No longer considered a fad for startups and freelancers, coworking has surpassed its humble beginnings to become one of the fastest-growing global workplace movements. An array of mature companies and industries — including academia, nonprofits, and media — are tapping into this phenomenon to reap the benefits long heralded by tech startups: shorter leases, just-in-time space, reduced overhead costs, shared infrastructure, and access to a network of diverse, creative thinkers.
The changing nature of how people work is driving the demand for coworking space. According to Innosight, the average lifespan of companies in the S&P 500 is expected to drop to just 14 years by 2026. This is a sign of corporate disruption — companies are restructuring, shrinking, and merging. With this volatile life cycle, nearly every resource a business uses must become more flexible — including real estate. JLL predicts one-third of all US office space will be flexible by 2020.
Large enterprise organizations are turning to coworking space to meet a variety of needs, such as transition spaces and expansions. Long-term leases aren’t going away. Yet, even long-term tenants have more need today to refresh their look and feel. Some companies are shedding longer-term leases on portions of their portfolios in favor of month-to-month terms that maximize flexibility and minimize move-in costs. “The growth that we’ve seen in coworking and flexible office solutions leads us to believe that restrictive terms are not the future,” says Gensler’s Sonya Dufner. “We see a shift in how office space is going to be leased, managed, and consumed.”
Coworking’s rise is also fueled by a more mobile workforce with shifting lifestyles. By 2020, according to Forbes, 50 percent of office workers will be freelance, remote, or project-based. Organizations are looking to agile spaces to attract and retain talent, drive business results, and push new ideas forward. As coworking expands in the US and Europe, it’s also expected to proliferate in Asia, Africa, and Latin America. The Global Coworking Unconference Conference, a convener of industry events, projects that global coworking spaces will grow from 14,411 in 2017 to over 30,000 in 2022, and the number of worldwide coworking members will nearly triple to over 5 million.
With numbers like these, there’s a global scramble by investors and companies looking to enter the market. As they do, there are some critical considerations. First, it’s crucial to differentiate; there’s no one-size-fits-all approach, and just offering generic space is not the answer. Second, design should be a differentiator. Successful coworking spaces should be branded, hyper personalized, and experience-driven — making people feel connected to their organization’s brand and culture.
CORPORATIONS AND DEVELOPERS JUMP IN
Large, established companies are offering coworking to all generations of their workforce, recognizing the importance of workplace choice and design as a tool to motivate and encourage employees to think differently. According to a CBRE Americas Occupier Survey, 65 percent of companies plan to incorporate coworking into their portfolio offering by 2020. Fortune 500 companies such as Facebook, IBM, and Microsoft are adopting coworking settings within their own walls or moving teams off-site to coworking spaces managed by others. They’re also looking at flexible spaces to pilot change, inspire knowledge sharing, or reposition assets.
Verizon, for one, is redeveloping pockets of unused real estate into coworking communities, repurposing the company’s legacy assets as flexible space for entrepreneurs and startups. Verizon has opened additional locations in Boston, New York, London, Singapore, and Washington, DC. In New York, Alley, powered by Verizon, is 5G capable, giving entrepreneurs, universities, and startups the ability to start developing tomorrow’s 5G-powered innovations today. At the same time, Verizon is supporting the development of products and services that can fill its own innovation pipeline.