It would be short-sighted to dismiss current upward trend of co-working spaces as a mere fad pandering to millennials. In the decade or so since it was identified as a phenomenon, co-working has become part of the corporate mainstream.
21 November 2017
The Hubud co-working centre on the Indonesian island of Bali bills itself as “an incredible place to run your business” for people who have “digital nomad, entrepreneurial and start-up ambitions”. However, like many facilities of its kind, it is not just selling a workspace, but a lifestyle, too: “On the flip side, if you’re into yoga, adventure sports, and green juice – well, this is the place for you.”
The global co-working survey, carried out by online co-working resource Deskmag, estimates that there are nearly 14,000 co-working facilities worldwide and that by the end of 2017 there will be 1.2 million people working in them. Cushman & Wakefield reports that, in the first half of 2017, co-working and serviced office providers took more space in central London than any other sector.
All the centres run by leading operators such as WeWork and the Office Group include a proportion of co-working space. However, they also incorporate traditional serviced offices, where companies can group desks together behind their own door. Their point of difference lies in trying to encourage a sense of community and interaction through shared activities.
The office property market has benefited from the trend, argues Stewart Smith MRICS, managing director of CBRE’s London occupier business:
"A lot of the employment growth in places like London, Berlin and Paris has been because of a massive rise in self-employment. The serviced office and co-working sector has acted as an aggregator of that growth and turned that into large-scale demand." - Stewart Smith MRICS, CBRE
Co-working originated on the back of demand from start-ups, but Smith says that a significant part of current market activity comes from large corporate occupiers seeking efficiencies. By maintaining a smaller permanent office of their own, they can take a flexible amount of co-working space to suit their day-to-day requirements.
Letting office space to a co-working operator offers a number of benefits for landlords, says Adam Egan MRICS, a partner in Cushman & Wakefield’s London office team: “Among the first deals to happen in a large building these days will be one to a co-working operator, to enable the owner to market it as an amenity to other occupiers,” he says. “It also operates as an incubator – it is a great opportunity for landlords to market themselves to a growing company who will potentially take a conventional lease.”
Concerns remain within the real estate industry about the robustness of co-working operators, however. Few own their own property, so their profit margin relies on maintaining a substantial gap between the rate they can charge their tenants and their own rents and overheads.
“Some landlords are quite wary of co-working, but the continued growth of small businesses and the gig economy [see p17] points to continued success,” predicts Smith.
The number of co-working spaces aross the globe has exploded over the past five years, their popularity helping to usher in a more collaborative approach to working practices:
|Year||Number of co-working spaces worldwide||Annual growth rate|
|How would you describe your co-working space?|
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