franchise is seducing newcomers. Originally a coworking brand, Office Evolution is paving the way, building a network of franchises all over the country sold as a “semi-absentee franchise model”…
In addition to being ubiquitous, the more popular the industry grows, the more niche it goes. Operators are differentiating themselves by focusing on specific communities outside of tech: women, artists, builders, wellness professionals… The end of a one-fits-all approach.
A major trend is the growth of private space vs. communal space: demand for closed office space has skyrocketed. According to Quartz, private offices now account for up to 90% of the space at WeWork, Alley, or Bond Collective locations. The risk is to re-create what coworking originally wanted to fix, i.e. traditional business centers like Regus.
In a race towards profitability, coworking operators multiply new business services: concierge service, virtual offices, catering, and much more, which drive substantial recurring revenue as well as higher operating costs. WeWork is thus exploring all opportunities, including a service marketplace and on-site gyms.
Corporate clients view coworking as an easy way to offer flexible office space to their workforce and outsource property management. WeWork is now designing, building, and operating offices on behalf of enterprise clients. This “space-as-a-service” offering has already seduced IBM who is said to rent a whole building in NYC for up to 600 employees.
“Space is the full environment. It’s experience as a service, culture as a service. And we see all of those as a subset of the space.”
– Dave Fano, Chief Product Officer, WeWork
Coworking has lead the way to the office the future: a flexible, collaborative, open, and mobile environment. The shift towards enterprise clients is a perfect fit for an industry looking for stable, long-term tenants. For corporations, it is an easy fix to defend their employer brand and attract employees tempted by the freedom of the gig economy or the thrill of startup life.
