Big property’s likely workplace strategy losses are hospitality’s coworking gains
Experience in delivering customised, on-demand personal service may favour the prospects of hospitality industry operators aiming to grow their share in hosting future coworking at the expense of many current CBD commercial office property owners.
As a consequence of my workplace strategy-related research and conversations, I was recently commissioned by another company to write its white paper on coworking.
Now having interviewed both leading coworking operators and their residents, I perceive coworking to have great emerging significance to the development of the discipline of workplace strategy.
Workplace strategy is increasingly about maximising knowledge productivity through the design of work with minimal overhead. Coworking may represent its future precisely because its offer is so granular, on-demand, cost-effective, accountable and work-specific.
My subsequent reading also seems to confirm coworking’s growing significance to the property developers and operators of the hospitality industry. They are embracing coworking, because it is such a natural fit to accommodate modern workers in comfortable, appropriately resourced knowledge factories. Such circumstances can only be beneficial to knowledge productivity.
Long versus short
For major property owners, however, coworking is potentially highly disruptive because it is antithetical to their business models. Where incumbent landlords want to lock customers into the longest lease term possible for the greatest amount of space, the space-takers now occupying coworking spaces want precisely the opposite.
Coworking residents want to buy the smallest amount of space, a single desk for a month — or space-as-a-service — without commitments any longer than that month.
The inherent uncertainties of coworking’s unit of sale of that single desk per month and the complications of providing supporting services geared to the interests of a specific niche of customers does not in any way fit the model of a typical incumbent property owner.
Yet, coworking fits the short-term, on-demand nature and expertise of the hospitality industry like a glove.
As much as maximising the productive output of a select group of minds is core to its discipline, lowering costs of production and reducing commitments to potential obstacles are fundamental to the exercise of workplace strategy.
When the design of digitised work means sees more of it distributed both around the clock and around the world, a potentially rapid decline in demand for large-scale, centralised work locations will increasingly become the reality office property owners must face.
When the viability of their assets really begins to shift, many if not most, will scramble to adapt and to accommodating the new forms of working.
This will require their business models to change, and with them the minds and capabilities required to run those businesses.
Thus, provision of the new workspaces will itself represent a fundamental shift of the providers’ workplace strategies. Yet, the minds that ran the old workplaces may simply not be fit to manage with curiosity for the attention to individual customisation and detail that this new world requires.
Demand for office hospitality is already growing
Even at present, there exists an emerging demand for workplace hospitality services. In its new central Sydney Barangaroo offices, Australia’s Westpac Banking Corporation engages concierges on every floor to attend to the workplace needs of not just its senior executive team, but its entire workforce. Deploying its vast resources, this is undoubtedly a feature of the bank’s strategy to attract and retain the best people.
Coworking presents the opportunity to attend to personal workplace needs at a localised, individualised scale. There are already many hotels offering coworking facilities, and those already expert in hospitality surely have an inbuilt advantage when it comes to understanding the needs of the emerging customer unit.
Can we trust the property owners to adapt to meeting the needs of individuals in the workplace, or can, indeed, those already expert in hospitality rise up to take with them the lion’s share of the entire future workplace?