I read a report saying that around 20% of commercial real estate in the US is currently vacant, with some cities resembling ghost towns with well over 25% vacancies.  This is one of the major impacts of the pandemic and the rise of remote work.  The recognition of remote work’s possibilities has resulted in a dramatic shift away from the traditional office culture.  We talked a little bit about this in previous blogs, but I want to focus this one on co-working spaces.

When most people I know hear ‘co-working spaces’ they think of WeWork, which often comes with a negative connotation.  Perhaps they remember the party culture highlighted in the AppleTV mini-series.  Or perhaps they think about the over-inflated valuation and now bankruptcy.  But the fact is that ‘flexible space’ or ‘co-working spaces’ have become much more prolific in recent years.  I believe we are entering a golden age where we will see experimentation with a variety of business models in an attempt to meet the complex and changing needs of businesses whilst paying the leases or mortgages on the properties themselves.

So let’s talk about the use cases.  There are all sorts of scenarios in which people can/should leverage flexible space, and in my career I’ve encountered a number of them.

1. Taking a call in between client meetings: When I lived in London, I spent 6 years without a dedicated office (other than my home) but would often meet in person on various client sites.  On a given day, it was not uncommon for me to meet with one customer in the morning on one side of the city and another partner or prospect in the afternoon on the exact opposite side.  In between those meetings, I often had to take a call (or nowadays - a video call) and I needed somewhere with good internet and relative quiet.  This kind of ad hoc need for a small meeting room or phone booth drove my initial move towards a co-working space membership and remains the reason why I still have one today.  If you’re a travelling salesperson or consultant, having a ‘global’ company like Regus or WeWork is critical here but there’s now an increasing list of ‘aggregators’ that are acting as platforms for local co-working spaces - like Gable , Desana , LiquidSpace , Deskpass and Radious.

   
   

2. Hosting a Client / Prospect / Partner for an in person meeting: If you watched our recent LinkedIn Live event with Jason Ezratty regarding New York, he poetically waxed about hosting these meetings at a restaurant.  This might work for some people, relationships or scenarios.  For others, you may need to present some slides and need an appropriate space to do it.  I can not count the number of workshops I’ve held in cities all around the world using a global co-working space brand.  The great thing about it is that all of the facilities are set-up the same way so the wifi always works, the TV monitors all work the same, the printers, etc - all with one card key and one booking app.  This is especially helpful for a group of 4 to 16 people for a workshop or small networking event.

   
   

3. Getting together as an internal team: I’ve seen this both at a small and a large scale.  One organisation had quarterly get togethers for 100+ people from multiple countries get together for a full day with multiple conference rooms in an ‘event space’ booked out.  Another company has 3-4 people who just want to co-locate a few times per month to share ideas, bond and brainstorm.  As I’ve talked about in previous blogs, this ‘getting together’ is fundamental and critical to success.  Companies should always budget for the travel and space costs necessary to facilitate these interactions, as they are value creators for the organisation.

   
   

4. Large networking events with customers, prospects and partners: Similar to the 2nd item but at a much bigger scale.  These events are sometimes held at hotel ballrooms or renting out space in a restaurant.  Whilst these traditional venues have positives, sometimes having a large space in a co-working facility can provide more flexibility, especially if you want to mix some presentations in or have something included that involves high speed WiFi.  An event I spoke at in London last year where we took over the common space after 5pm and brought in catering, but folks could come early and get work done.  This increased our turnout as compared to a restaurant booking for the same event type and time.

Notice that none of these use cases involved a continuous dedicated use of a reserved spot in a single building.  This is the difficult balance that these co-working spaces have to manage.  They desperately want you to sign a long term sub-lease for a portion of their space as it gives them guaranteed revenue to pay their bills, but the fact is that because of work from home and globally distributed workforces, the real ‘customer need’ is for high levels of flexibility.  It will be interesting to see how we see this play out over the coming years.  Will platforms be the answer?  Will we see more consolidation into big global brands?  Will we see more creativity in the pricing models - for example to have one company occupy a space M / W / F and a separate one on T / Th for the same space?

Would love to hear your thoughts, use cases and ideas as it relates to co-working or flexible office space.  I reckon we’ll be hearing more and more about this as corporate lease holders start to default and banks scramble to find revenue generation from these empty offices.