Don’t lose sight of coworking. It’s part of the future of CRE.
Coworking is actually a central component of where we’re all heading with office space solutions, having shaken up the industry for the better. That’s because coworking, at its core, works. Workforces have been reshaped to give employees more of a voice, and now workplaces are following suit accordingly.
If you’ve only been paying attention to the category of coworking for the past six months, you’d think that this trend has come and gone. Veterans of the commercial real estate industry, however, will tell you that far from the truth.
Coworking is actually a central component of where we’re all heading with office space solutions, having shaken up the industry for the better. That’s because coworking, at its core, works.
You’re putting two sometimes three people into the same spaces. If you can fill those seats with happy, paying customers, you can make more money than ever found before from these same floors and buildings.
Companies value flexibility
Today’s companies, especially startups, are looking for something other than space to spread out. Many of them value first flexibility when it comes to office spaces, not wanting to sign long-term leases that landlords have typically called upon and demanded in exchange for the spaces clients identified and pursued.
As a result, coworking emerged as the best option for this middle segment of the market, who dealt with the noise issues and the space constraints as part of the deal they had bargained for. For these companies, they couldn’t possibly have grown their businesses as they have over recent years without a place like that to call home.
But even that reality is changing. With the success of coworking have come landlords rethinking how they divvy up their spaces and who they give leases to.
Recognizing the shift in thinking about workplaces, some landlords are more open than ever to negotiating for shorter leases directly with companies interested in taking on the full space for themselves. While many who have chosen coworking in the past as their best option would continue to opt for that solution, we believe that for some portion of the coworking market it was an inevitability, not a desirability.
So we launched FLEX by SquareFoot last year to accommodate and to address those who really wanted office spaces of their own with lease terms that made sense to them.
That’s just one other example of the flexible office solutions that have turned up over time. In addition, early last year, we acquired PivotDesk, a company that pairs up a ‘host’ and a ‘guest’ to share office spaces among themselves. It comes with fewer other companies and inherent disruption, but with the same coveted lease flexibility for the guest company.
There are countless other solutions available, too, for people to investigate and to incorporate. Coworking remains a viable option for many, and it will continue to appeal to the startup segment and small business owners who require a come-and-go creation.
With all of these new options available, I am optimistic that the best years of commercial real estate are ahead. For everyone. For a long time, we were trying to fit people into existing, available options.
That led to poor interactions and challenging transactions, in my opinion. Going forward, we can speak more often and more openly about finding the right solution for the right company. Instead of a focus entirely on the future of coworking, I predict an increased emphasis on all of the flexible options on the market for the first time – coworking being one of many to choose from.
That flexibility begins with and stems directly back to landlords’ willingness to negotiate and to work with companies to give them what they seek.
The rise in remote work
As we’ve seen the rise in remote work, landlords must grapple with, arguably for the first time, the value that having an office at all will bring to a company of a certain size. That captive audience is no longer expected to come to them wanting to be shown the ropes.
Companies that do elect to favor office space for their headquarters or for a distributed team in a different city are coming to the table with more in mind about what they want. Landlords similarly are meeting people where they are in their pursuits to mold and shape their spaces via customized build outs to modernize and bring the buildings into a different era.
Workforces have been reshaped to give employees more of a voice, and now workplaces are following suit accordingly. So it should come as no surprise that coworking is here to stay. We speak to countless people every month who swear by it.
But you can also expect that when coworking stops working for a certain company, and they grow into a space of their own, they’re not letting go of the amenities they’re used to, beginning with leasing flexibility. The landlords and brokerages that have awoken to this state of the game will win in the next generation. Continuing to operate in the traditional ways will only take you so far. Tenants won’t stand for it.