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The future of co-working space

Article-The future of co-working space

Many co-working operators have tweaked their offerings to feature on-demand, flexible space options, or are repackaging and promoting existing pay-as-you-go plans to meet this increasing demand.

“This (on-demand space) isn’t a new phenomenon, but since March the (flexible office) market has been tilting toward on-demand and new package options are being aggressively promoted to meet current market needs and drive co-working occupancy,” says Mark Gilbreath, CEO and founder of LiquidSpace, noting that his company has offered space on-demand for nine years. “What’s new and improved about on-demand is the package deals,” he adds.

LiquidSpace is a shared-economy platform that markets available flex-office and meeting space globally and has compiled a large network of co-working operators in the San Francisco Bay Area. It is similar to Airbnb in that it does not own its own real estate but instead connects users with space providers through its proprietary platform.

Its Membership by LiquidSpace product provides discounts of up to 20 percent off on-demand work and meeting space rates, for $35 per month. The aim is to serve professionals working from home in neighborhoods where they live.

“The interesting thing is the ‘white hot center of the market,’ which is what is needed at the moment, has shifted to an on-demand space used by workers in need of an alternative on days when working at home has too many distractions or they want to collaborate with a colleague,” Gilbreath says.

Another flexible-office space provider, Industrious, launched a program called Oasis in September. It’s a monthly subscription program that provides a private office on an as-needed-basis two or three times a week. Jamie Hodari, Industrious CEO and cofounder, says he was surprised by this product’s popularity, which represented about one-fourth of the company’s sales last month and expects it to comprise one-third of November sales. Hodari says he expected greater demand in suburban facilities than those in urban centers, but the company has found that demand is consistent across both markets.  

Hodari points to four reasons workers are seeking to get outside of their homes and into nearby coworking spaces for at least part of the work week.

Some are professionals that live with young children or elderly parents and need a place outside the home environment to concentrate. There are also younger adults who may live alone or in small apartments looking to break the monotony of working at home or who want to be around peers. And there are also professionals who feel self-conscious participating in important meetings or other business events like sales calls with clients from their bedrooms or kitchen tables and seeking a professional setting for those meetings.

Co-working operator Novel has also adapted. It has converted it shared desk space to private offices and transitioned its Novel Access Pass, which is a monthly program that provides workspace access on an as needed basis, notes Allison Voigts, Novel director of marketing.

“Previously we saw companies looking to maximize space and headcount,” Voights says. “Now we see employers taking advantage of the privacy and social distancing that our spaces can allow, particularly our SmartSuites product which is highly customizable and features a private entrance and private amenities.” Voigts says about half of occupants are supported by employers and the other half are individual entrepreneurs and small business owners.

Co-working giant WeWork, meanwhile, is offering both monthly memberships (WeWork All Access), which provide desk space at facilities nationwide and, for the first time, a pay-as-you-go, daily option (WeWork On Demand), which offers non-membership access to a workspace for $29 or a meeting room for $10 per hour at facilities within a given region. For example, WeWork On Demand offers New Yorkers access to 47 facilities across Manhattan, Brooklyn and Queens.

The co-working division of Regus, which is part of the IWG Group global network, is offering co-working desks and private offices on an as-needed-basis hourly, daily, weekly or monthly. For example, users can sign up for a couple days a week or buy monthly package for five or 10 days.

Co-working operator Cove has closed its own co-working facilities due to health concerns, as its facilities provide dedicated desks in a shared-space environment. Adam Segal, Cove CEO and cofounder, says that his company is now focused on providing office landlords, building owners and property managers a technology platform to manage flexible office space and amenities in a COVID-19 environment.

“This is a challenging time for all shared-space providers,” he says, noting that a facilities with a 50-person capacity can only have 20 occupants under pandemic rules. Cove technology is currently helping landlords manage health and safety issues in flex space, providing touchless building features, health checks and other measure to provide a safe office environment. Cove’s app also manages shared-amenity reservations and matches flexible office users with nearby providers in Cove’s partner network.

Coworking spaces are facing the same occupancy restrictions as other office environments, but Industrious’ Hodari notes that even before COVID-19 coworking spaces are normally only about at two-thirds of capacity. So cutting back to meet 50 percent or 25 percent thresholds in various markets is not a dramatic shift.

However, coordinating space use and organizing health safety measures can be logistically complex, so members must make a reservation at least 24 hours in advance. “It helps that all our spaces are private offices,” he adds. Other providers require reservations too, but length of notice varies. WeWork, for instance, only requires an hour advance notice.

Availability of on-demand space could become more problematic in the future, as all of these providers predict demand for this type of space will continue to grow when the pandemic is over, because office workers will continue to work mostly from home, but will need a nearby alternative workspace at least a day or two a week.

Gilbreath suggests that going forward, office workers will work from home 60 percent to 80 percent of the workweek, 20 percent to 30 percent in a co-working for flexible office space, and will only go to their company’s headquarters or main office occasionally to collaborate, attend meetings and events, for training, or to mentor new hires.

Hodari agrees, noting that surveys revealed that 80 percent of office workers only want to go to an office two to three days a week, and contends that this trend or preference will continue for years to come and boost demand for flex space near where they live. “Americans hate commuting—length of commute has been inversely correlated with happiness,” he adds.

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