Coworking spaces are popping up everywhere, with entire companies now devoted to creating and renting out coworking spaces. With the increasing popularity level of these non-traditional workspaces, landlords, and real estate, investors need to understand what they are, how they work, and what the implications are for property management.
What is a Coworking Space?
A coworking space is a shared, public workspace. Anybody can rent a desk in a coworking space, and so each one is filled with people working for different companies or freelancing for various industries.
They offer the amenities of an office, like kitchens, hot-desks, and community, for freelancers or small companies that can’t afford a traditional office space. Payment options are flexible, with both daily and monthly rent available, and lower rent for those willing to share a desk.
Who Uses Coworking Spaces?
Freelancers love coworking spaces because they allow them to continue to have the freedom of making their schedule and working on their terms, while still providing them the community they miss from traditional workplaces.
Startups also like coworking spaces. The short leases are cheaper and less binding than a traditional contract on an office, and the flexibility of the space lends itself to companies that are small but proliferating.
Small organizations benefit massively from coworking spaces, and not only for financial reasons. Workers often report higher job satisfaction when they work out of coworking spaces, along with a more profound sense of community in the workplace.
With so many smaller organizations benefiting from them, larger companies are beginning to take advantage of coworking spaces as well. General Electric and KPMG are renting desks at WeWork now.
Internalizing Coworking Spaces
Large organizations tend to try and internalize the successful practices that they encounter in the business world. That means it’s likely that larger companies will attempt to duplicate the success of coworking spaces within their own offices.
The way to do this successfully would be to duplicate the culture of coworking spaces. The real value of coworking spaces for many is the way that they allow for innovation by fostering collaboration between people with very different skill sets.
The freedom and flexibility inherent to coworking spaces is another crucial factor, but many companies will find that they don’t have the kind of culture that encourages people from different departments to connect and collaborate. The best way to solve that problem is to open up a coworking space in your office and make it available for startups and freelancers to rent. That way, you expose your company to the coworking space culture.
The Growth of Coworking
Coworking spaces continue to grow because the freelance economy continues to grow. As the number of freelancers goes up, the demand for working space tailored to their needs will rise also. The same is true for small startups, and now that larger companies are getting on board we can expect coworking space to be one of the fastest-growing areas of commercial real estate for a long time to come.
Some companies turn to coworking spaces simply because they provide an ideal environment for fostering innovation at work; others value the low cost and flexibility they provide when compared with traditional office spaces and lease agreements.
With 50% of the American workforce expected to be freelancers by 2020, landlords and real estate investors should be scrambling to develop more high-quality coworking spaces or to cater to companies that offer coworking spaces like WeWork. Much like flex spaces, coworking spaces are going to be in high demand for a while, and they fill a niche that more commercial property doesn’t.
Freelancers and startups will provide a steady stream of tenants for coworking spaces without much risk; owning a coworking space means you have a near-constant stream of tenants coming in. Unlike a flex space, though, the owner/landlord of a coworking space has more responsibilities in terms of maintaining and furnishing the space, because the people renting it will expect it to be fully furnished and come with amenities like a kitchen, coffee bar, etc.
That’s a small price to pay, however, for an opportunity as lucrative as this. Because you’ll be collecting rent from a much larger number of tenants than you would typically have in a given space, you can earn more in rent while still charging each tenant a very affordable rate. With their increasing popularity, coworking spaces are going to be an excellent investment for a long time to come.