Is flexible workspace on the brink of crisis or set for coworking 2.0?
The financial troubles of WeWork have obscured the underlying strengths and bright prospects for the coworking sector as a whole, as new analysis from architectural firm HOK suggests
As WeWork stares into the abyss, what’s going on in the coworking sector?
Despite taking a substantial business hit during the lockdowns of the Covid-19 pandemic, the flexible workspace market was all set to grow rapidly off the back of more flexible working patterns with WeWork as its flagship operator, big, brash and universally recognised. Corporate occupiers and landlords were gearing up to get in on the act alongside start-ups and entrepreneurs. So why all the talk of crisis in the sector right now?
Confident forecasts
Back in 2020, amid the most difficult trading conditions imaginable, a global coworking growth survey from Coworking Resources confidently forecast a doubling of coworking spaces worldwide to more than 40,000 by 2024.
When WORKTECH Academy analysed the sector with architects AFK two years ago for a research paper entitled ‘The Future of Flex: Flexible Workspace in the UK post Covid-19’, the prediction was that the flexible workspace sector could grab as much as a fifth of the total UK office market by 2023. The omens for coworking looked good. There was wind in the sails.
However, the news that WeWork’s potential collapse could pose a £3 billion threat to UK landlords alone (it has 56 British locations) makes it easy to see why the flex market might start to feel a bit deflated. According to The Wall Street Journal, coworking clients everywhere are cancelling their WeWork memberships at a faster rate than expected.
Cool heads needed
So, is WeWork a weather vane for how the sector is faring? Or are its current difficulties more intrinsic and internal to how it operates as a business and not indicative of coworking as a whole?
The situation calls for cool heads and a clear perspective. According to architectural firm HOK, which has just published an analysis entitled ‘How Coworking and Shared Spaces are Impacting Work: Navigating the Post-Pandemic Opportunities’, there remain considerable grounds for optimism. WeWork could, in effect, be a false flag.
HOK’s authors of the report, Steven Burgos, Nambi Gardner, Kay Sargent and Danielle Schmitt, support a forecast that the market will nearly triple from a US $14.3 billion market last year to US $37.4 billion by 2028; they also quote a JLL prediction that flexible space will represent 30 per cent of all office inventory globally by 2030 and assert that ‘Coworking 2.0 has arrived’.
Trends driving growth
What lies behind these bold claims for the sector? HOK’s analysis identifies several trends set to drive growth. Coworking is undeniably a great company fit for the hybrid working model. Younger employees want in-person opportunities for mentorship and coaching rather than fully remote set-ups. And coworking is seen as synonymous with collaboration and community, which corporates are seeking to foster.
Then there is the scope to achieve efficiencies of space use with shared spaces, incubators and innovation centres to counter low occupancy rates inside company offices, and to improve experience with workplace experience managers and curated events.
‘Coworking space is leading the workplace charge from city centres to the suburbs…’
Coworking offers more flexible leases, which attracts a wider range of organisations, and negates the need for swing space during office renovations, according to HOK. Both of these factors support agility and reduce logistical challenges. Coworking space is also leading the workplace charge from city centres to the suburbs and from business districts to former retail malls, expanding access to talent while fostering community among dispersed teams.
In short, the bigger picture around coworking and shared space is more nuanced than the headlines around WeWork’s financial troubles might suggest. Globally, the flexible market is richly diverse and multi-faceted with many players, platforms, partnership and niches serving client needs.
One might charitably conclude that the crisis in coworking could well be confined to one large, over-reaching flexspace behemoth. Elsewhere, given a fair wind, things could go just fine.
