While the serviced office sector may be booming, the traditional co-working sector it is wilting. Discerning businesses of all sizes want more from their flexible office space. Here, two providers offer their take on the next phase of collaborative work environments
James Layfield, chief executive, Central Working
Most people think of co-working as a collection of scrappy companies hunkered down in a less-than-ideal workspace, paying next to nothing to get by. This rough-and-ready concept was a child of the last recession and appealed to many post-recession entrepreneurs – as the economy started to rally from 2012, shared, cheap working spaces sprang up around major cities and were quickly filled.
Today, the economy and the country have moved on. Rising rents, particularly in major cities, means that a quick lease deal and overnight Ikea fit-out no longer works, forcing many co-working providers to throw in the towel in recent years. Moreover, the traditional notion of co-working – bare-bones provision comprising cheap desk space and an internet connection – doesn’t help businesses to grow. Co-working as you know it is dead.
Today’s businesses require more than just office space. They need a nurturing environment, surrounded by people that understand their business and care about their success – an environment in which they are helped to grow. This support is absent from 90% of co-working spaces that rely instead on gimmicks like beer and ping-pong tables to make their environment work.
We are seeing the rise of the next generation of workspaces that help to expand members’ businesses by providing tailored support and forging valuable connections – whether it is sourcing a cost-effective supplier quickly, networking with like-minded businesses or connecting with a partner to pitch to a large client collaboratively. This goes far beyond “co-working” but doesn’t mean “incubator” either. It is a new type of workspace, one which many are paying lip service to, but very few actually deliver.
The penny has dropped for SMEs too. They have recognised co-working’s shortcomings and have become more discerning. They would prefer to spend on a premium product that helps them to thrive, particularly during those early stages during which support is so valuable.
Co-working’s demise should serve as a warning to commercial landlords. Creating environments for growth, rather than offering real estate, is the future of commercial property aimed at smaller businesses. There is an opportunity for both landlords and tenants to benefit from a different approach. A focus on more collaborative, supportive environments with shorter, less restrictive leases is more attractive to smaller businesses by helping them expand with you. That puts a big smile on the finance director’s face but, more importantly in my view, ensures that the SME community, the bedrock of our economy, continues to flourish.
Tim Rodber, chief executive, Instant
Over the past two years, the percentage of new offices opening that have some offer of co-working space has doubled and enquiry numbers are rising aggressively.
The increase of contingent workers – freelancers, consultants and sole-person companies – is driving this demand. The jobs market has changed and that is changing the way people are working. The number of start-ups has increased by more than a quarter in the last year, according to our numbers. But this is not the whole story.
Demand for flexible office space of all types is up by 21% in the past 12 months and that is being driven by corporates and mid-cap firms as much as it is by SMEs. They are happy to use flexible space on projects to promote collaboration and be near their clients without the risk and time involved in a longer lease.
For a long time, workplace specialists have heralded a change in the way we work. The new generation of workers, who have spent their undergraduate and school days in collaborative study spaces, do not want to be restricted to a rigid desk hierarchy. In our view, however, the change is more profound than that.
Co-working is emblematic of a broader move to flexible workspace. The term co-working represents a change in perception of the office across the market as traditional office rents remain steep and constrained supply puts pressure on vacancy rates. Matt Watts, head of sales and revenue at The Office Group, says: “I consider all of our offer to be co-working now – that is a better description of how our occupiers use the space than serviced offices ever was.”
Serviced office company Orega has introduced flexi-desk working into its new site in Brussels in recognition of the dynamics of the market in that city. “Brussels is a hub for collaboration,” says owner Zac Douglas. “Firms from around the world set up business here to engage with Europe and liaise with EU or the other pan-continental organisations here. To that end, we have to create space that meets this need and allows firms to interact and engage with one another. Flexi-desking is co-working by any other name as it also operates as an introduction service for new entrants to the market.”
He adds: “There is robust demand in the market for firms seeking an alternative to the traditional office model. At the heart of this is the ethos of co-working; namely, collaborative workspaces that offer flexible solutions for firms that want to challenge the traditional idea of office space. For operators and clients alike, it offers efficiencies as it maximises the use of existing space – and the flexibility of the co-working model helps to retain and attract the best talent.”
Co-working and collaboration
Have you enabled people or companies to co-work? Have you provided collaborative space for the new breed of occupier and worker? If so, why not put yourself forward for EG’s Top 50 Collaborators in association with Mishcon de Reya, JLL and CRS. Just send an email with a short paragraph about why you or your business should feature in the list to email@example.com or tweet @estatesgazette using the hashtag #thecollaborators