Coworking Trends Continue to Shift
Until the recent acceleration in the work-from-home trend, coworking had become popular for a broad range of consumers. Coworking leases provided an optimal short-term office solution for freelancers and small startup companies as well as larger enterprise companies.
Many coworking spaces were also appealing from a design perspective. Their creative modern interiors typically included large common workspaces, private offices, and cafe areas that provided an ideal space for networking events.
Coworking Companies Struggle to Adapt
In the current environment in which pandemic concerns are paramount, many coworking tenants are opting to work from home and canceling their short-term leases. This has put pressure on many coworking companies that still bear the burden of their long-term lease liabilities.
Many companies are trying to reassure their remaining tenants that they have introduced strict measures in terms of disinfecting surfaces and nightly cleanings as well as social distancing and mask-wearing policies. They have also re-designed common areas and re-directed office traffic to ensure social distancing guidelines can be followed.
It remains to be seen which companies will be able to withstand many months of reduced revenues as the pandemic continues. Companies such as WeWork that were already suffering financially prior to the pandemic will likely struggle to stay afloat.
Long-term Prospects for Coworking Remain Bright
It is widely accepted that the accelerated trend towards working from home will most likely continue into the post-pandemic world. Ironically, it is very possible that coworking spaces that are currently struggling will be the long-term beneficiaries of this work-from-home trend.
As larger companies that used to rent large office spaces start to reduce their long-term office leases and encourage part of their workforce to work from home, it stands to reason that they will move some of their employees to coworking spaces. The short-term leases will be especially appealing while the economic situation remains uncertain. This trend is likely to continue and accelerate into the future. According to JLL’s recent predictions, flexible workspaces that currently claim 5% of the commercial real estate market are expected to make up 30% of this market by 2030.
Coworking History: Coworking Moves into Enterprise and Luxury Markets
Prior to the pandemic, two important changes had occurred in coworking. First, coworking spaces that were once occupied by unconventional freelancers and small startup companies were starting to become mainstream. Mid-size and enterprise businesses like Microsoft and Salesforce were increasingly renting coworking spaces as they expanded their businesses.
Secondly, the coworking trend had expanded into the luxury market. Many new international coworking companies such as Soho House, Neuehouse, and The Great Room were founded to provide upscale workspaces with amenities usually found in a high-end luxury hotel or an airport business lounge. These luxury spaces provide larger work areas, more private offices and more quiet areas, albeit at a higher price point. Some of these spaces are so expensive and exclusive that they are more like private clubs, with an emphasis on networking and social events.
Future of Coworking Design: The Gig Economy Meets Social Distancing and Luxury
It seems clear that going forward the current attention to hygiene and social distancing in coworking spaces will continue and in many cases lead to changes in interior design. Instead of a focus on common lounge areas that encourage social interaction, there will be a shift to room designs that allow for social distancing. In addition many common areas and shared offices will probably be converted into private offices.
At the baseline, each coworking space will likely meet the new basic standards: a flexible lease, social distancing design, hygiene measures, and private office options. In addition, diversification in coworking spaces will continue to evolve to meet demand and increase consumer choices. Each workspace will have its own features, geared either to startups and freelancers at a lower price point or to more affluent clients in the luxury market. Choosing a coworking space will increasingly resemble finding a hotel, based on its price, design, location, features and amenities.