Coworking is Taking Over Enterprise. Here’s How.
There is no doubt that the way we view and approach work is rapidly changing. The coworking phenomenon has swept the globe and every business is taking note, especially enterprise organizations. To keep its workforce satisfied ‘big business’ must match the values of today’s workforce, which means examining long-overlooked and antiquated elements of conventional office life and modernizing them.
To procure and preserve top talent now and in the future, companies must exceed an employee’s expectations to ensure a long-term commitment. Comprehensive packages that offer individual autonomy, stellar benefits and a more progressive office culture will be the cornerstone of successful team building going forward.
As such, top organizations are diving deep into the coworking trend. Recognizing that it’s not going out of style any time soon, many institutions are investing enormous amounts of capital to create a new environment for their employees—especially in major American cities. Take Manhattan, for example. In an article from Commercial Observer, they explain,
“Since 2013, when there was only 3.7 million square feet of coworking space in Manhattan, the sector has grown 22 percent on average each year to 8.2 million square in 2017, according to the report. That number jumps to 9.2 million in the first quarter of 2018, representing 2.5 percent, of the 368 million-square-foot Manhattan office market.”
As for San Francisco,
“There is over 500K SF of coworking demand in San Francisco, Lee said. Coworking currently makes up about 2.6% of the office market, or just over 2M SF. The Instant Group Head of Marketing John Williams said coworking grew 13% in San Francisco last year and there is definitely more room for supply to come to the market. Among the providers to expand in the city have been Canopy, Werqwise, Spaces and Mindspace. The average coworking lease is about 29K SF.”
There’s also a shift in who is moving in. What was once an almost-entirely entrepreneur audience has now expanded to a broader clientele. Via Recode,
“Seven years ago, freelancers and independent workers composed nearly 80 percent of co-workers, according to survey data from consulting firm Emergent Research. Now they’ve shrunk to 39 percent, while membership from small and large companies has grown significantly.”
It’s the world’s largest corporations that are now taking over the game.
“Coworking spaces have been moving away from catering only to the startup and small business sector. Thus, companies like Microsoft and IBM have been renting WeWork spaces for their employees and testing more involved partnerships. WeWork now manages the entire building for IBM in Greenwich Village, and it runs Airbnb’s Berlin office as well as Amazon’s Boston office.”
And as Curbed mentions,
“Corporations are fighting for top talent, and using office design as a major weapon (witness the headline-grabbing redesigns of offices for Apple, Google, and Facebook.) Designers aren’t just creating an environment to place employees; they’re designing an experience that offers community, control, and empowerment to attract potential hires.
These innovative, collaborative spaces are the inverse of the corporate campuses built by midcentury conglomerates; instead of bringing workers to them, corporations are racing to accommodate urban creatives and tech workers, often open (or re-opening) branches in the urban areas where this talent tends to reside.”
And while corporate entities are growing in coworking spaces, there is still plenty of room for up-and-comers. Take Chicago, a city that has a slightly different approach. Although their overall market for coworking is growing, they desire to host ‘the next big thing’—seeking out established, yet growing, startups—instead of recognized corporations.
“We’re a good landing pad for companies coming out of an accelerator program… We like companies that are a little bit further along than a (person) with an idea. Like many industrial properties-turned-offices already completed in the area, the building was ideal for a tenant “that matched the entrepreneurial spirit of Fulton Market much more so than some of these larger co-working entities have become.”
Though the individual methodology may be a bit different, the growth proves the future of work will be led by collaborative workspaces.
Entrepreneur concurs; they explain,
“These new trends have been fueling WeWork’s new aggressive focus toward partnering with enterprise tenants. A spokesperson from WeWork cites a 90 percent growth rate in the number of enterprise corporation clients between June 2016 and June 2017, with a 360 percent increase of remote worker members from enterprise companies.”
It’s not just WeWork that’s dominating the space, however. The article continues,
“Even though WeWork is the biggest player in New York City, Jason Saltzman, the founder of collaborative space Alley, projects confidence. In June 2017, Alley announced a new and unprecedented partnership with Verizon, the world’s leading telecommunications company, which has allowed for Alley to open new locations in New York, Cambridge and Washington, D.C. The deal, dubbed “Alley powered by Verizon”, is more than a just a revenue sharing real estate deal, Verizon executives hope to benefit from a different kind of networking.”
And innovation is continuing to expand in other well-heeled sectors, too, Barclays is elevating their offerings with more than just a modified office space; juxtaposing today’s coworking environment with other amenities that boost its ability to build their brand into the future:
“In 2016, Barclays, the multinational bank, launched a fintech-focused accelerator space in New York called Rise that partnered with TechStars, which offers three floors of membership coworking space, a 100-seat auditorium and meeting rooms with video and podcast recording facilities.”
Similarly, as the idea becomes more mainstream, there is also a microcosm effect; niches that are built out as brainchildren of coworking, yet facilitate a need amongst a larger population, rather than just a singular business.
Take Milwaukee’s first ‘Business Lounge’ center; instead of gambling solely on one collaborative workspace to fill a large, multi-purpose space, the Hudson Business Lounge created a larger community around the awareness of coworking. Forbes highlights this model, sharing:
“Hudson Business Lounge is a 2-story, 10,000-square-foot facility along the main retail corridor of the Historic Third Ward, a revitalized warehouse district southeast of downtown Milwaukee. It was founded five years ago as a generic co-working space, to attract a professional class that’s been budding in this traditionally blue-collar city.
