With a decline in full-time corporate jobs and a rise in entrepreneurial activity the once tiny and industry-specific alternative workspace arena is beginning to grow at a pace much faster than ever seen in the past 50 years. Coworking centers are the latest evolution in alternative work spaces popping up mostly in urban or rural areas, mimicking fitness centers with their price packages, and expanding to serve not just start-up companies and entrepreneurs, but also freelancers and migratory working professionals beyond the typical technology-based industry user.
Coworking was originally coined to describe “computer-supported, collaborative work”. The term evolved to describe a style of working independently in a shared environment. A coworking space today is defined by three elements—(1) Multifunctional working/learning/social space, (2) a mixture of designated and undesignated seating and (3) participation by membership. CoMerge, a coworking center in San Diego’s financial district advertises “professional office space, conference rooms for meetings of any size and event space for networking, training and seminars.”
CoMerge and the rest of today’s innovative work spaces are catering to freelancers which make up 53% of users. Entrepreneurs and start-ups are the second and third major types of “coworkers” making up 14% and 9% of coworking space users respectively. Most users cited their ability to easily change workspaces as their primary reason for initially seeking out alternative workspaces. Sixty-two percent of those surveyed said they had no plans to leave their current center. The number one criteria coworkers used to select their coworking center are not the practical considerations of facility amenities or location. Those are secondary, in fact, to a center’s community atmosphere, opportunity for social interaction and networking.
Coworking centers evolved from innovations centers—where entrepreneurial endeavors met venture capitalist funding to form a concentration of ideas and advancements that could quickly be taken to market and accelerators—finishing schools for entrepreneurs launched by visionaries and industry leaders with rockstar reputations available to mentor and lead “classes” of selected students to success. Fundamental to these predecessor workspaces that are still around today, are their focus on collaboration, social interaction and networking. These elements benefit the coworking community at large as well as the coworkers individually by offering an exchange of ideas, knowledge, experience, resources and more. It’s easy to see why facility amenities which are pretty standard everywhere you go (internet connection & a variety of spaces for different needs) would be a secondary concern.
The Future of Coworking Space
The question of permanency with any development is answered with a look at demand and supply. In 1959, the first alternative workspace was developed out of a warehouse in Batavia, New York. It was called an incubator and its intent was to “stimulate commerce and rent empty space.” However, alternative workspaces as a trend didn’t begin to appear until the 1970s when computer power and sophisticated engineering sparked the dawning of the technology boom. These industries requiring incubation, collaboration amongst innovators, the sharing of resources and support were the basis for alternative workspace demand. But it was only the tech fields that alternative work spaces really worked for until recently.
Despite the recession and a lagging recovery, the number of alternative workspaces has doubled every year between 2006 and 2012. There’s been 83% growth in spaces worldwide from February 2012 to February 2013. The U.S. has the largest number of coworking spaces of any country, Spain has the highest number of spaces relative to population. Building owners would be happy to hear that the more coworking spaces present in one area, the more profitable each of them are. Monthly memberships are also up 117% from February 2012 to February 2013. Although 79 % of coworking centers are individually and locally owned, major companies are taking note and incorporating coworking into their operations and strategies. The benefits to established companies utilizing the coworking model range from forming new competitive advantages to discovering unconventional market analysis tools as the following examples illustrate. State Street Bank designed its internal work units utilizing coworking design elements. Farmers Insurance offered coworking space at no charge in order to better understand the millennial consumer. Marriott, Regus and Starwood are updating their business centers to coworking spaces and adding it as a new revenue component to their operations.
If there’s anything we can see from the emergence of coworking spaces it’s that they appeal to a wide variety of professionals from entrepreneurs to corporate travelers to telecommuters. They’re also redefining what a productive, innovative and modern work space looks like etching closed off and purely isolated work spaces into obsolescence. Even with the economy inching back toward full employment, technology is changing the work place in general with more people traveling and telecommuting than ever before. Major companies are downsizing and condensing offices, flexibility, mobility and reconfigure-abillity of space is becoming more important to both the employee and the employer. Not only are facility desirables being offered by coworking centers, but flexible payment plans and the soft stuff that can rarely be measured, but makes all the difference in the most successful work environments. You may have passed by one of these curious offices before, but from now on you’ll have a newfound appreciation for your neighborhood alternative workspace—the coworking center.
Lauren is a 2015 MSRE Candidate at the University of San Diego and California licensed Realtor for Blue Chip Realty Group. She appreciates her generalist education in all aspects of commercial real estate for preparing her to fully transition into the field and serve the business community as a knowledgeable leader and innovator. @Laurenderella