The pandemic has not only accelerated a global digital transformation, but it has also helped to speed up innovation, including within the world of coworking. We are now facing a new reality where it is looking more and more certain that traditional office spaces are going to become obsolete. That is why we are seeing more and more coworking and flexible office spaces popping up. Let’s have a look at some of our coworking trends and predictions for the year ahead.
Aligning Needs
Although remote working has been a big part of our lives recently, many businesses don’t plan on enforcing this moving forward. A new ‘flexible’ approach seems to be the most popular option, which is all about making the office space suitable for when employees return. The focus is on reevaluating the office in order to encourage company culture and drive the recruitment of talent.
The changing role of the office means that there needs to be realignment between the landlords and the tenants. Rather than square footage being the priority, companies are more focused on how the office space performs. Landlords need to consider how their space is going to deliver a positive experience.
A coworking space throws another element into the mix as previously landlords have used third-party providers to offer a flexible space for tenants. Coworking operators are moving towards management agreements though, which means traditional leases are out of the window. This leaves landlords wondering what to do with their vacant flexible space – they are launching their own!
Why Building Owners Are Shifting Towards Co-working
As the flexible model continues to expand, the relationship between building owners and co-working operators is changing too. The likes of WeWork (a long-term lease model) helped to reduce vacancies initially, but rent rates went through the roof. Coworking tenants were similar to other office tenants. Then as the market changed, and business owners needed a short-term stopgap building owners moved towards the flexible office and co-working spaces.
Here are some of the other reasons we have seen a shift in the coworking trend:
1. A gap in the market
At the end of the day, happy customers = more profit. The same applies to tenants too. If a tenant has a positive experience of renting business premises, they are more likely to renew their lease when it comes to the end. Rather than being rigid and providing no flexibility, landlords are realising they have to create more flexible office spaces if they are wanting to retain their tenants.
2. Access to more dynamic tenants
Running a coworking space opens up business premises to a whole new market. Think entrepreneurs, start-up businesses and freelancers. Not the traditional target audience you would attract with fixed office spaces. However as they will have occupied the space from the start of their journey, as their business grows and the team expands, they will need to sign a larger lease.
3. Fewer fees
The high risks associated with coworking operators moving toward management agreements mean that landlords are taking the plunge with setting up their own coworking spaces instead. Of course, we still don’t quite know how the pandemic is going to affect this shift, but it will be interesting to see.
Leading The Coworking Trend
The building owners that are already running their coworking spaces are the early adopters, and they are growing their portfolio fairly quickly. Here at McCue House as we are still in the initial phases of development we welcome your suggestions on how you would like to see our coworking space work, and whether there are any other facilities that we can implement to help grow your business. Feel free to give us a call on 01472 287766 to find out more.