What Does the Future Hold for Co-Working Spaces?
- Apr 27, 2017
Chances are you know what co-working spaces are. It seems that shared office space is on everyone’s lips, and it’s becoming more and more popular not only among startups and freelancers, but also among Forbes 500 companies. But is this just a passing trend, or are we facing a permanent shift in the office real estate business?
Most research and media articles on co-working spaces take an optimistic tone and predict even more growth for the flexible, amenity-rich, tech-friendly, hipster-ish workspaces. So, what makes co-working office spaces so popular?
This type of professional space is the result of the natural evolution of the business environment and of the economy in general. In the past decade, office employees’ needs—and the way companies operate—have changes. Millennials, which make up the largest share of today’s workforce, have deeply influenced the workplace culture. Flexible hours, break lounges, game rooms and cool tech gadgets courtesy of the employer are just a few of the things that keep Millennials motivated.
It is less about the physical side and more about the culture. Studies show that flexibility beats any other benefit, as it offers a better control of the job and boosts creativity. Not having the pressure of a 9 to 5 schedule, those sharing their workspace can choose if they want to put in just a few hours of work and use the rest to unwind or take a long day at the office to finish a project. This increases productivity and feeds inspiration (as a result of interaction with other co-workers and taking time for other activities). Also, freelancers (the main beneficiaries of co-working spaces) choose to work on projects they love, so they get 100 percent involved in their job, which makes it more meaningful.
Shared offices are also a great way to cut costs, as they are membership-based rather than long-term leases. This is a good option for start-ups looking for affordable spaces that feel like a traditional office or for companies that are planning to make budget cuts without sacrificing the quality of their products. Co-working offices can be the perfect solution in large cities, where leases are expensive and supply is low. More and more companies are making co-working spaces part of their strategy, relocating a team or several employees in a co-working office or replacing full-time employees with remote collaborators.
There are, of course, some downsides to a shared office space. There is the lack of privacy, and constant noise and movement. Those looking for permanent peace and quiet should not consider co-working spaces as a long-term option. Also, industry peers working side to side might lead to conflict or competition.
Companies looking to include co-working culture into their business strategy should consider the fact that they will have little control over their collaborators or remote employees. A 2012 New York Times article called “The Rise of the New Groupthink,” explored the Coding War Games study by consultants Tom DeMarco and Timothy Lister. The two evaluated the work of more than 600 computer programmers at 92 companies and found that employees of the same company performed at roughly the same level, but there was a significant difference between organizations. It appears that programmers at the top-performing companies had more privacy, personal workspace and freedom for interruption and that helped them get better results. However, some of these companies are interested in including co-working spaces in their strategies, for the exact reasons mentioned above.
Research predicts impressive growth for the co-working sector in the next couple of years. An Emergent Research study shows that co-working membership should grow about 40 percent per year to pass 1 million members worldwide by 2018. The growth is supported by the fact that Millennials will represent 75 percent of the U.S. workforce by 2025, according to the Governance Studies at Brookings report “How Millennials Could Upend Wall Street and Corporate America.”
Co-working spaces have found a place in the commercial real estate industry. Rather than replacing what already exists, they’re providing more options.