As coworking adds more offices there is BIG a hidden benefit for freelancers and remote workers
It’s easy to fear what’s new.
Not too long ago the Atlantic published the findings of a breakthrough study from Chapman University, finding people feared technology and future trends more than death. One of the co-authors summarized his observations well saying, “people tend to express the highest level of fear for things they’re dependent on” and “don’t have any control over.”
As owners who’ve also been active coworkers throughout the years, it’s easy to mourn the loss of more pure communal spaces. After all, the trend in coworking since 2012 has been to add more and more private offices into new shared offices and we can’t control it. In Denver alone, 87% of new coworking and shared office environments are made up of private offices.
It’s easy to take a stance of ‘the old good times‘ view: less communal work areas means less space in which individual remote workers and freelancers can hang out, brainstorm, casually relax while getting work done. Is this how we treat the foundational members that built the early coworking movement?
You could see that–or–you could see the new beneficial shift happening before our eyes.
I’ve noticed this growing trend as I continue to consult new coworking spaces around the US. And it can be good for the individual coworker.
Offices Make The Revenue. Individuals Spark the Vibe.
The hard work for any business is the pursuit of increasing revenue while decreasing risk. The simple truth is that offices are an easier sell than coworking spaces because they rely on taking part in an established market versus creating one like individual coworking. In the foreseeable future is going to be true.
However, people don’t want a spot of just private offices.
This is where collaborative spaces come in, serving the original purpose of coworking. Owners want (or need) 10 – 15% of their marketable space to provide the activity to make it feel like the coworking communities they read about in the media. The good news is they don’t really need to make money off of this collaborative space in order to drive their business models. It can almost become a side revenue, a little extra gravy to the bottom. The intangible benefits to the greater whole is really the bigger benefit.
Think of it this way: the trend of coworking serves as its own marketing. Newer and cooler compared to traditional executive suites (and arguably better than long-term leases in meeting the needs of the modern flexible business world), it provides foot traffic that leads to profit. Far from kitsch, it adds value one can count.
Currently, coworking spaces are able to charge a premium, around $350 to $700 per desk in an office (think $1400 to $2800 for a 140 sq. ft. office!) If places are hovering around 90% offices, this generates more than enough revenue for covering operations, allowing for reasonable profit, and cushioning for downturns.
People Are the Difference, Not Affordability
People, in turn, spark the vibe in coworking space and give it a living community. Space owners don’t want their spaces to be just hallways and offices. They want that vibrant activity and chatter that had members avoid their home offices in the first place. In order to deliver on this coworking promise, spaces are providing full time coworking members the lowest prices I’ve seen in the last 5 years. For example, in Denver, some high-amenity spaces are selling full-time access memberships as low as $99 a month.
Creative Density in Denver used to be the affordable option for individuals at $250 a month for 24/7 access. Up until a year ago most full time coworking plans had cost between $300 and $350 a month in Denver and most of the bigger cities in the US. The new spaces relying on offices are undercutting all of the other coworking spaces while leading the wave of low-cost, high amenity spaces.
Overall, this is good for coworking. It’s a maturing industry. This competition will force all of the coworking communities to differentiate based on personality, vibe, valuable relationships, events, space design, etc. This is great news for remote workers and individuals that want better spaces and more affordable rates. Coworking spaces can still be gathering spots for friends to come together and work in small spaces but there will be competition on other fronts.
Community: The Past and Future of Coworking
This trend doesn’t mean all of these new spaces will corrupt the shared office ethos by capitalizing on uninhabitable leftover space and call it coworking.Most of these new spaces are 20,000 to 40,000 sq. ft. Once you take away hallways, bathrooms, conference rooms, etc from the equation there is still around 2,000 to 3,000 sq. ft. for individual coworking and collaborative areas,the same size at which most coworking spaces started 10 years ago.
The Question and the Challenge
The big question is whether community managers can still create and tend to that communal aspect that most individuals seek after being cooped for hours in a small carved-away portion of a larger space. That’s the challenge.
Another development: It’s also possible new large spaces will nurture a marketable segment of buyers more desirous of high-end amenities at good prices than any high-brow concept of cooperation. You can be sure I’ll be watching how the he US market unfolds and provide pressing information on how you can best adapt to create community.
Adaptation is the key term in these times. The dynamics of the modern coworking space is alive, just like the people who inhabit them. Therefore, overseeing positive change and adjustment will always be a necessity.
Look for the next post, where I’ll be coaching small spaces on how best keep costs under control in the midst of competitors, and larger spaces, over 7,000 sq ft., on how to best achieve the best economies of scale in order to attract coworkers before the intangible benefits of coworking are be realized.