Coworking: The Transformation of Office Space

Having been involved in the coworking for nearly six years, I'm often asked: "What is coworking?"

Or for those who are aware of the industry, they ask: "When do you think the market will reach saturation?"

The acceleration of entrepreneurism, innovation and growth from within economic development introduced rapid culture shifts and new jargon to the business world. No wonder many professionals find coworking confusing. 

So let me start at the beginning. Simply put, coworking is this generation’s version office space. It grew out of the need to create a sense of community in response to:

• Corporate downsizing,
• Increased W9 workers,
• The explosion of the gig economy,
• Advancement in technology to allow portable productivity (ie: 2005 laptop computers outsell desktop computers)
• Strategic economic development through building entrepreneurial ecosystems

“In a relatively minuscule length of time, coworking has gone from a part-time, small-scale venture to a global worldwide phenomenon. Today, we are nearing two million coworkers working from thousands of spaces all over the globe – spaces which were essentially unavailable less than twenty years ago.” ~ Alexandra Nicorici, “The History of Coworking,” Coworking Insights

Coworking Continuum

Coworking spaces and innovation-led communities run the gamut, from small fab labs to large flex spaces. No matter the genre, all focus on providing community, productivity and an improved work-life.

Here's a quick look at the continuum of coworking types and their definitions.

Innovation Lab/Fab Lab: Privately sponsored and funded to encourage innovation within a company.

Incubator: Shared space with training, marketing, seed money and technical support to grow new and early-stage businesses. Often grant-funded by private companies, municipalities and/or universities. 

Accelerator: Often financed by venture capitalists, business accelerators offer support services, mentorship, education, funding and access to supply chain resources for rapid growth companies.

Coworking: Often financed by venture capitalists, business accelerators offer support services, mentorship, education, funding and access to supply chain resources for rapid growth companies.

Flex Space: A hybrid workspace model within a coworking culture that combines all-inclusive pricing packages as well as traditional, cost per square footage options. Flex spaces often include corporate and entrepreneur members, as well as a range of industry sectors. This coworking model offers a modern work style while minimizing risks and capital expenditures.

Isn’t it just a fad?

Now that the coworking basics are outlined, let me address the prevailing perception is that coworking is a fad. The data clearly refutes this.

According to an August 2019 article on coworking trends, author Clarke Illmatical writes:

“Coworking spaces are shaping and defining office culture of the future. Why? Statistics have shown that these shared office spaces are more productive work environments. Whether a solo entrepreneur, burgeoning startup or employee of a corporation, people who work in coworking spaces are healthier, happier and more efficient. 

The changes of coworking in one room at a large farm table to a mix of dedicated desks and enclosed offices served as a springboard for the transformation of offices spaces. The following three coworking trends outline how coworking represents the evolution of office space.

Niche Spaces

Despite the ongoing publicity on WeWork and its inability to turn a profit, flex space companies, such as Cowork KCI, that focus on niche marketing experience growth and profit. By focusing on niche members, these spaces create a community of businesses that support each other and develop a shared economy.

Growth in niche markets and increased market segmentation serve as a sign that coworking is a maturing industry.

Evolution of Office Culture

In response to scare workforce talent and the desire for Generation Y and Gen Z to work remotely while living in the city of their choice, corporate America increasingly hires remote workers.

Big corporations like IBM, Verizon and Microsoft are testing coworking, even moving entire teams into coworking spaces. By positioning teams with technology resources and talent, corporations are able to give their employees access to innovation, education and talent with reduced initial real estate costs and increased flexibility.

As corporations continue to secure coworking offices for their remote workers, coworking will reshape the traditional office culture.

On-Demand, Plug-n-Play Options

Long, difficult office leases no longer make sense for project teams or start-up companies. Instead of flexible, all-inclusive lease options continue to attract workers to coworking models.

Entrepreneurs, small businesses and corporate workers appreciate the convenience of month-to-month leases, high-speed Internet connectivity and industry-specific amenities without the hassle of add-on charges.

The on-demand, all-in-one price business model has disrupted traditional price per square foot commercial real estate.

A disrupter in the office marketplace, coworking spaces are transforming the way people work. They represent a blend of the hospitality industry and commercial real estate. Interested to learn more? Contact me, Terri S. Turner, Partner, EnCorps Partners, LLC at [email protected].