RETOOLING BUSINESS MODELS Coworking facilities may emerge from the pandemic with a new look and a new way to service clients . “ While the concept is good , I think the model is going to be different , and the tenants are looking for different things now ,” says Walker . Prior to the pandemic , it had become a services war . Coworking facilities were offering workspace with perks such as an on-site chef and evening cocktail parties . “ That was fun , but ultimately , it ’ s still a place to work ,” says Walker .
Walker expects to see major changes as coworking facilities reopen . Certainly , health and safety will be front and center with new cleaning protocols and buffet lines that are replaced by prepackaged foods . Technology is going to be the name of the game . Users want flexible workspace that offers tech such as high-speed internet and the latest tech for things such as reservation systems . Many people will be drawn to coworking because they want to reconnect with others . Coworking facilities will need to foster a community , and for some providers , that will create an opportunity to develop specialty facilities , like those that cater to tech or professionals such as attorneys . “ Coworking spaces used to be generalists . In the successful coworking spaces in the future , we will see more specialty to create the synergy so that they can provide the services for that subsector user ,” says Walker .
Coworking providers have prioritized health and safety by increasing cleaning and sanitation , promoting social distancing , and improving HVAC systems . For example , WeWork has installed approximately 3,700 air-quality sensors in its buildings across the U . S . and Europe over the past year to track , verify , and proactively manage air quality performance across a range of designs , outdoor conditions , and space-use scenarios .
“ We ’ ve ensured these enhanced safety measures are visible by integrating more touchless elements for physical safety ,” says Greenspan . WeWork also was quick to launch two new products , its pay-as-you-go on-demand offering and a monthly subscription-based all-access product . “ Like virtually every business around the world , COVID-19 had an impact on our business , but it also created an unprecedented opportunity ,” says Greenspan . “ The pandemic accelerated our plans to further innovate and expand on our offerings in order to meet the moment for greater flexibility .”
WeWork has seen evidence of returning demand — and a growing appetite for flexible workspace — in its leasing activity . According to Greenspan , the company ’ s gross sales in Manhattan in 3Q2021 were equivalent to 20 percent of the traditional office market leasing , even though its portfolio accounts for only about 1 percent
COWORKING ' S NEXT ACT
of the total office stock in that market . The company has seen similar oversized trends in other major cities globally . In London , its gross sales accounted for 37 percent of office take-up and 13 percent of Paris ’ s takeup , while its portfolio of space represents approximately 1 percent of stock in both of those markets .
Employee Expectations After the Pandemic
78 %
52 %
25 %
< 1 day a week from home
34 %
Source : JLL
88 %
72 %
32 %
1-2 days from home
32 %
3-4 days from home
24 %
IDENTIFYING EXPANSION OPPORTUNITIES Although coworking providers clearly pumped the brakes on some of the aggressive expansion that was occurring prior to the pandemic , growth is once again returning with new facilities . Last April , JLL opened Orchard Workspace , a new 50,000-sf flexible office and coworking space at Brookfield Properties ’ MetroTech in Brooklyn , N . Y . Health club operator Life Time Group Holdings Inc . also is set to open its ninth Life Time Work coworking facility in January with a location in Chicago .
Property owners also are looking at coworking as an opportunity to unlock value in underutilized space . In some cases , coworking is still viewed as a viable option to reposition surplus or underutilized space . For example , Hudson Bay Company announced in August that it was partnering with WeWork in the launch of SaksWorks . The new venture will deliver amenities
87 %
74 %
37 % at select department store locations that include work and meeting spaces , café and restaurant space , retail areas , and fitness studios that will be available to members . The initial five locations include its Saks Fifth Avenue New York flagship store and Brookfield Place in New York , as well as Saks Fifth Avenue stores in Manhasset , N . Y .; Greenwich , Conn .; and Eastchester , N . Y .
Some industry observers expect demand to rise for “ near home ” flexible space options , which could create more expansion opportunities in suburban and secondary markets in the future . However ,
90 %
74 %
39 %
Full-time from home
10 %
A good work-life balance , less commuting , and a local work life
New flexible work options ( flexible schedules , 4-day work week , moving away from the city )
The permanence of new health standards
WFH Frequency Expected Post-COVID
coworking facilities also must deal with a new competitor — the home office .
“ It ’ s more socially acceptable for people to work out of the home ,” notes Walker . To compete , coworking facilities are going to have to offer really great technology . They also need to offer flexibility , such as the ability to occupy a private office one day or work in a collaborative area another day , she adds .
Given the disruption still at play in the broader office market , it remains to be seen just how significantly COVID-19 will impact the flexible workspace market . What is clear is that the shift to remote and hybrid working is creating both challenges and opportunities . And space providers , both landlords and third-party firms , will need to adapt their space , services and amenities to attract a workforce that is in still in flux .
Beth Mattson-Teig A freelance business writer based in Minneapolis
CIREMAGAZINE . COM COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE 23