Since then, said co-founder Gary Lato, Hudson has become more all-purpose, moving away “from a typical co-working space, into essentially an events space, a shared office space, a conference center, and a casual dining café all rolled up into one.”
It’s not just the largest corporations that are getting into coworking; it’s the largest landlords, too. Interestingly, they’re not necessarily offloading the massive spaces that you may imagine—instead, more so, utilizing the current boom as a way to recoup post-recession losses.
As the WSJ notes,
“Coworking firms are one of the few sources of growing demand, a point stressed at an October investor presentation by Boston Properties Inc., one of the country’s largest office real-estate investment trusts. The firms accounted for 30 million square feet of absorption during the current cycle, or 9.1% of the total, said Owen Thomas, Boston Properties’ chief executive.”
According to another Commercial Observer article, Manhattan landlords’ have a desire to rent smaller spaces than they’re usually accustomed to, solely because of a shift in the way businesses are leasing office space,
“There’s been a shift in the small-user paradigm where players like WeWork are accommodating businesses that can be run out of a knapsack,” said Jay Caseley, an executive managing director at ABS Partners Real Estate and head of the brokerage and property management firm’s office leasing operations. “Several of our tenants are so-called graduates from that environment. When those people get tired of being in a crowd, they want to have some autonomy and privacy.”
Globally, there are many changes on the horizon as well— especially through partnerships between spaces like WeWork and major global funds like Japan’s SoftBank
“The swift rise of WeWork from its founding in 2010 has amazed followers and bewildered its critics, who wonder how a company centred around leasing office space could be valued like a tech firm. WeWork investors are betting the firm will dominate a reshaping of the global office market—where they see companies giving up long-term leases and embracing WeWork’s more flexible terms.”
The article continues,
“For SoftBank, a deal would help the Japanese conglomerate put more money to work from its Vision Fund, which is backed largely by Saudi Arabia and Abu Dhabi sovereign-wealth funds, as well as money from SoftBank.”
These groundbreaking opportunities for enterprise expansion are not without major potential pitfalls, however. Corporations must be keenly aware of how shortcomings could do more than just a little damage; they could, instead, crush the reputation, profitability or longevity of a well-regarded institution.
One major dilemma is the potential of another recession—having vast implications on the real estate market. And even though its popularity stems from post-recession ideology, future market instability could potentially cause catastrophic results—a situation much like the burst of the dot-com bubble twenty years ago.
And even greater than the risk of economic insecurity in the global market is the propensity for security breaches in shared workspaces.
Most organizations are beginning to understand the importance of improving upon their current workplace experience—as such, they’re curating an unknown future, which like with any new venture, will incur insidious issues.
The shift in the way we work presents many unique, new age implications when it comes to measuring the efficacy of coworking communities—especially when it comes to a matter of utmost importance: quality security strategies.
Traditional security solutions for enterprise organizations are difficult enough to monitor and rely on in an ever-changing techscape— innovative spaces bring many new challenges to the table for organizations that are looking to better their everyday office environment.
SC media, a publication dedicated to cybersecurity, recently expanded upon this, noting,
“While no one is completely sure what the office of the future will look like, one of the few certainties is that security will be at the heart of it and likely to evolve alongside the new technologies entering the workplace. Enterprises should remember that stronger security is needed to not only protect their employees but also themselves.”
When employees are encouraged to practice more self-sufficient policies like “B.Y.O.D.”— Bring Your Own Device— there is a possibility of major issues. Much like one employee coming into the office with a cold, an isolated illness can quickly turn into a full-blown pandemic, quickly.
These issues are such a major concern for enterprise organizations, that Canon U.S.A commissioned a study in 2017 to explore what “500 CIO and IT decision-makers” believed would be the most pressing concerns of the future. What’s their primary fear? The impact of individual devices connected to a shared network. The SC article continues,
“Enterprise solutions shared by multiple businesses in a coworking space can function as access points for managing and distributing intellectual property, consumer data, financial documents, and other private files.”
And although there are myriad encryption and protection measures that continuously evolve and are easily put in place, it is still, no doubt, uncharted territory—inevitably ending in a few cautionary tales. To succeed, institutions must put the protective procedures and policies in place immediately; setting a security standard that will safeguard them from inception.
Embarking on new terrain—navigating the landscape, discovering the most bountiful resources, adjusting to particular specifications—can seem like insurmountable tasks when you’re getting started. Developing the frame for the future of work is much the same. It takes bravery, determination and preparedness to conquer coworking. It also takes teamwork.
Organizational leaders must be ready and able to make the necessary changes to create a better future for their employees, enhancing their institution as a whole. There’s an exciting opportunity for businesses to thrive in a new way; those that fall behind will become less competitive—as employee satisfaction has major implications to a corporation’s bottom line.
Corporations like WeWork and their contemporaries will continue to flourish, enterprise organizations, landlords, human resource and tech professionals will all work together and collaborate in a more meaningful way—creating an ecosystem that is virtually brand new.
A solid foundational infrastructure created within this group is paramount for the effectiveness of enterprise coworking. As is their necessity to teach behind-the-times operations, slow to adapt to the future of work, the best way to progressively move forward.