2017, may perhaps, have been the ‘Year of Co-working’, as the industry witnessed several large corporates such as IBM, Microsoft and Verizon jump onto the co-working bandwagon. The addition of 18,900 co-working spaces boosted the industry with nearly 16 % growth in comparison to the 12,100 co-working spaces in 2016. As per industry estimate by the end of 2018, 1.7 million people of the entire workforce in the world would be congregated in about 19,000 shared workplaces. It is forecasted that in the U.S. alone, 65% of the total firms are expected to adopt co-working spaces as part of their office portfolio by 2020. Another study, 2018-2022 Global Coworking Forecast, predicts that an average of five million people will be co-working in 30,000 shared workplaces around the world in 2022.
Thus, it is no wonder that with the implementation of new workplace organizational strategies a positive shift, with an accelerated growth in co-working space is seen.
The rising popularity of co-working spaces
With the introduction of agile and dynamic workplaces, corporates today have started to focus on employee well-being and increase in productivity. Many organizations have opted for alternate workspaces as satellite offices, to provide employees residing away from the office and in suburban areas with an opportunity to work remotely. This has led to greater productivity, reduced absenteeism and staff turnover, besides a greater sense of job satisfaction. Corporations have also come to an understanding that creating an office that increases employee interaction, positively impacts the work environment.
Benefits of co-working spaces
Firms have realized that devolving their asset portfolio contributes to reduced building operation and management costs. Divesting real estate resources and acquiring end-to-end turnkey solutions has paved the way to greater cost-optimization for larger firms. Evaluation of companies with full-fledged headquarters, found that shifting towards a co-working model benefited them with 40% reduction in infrastructure and operational cost. Additionally, the monetary gains accrued by the flexible leasing option of co-working spaces allowed firms to reduce fixed assets.
Geographical and new market expansions are time-consuming, expensive and tedious. Organizations are expediting expansion plans with strategic business measures that include operating out of shared working spaces to understand market scenario, competition and further scope for expansion. Flexibility in leasing provides businesses with the right incentive to measure their scalability options.
Recruitment and Retention of Talent
The entrepreneurial mindset of the millennial workforce demands independence and a workplace devoid of rigid operational structure and processes. Supplementary perks including recreational spaces, networking possibilities and energetic office environments are also recognized as mandatory inclusions in the new workplace. A co-working space addresses all these requirements, the direct fallout of which is greater job satisfaction, better firm loyalty and reduced attrition rate. Being in collaboration with individuals from different areas of expertise also increases the quality of talent. According to a study conducted by Harvard Business Review in 2017, employees’ identities were enhanced when working among people with varied job roles.
Co-working spaces are generally situated in prime real estate locations, with good connectivity, mix of retail and recreational options. An organization looking to be situated in a prime location, can do so, without making expensive infrastructure investments, by entering into contract with co-working space operators for offices at prime locations.
The future of the industry
Today, with increasing competition in the office space spectrum, most co-working space providers are proactively seeking service differentiators to expand their business. In a bid to increase revenue share, co-working spaces frequently rent out space to industrial forums and event organizers to conduct corporate events, conferences and hold round-table meetings. Yet, the fact cannot be overlooked that co-working has become a facilitating medium that has essentially helped corporates battle high attrition rates, utilize space efficiently, encourage collaboration, provide a positive atmosphere for creative thinking where conversation and ideas can flow freely, encouraging an environment of gainful ideas and re-establishing connect with employees.
Similar to the previous financial year, expansions will be the mainstay of co working operators. From startups to major corporates like WeWork, CoWrks, Knotel, all flexible workspace providers are looking to open additional workspaces and expand their existing portfolio. With an increase in demand for such spaces, tech giants like Microsoft and IBM are collaborating with workspace providers to boost the industry into higher profits and better turnover in the years to come.
This shifting workplace trend has also increased the demand for niche office spaces prompting third party providers to take stock when investing and pitching for potential clients. The market will eventually see greater competition leading to consolidation and many players exiting the business. More and more workspace providers will try to improvise their community building practices to help boost loyalty and give greater benefits to consumers.
Thus, by dint of co-working space, the workplace will become more than a regular office space – it will become a place to co-exist and thrive.