Has the shared office finally had its day?

This year, the face of work changed for­ev­er. 2020 saw the dai­ly grind get a new look. Gone are office tea rounds and packed tube car­riages, replaced with Zoom calls and com­mut­ing to your liv­ing room.

The chal­lenges fac­ing the co-work­ing indus­try are clear: with more peo­ple work­ing from home than ever before, demand is reduced. And hit by the coro­n­avirus reces­sion, many free­lancers can no longer afford the spaces either.

Speak­ing to chief exec­u­tives, how­ev­er, the out­look is large­ly opti­mistic. Flex­i­ble work­space made up 0.5 per cent of total office space in 2014, grew to 7 per cent by 2020 and was pre­dict­ed to be 30 per cent by 2030. Co-work­ing is not dead; in fact, it might just be the solu­tion to many busi­ness­es’ prob­lems as we emerge from the pan­dem­ic.

Coworking spaces: the biggest challenges

Hygiene is a big issue for shared offices. Jitesh Patel, chief exec­u­tive of office design experts Pel­don Rose, explains that busi­ness­es now want pri­vate space and their own front door. This, of course, is a huge chal­lenge to co-work­ing spaces, whose very premise is built around shared space and social­is­ing.

Gabriela Her­sham, co-founder and chief exec­u­tive of co-work­ing group Huck­le­tree, which has sev­en UK sites, says mak­ing their venues feel safe is a top pri­or­i­ty. They have a clean­ing team of “life­savers”, who are spe­cial­ly trained in hourly COVID-secure clean­ing mea­sures.

But a drop in demand is unavoid­able. With pay-as-you-go con­tracts, cus­tomers can sim­ply choose to end their mem­ber­ship. Unlike tra­di­tion­al office space, where you might have a five-year lease, you’re not tied into a dif­fi­cult con­tract. As Tushar Agar­w­al, co-founder and chief exec­u­tive of office-find­er plat­form Hub­ble­HQ, explains: “The biggest ben­e­fit of co-work­ing spaces before the pan­dem­ic – flex­i­ble con­tracts – has been their biggest down­fall dur­ing it.”

Coworking operators: do they have the cash to survive?

Vacan­cy cre­ates a huge cash-flow prob­lem for the spaces, made worse by nation­al lock­downs. Patel pre­dicts 2021 will see increased vacan­cy, with the added loss of income from day-hire meet­ing rooms and event spaces, which are no longer in demand. But the biggest loss will come from small and medi­um-sized enter­pris­es of 20 to 30 peo­ple that will, thanks to suc­cess­ful home work­ing, realise they no longer need an office at all.

Oth­ers believe the drop in occu­pan­cy is over­es­ti­mat­ed. Huck­le­tree had the strongest year in its his­to­ry, sign­ing 120 new mem­ber busi­ness­es dur­ing 2020. Her­sham attrib­ut­es this growth to a long­ing for com­mu­ni­ty; it’s no longer about the need for an office, but about curat­ed com­mu­ni­ties, with skill-shar­ing, net­work­ing and team-build­ing oppor­tu­ni­ties.

Shared offices: the future of flexible working?

Flex­i­bil­i­ty is the key to sur­vival and Agar­w­al sees the future of co-work­ing as a hybrid-work approach, where com­pa­nies base their head­quar­ters at a shared space, but have lim­it­ed capac­i­ty. Com­pa­nies can cre­ate a week­ly rota of employ­ees who are present at any one time, allow­ing flex­i­bil­i­ty and cost-sav­ing, using a “cred­its” sys­tem.

He sees work falling into three “buck­ets” post-pan­dem­ic: a head­quar­ters, home work­ing, and on-demand space, such as with day pass­es. Not only is this a more cost-effi­cient way of run­ning your com­pa­ny, but it also enables greater flex­i­bil­i­ty.

Anto­nio Wedral, founder of ecom­merce spe­cial­ists Novos, is one chief exec­u­tive who has adopt­ed this approach. His team has grown by 50 per cent dur­ing the pan­dem­ic. They have a week­ly rota and allo­cate WeWork work­space cred­its to 15 staff, who book a desk to go in once a week. Opt­ing for his mod­el over a per­ma­nent lease, Wedral says: “This hybrid approach has saved us mon­ey on rent and our team love it; they get flex­i­bil­i­ty and we can con­tin­ue to grow our cul­ture despite the lim­i­ta­tions.”

Post Covid-19: are corporates the ticket to success?

Anoth­er trend which may ensure sur­vival is unprece­dent­ed inter­est from cor­po­rate occu­piers. WeWork is aim­ing for 70 per cent cor­po­rate occu­piers by the end of 2021, focus­ing on attract­ing cor­po­rate clients, rather than free­lancers and star­tups. There’s a shift hap­pen­ing and 76 per cent of For­tune 500 chief exec­u­tives say they are look­ing to reduce their office foot­print over the next five years.

Huck­le­tree has seen increased inter­est from cor­po­rate occu­piers, with com­pa­nies such as Face­book giv­ing their employ­ees a work-from-home bud­get, which can be used at co-work­ing spaces. Her­sham says it’s about struc­tur­ing pack­ages on an indi­vid­ual basis to a company’s needs and, as leas­es come up for renew­al, she thinks we’ll see a big shift in cor­po­rate occu­pan­cies.

She believes employ­ees want to be around inno­va­tion and edu­ca­tion and the appeal is clear as so much is offered by proxy at a co-work­ing space, with a cal­en­dar of events and net­work­ing oppor­tu­ni­ties. As such, co-work­ing spaces can fill a gap for cor­po­rate inno­va­tion in a cost-effec­tive way.

This may be their hot tick­et. With uncer­tain­ty cre­at­ed by the pan­dem­ic, big cor­po­rates are more risk averse than ever. Tak­ing a pri­vate office in a co-work­ing space is a less risky solu­tion than a ten-year lease in a tra­di­tion­al office.

Shared offices: a pilot for businesses?

Co-work­ing spaces can also act as a launch­pad to test con­cepts, such as satel­lite offices out­side major cities, where employ­ees have the option of work­ing clos­er to home. This hub-and-spoke con­cept has been accel­er­at­ed by the pan­dem­ic, with decen­tral­i­sa­tion of offices like­ly to be a com­mon theme in 2021.

Cata­ri­na King, who runs Society1 in Pre­ston, has seen a lot of cor­po­rate over­spill in their shared office space, as more com­pa­nies move their inno­va­tion hub away from Lon­don. Accord­ing to Hub­ble­HQ, 86 per cent of employ­ees want to work some­where oth­er than the office at least once a week, though only 15 per cent want to do so every day, and per­haps work­ing close to home is the next move.

It seems co-work­ing spaces may have a bright future after all. The office isn’t dead, it’s sim­ply tak­ing a new form that offers busi­ness­es of all sizes greater flex­i­bil­i­ty, choice and low­er risk, which might work bet­ter for employ­ees every­where.