There is a contemporary school of thought, which indicates that co-working spaces are leading the way in workplace design. This may be partly true, especially when it concerns co-working spaces that are start-up friendly in approach. However, when it comes to a business proposition, I am beginning to feel that co-working spaces, in their current form, is not the way forward in the way work will happen in the future. They will need to change, and rapidly. Let me explain. This is my opinion, and there may be some who may disagree and some who may agree. I would love to hear those thoughts in the comments!
As a consultant on workplace strategy and change management, I travel a bit for work and to talk about the subject of my recent book ‘The radically changing nature of Work, Workers & Workplaces’. In these travels across Asia, Europe and the USA, I have seen the growth of two broad types of co-working spaces; a) the enterprise focused type and b) the startup focused type.
The Enterprise Focused Co-Working Space
These are large format co-working spaces, where client organizations house hundreds of people. Such centers have a multitude of such clients and collectively accommodate thousands of workers. Grouped by organizations, workers are segregated by partitions. Inside these partitions, workers of one organization interact and behave with their colleagues in the same way that they would, if they were operating from their own workplace. It is only during breaks in the common cafeteria or breakout areas, that an opportunity for workers of one organization to interact with workers of a neighboring organization, may present itself. In that sense, these centers no different from a multistoried office complex housing different organizations on different floors, with some common breakout areas. Contracts are often signed for a year, and sometimes even for longer terms like three or five years. From a client organizational point of view, their advantage is that they do not need to spend capex for the fit-out, and that they do not need to manage the facility. But then, this is something that can be offered by any willing property developer.
I spoke with a few senior representatives of such co-working centers. On condition of anonymity, one senior professional said “The biggest challenge we face today is to bring about a common sense of purpose amongst the various organizations housed in our centers.” Each organization is dedicated to their own mission and find it difficult to relate to any other common mission of the center; which anyway is not obvious. In absence of this, the question arises as to how is this model any different from a ‘real estate rental’ model, with a mild sprinkling of ‘real estate as a service’ model. A rental model, based on well furnished and managed spaces, is not really anything different from models, which have existed in smaller formats, since the 1990s. By harping on the service offerings, large format co-working businesses have managed to quickly ramp up millions of sq. ft. of real estate, raised big-ticket funds and attracted large enterprises as clients. The verdict is not yet out on whether this is a financially sustainable model, but as things stand today, this appears to be more of a financial valuation game then anything else.