For commercial building owners, the opportunity to retrofit existing real estate into co-working spaces can open up an untapped revenue stream. Rather than having unleased office space sit vacant, these facilities can be modified into co-working sites and rented out to individuals or businesses with short-term space needs with more flexible leasing options.
How It Works
When an independent contractor or a business needs to lease an office, for example, it can be challenging to find an available space within budget and without signing a long-term lease with an extensive list of conditions, according to Brussels, Belgium-based Regus, one of the world’s largest providers of flexible workspaces with 3,000 business centers in 900 cities around the world. With co-working spaces, entrepreneurs can purchase time at a workspace according to their needs—whether it’s by the hour, day, week, month or year, depending on the co-working facility’s availability.
These facilities are fully furnished, professional office spaces that require no upfront capital or build-out costs to the end user, and many offer a variety of spaces from open to private (more on this to come). For example, let’s say American Express wants to launch a new app and needs additional space for a project team. Rather than signing a five-year lease and spending $2 to $3 million on a build-out and hiring a property manager to handle the logistics, the company can temporarily lease a co-working space that will enable it to accommodate 50 people for six months, then drop down to 40 or less until the project is complete without wasting space or capital.
Dollars and Sense
Sharing the cost of office space among a group of freelancers or a business signing on for a temporary lease on a project-by-project basis makes a lot of sense—so much so that it’s a wonder the trend didn’t catch on sooner. According to the New York City-based co-working facility provider, Coworkrs, modern companies are “high-concept and low-overhead” and don’t have the resources or timeline to set up their own office spaces. Further, the networking opportunities offered by partnerships forged in these dynamic environments can make the difference between a successful year and closing up shop.
“I think the appeal is just that it really makes sense at every level,” explains Shlomo Silber, co-founder and CEO of Coworkrs. “It makes sense on a business level, as far as being in a working environment. It makes sense from an economic standpoint because through the shared economy, through sharing all these costs, you wouldn’t necessarily have … access to printers and copiers and high-speed Internet and all the other amenities.”
Silber adds the social element is equally important because freelancers and nomadic employees of larger companies alike desire workspaces that help enable productivity and foster socialization.
Although the trend is still picking up steam here in North America, the model originated and has been vetted in Europe during the past 10 years where a shift in thinking about facility management and workplace provisioning has occurred, according to Erik Jaspers, director of product strategy and innovation for Planon, a Netherlands-based global software provider helping organizations streamline business for buildings, people and workplaces.
“When I look at Europe, where [co-working] started, the framework of thinking is: do I need to own all the workplace assets to serve the people in my company or can I be more flexible? Can I get away from a new lease by providing other types?” he asks. In other words, there is a whole new set of considerations within the facility-management world today that is challenging building owners to consider alternative sourcing of the workplace.
A Mix of Spaces
Co-working environments aren’t altogether different from traditional offices in that there are spaces for individual and collaborative work. However, the transient nature of the customer base means they will be geared toward diversity, flexibility, and the nature of the community or work being done within them.
PHOTOS: Courtesy of Perkins+Will/©Paul Crosby