Co-working spaces are no longer places where a handful of start-up tech companies can fine-tune their next big digital idea.
They’re now evolving into communities for hundreds of thousands of small businesses in a myriad of industries – all looking to take their company to the next level.
These shared office spaces allow companies to have dedicated space to both work independently and collaborate with fellow entrepreneurs without the stringent terms of a typical commercial real estate lease.
This trend is booming in cities around the world – from Beijing to Boston. Chicago, for example, had just six co-working spaces in 2011 with a combined 163,000 square feet. Now, the total has grown to 41 locations with 868,000 square feet. One of the fastest-growing co-working spaces, WeWork, has 23,000 customers in 32 locations, about half of which are concentrated in New York City. Flush with $355 million in venture capital from its latest funding round, the company is now expanding internationally, moving into “high IQ” cities like Portland, Toronto, Berlin and Tel Aviv.
Co-working companies like WeWork typically sign long-term leases with a building’s landlord and then sublease space to small businesses and freelancers, ranging from individual desks to small offices, on a monthly basis. Small companies and start-ups that are finding their feet often prefer the flexibility that co-working provides over a long-term lease signed directly with a landlord, even if it works out to be more expensive, according to Crain’s Chicago Business.
The concept of co-working is growing and lucrative, as indicated by WeWork’s $5 billion valuation last December. Furthermore, freelancers are expected to make up 50% of the full-time workforce in the U.S. by 2020.
However, many large, multinational corporations have yet to reap the benefits of leasing small portions of office space to outside companies and individuals.
“Most office space that corporations own or lease is under-utilized for a striking 60 percent of a typical workday,” says John Hampton, Senior Vice President , Corporate Solutions at JLL. “Couple that with the changing nature of today’s work where the demand for space is more dynamic than the traditional lease with a fixed term of five or 10 years allows”.
Hampton says large corporations can evolve beyond co-working with a ‘pro-working’ approach that balances this shift in employee needs with a company’s office environment. Companies can put their under-utilized office space to work and connect with a vetted network of professionals (outside of their employee base) who need office space. This creates a real-time online marketplace for office space that streamlines the matchmaking process between excess or under-utilized corporate real estate and the professionals that require on demand workplaces.
“Pro-working is best applied to large companies who have lots of vendors, sub-contractors and partners that would benefit from working in the large company’s corporate office. This is not a new idea. Co-location has become a mainstream concept, as companies optimize collaboration and accelerate decision-making across their value-chains,” he says. “Therefore, a company can monetize its long-term, underutilized office space by leasing it to its vetted business partners, with whom they are likely to collaborate with every day. It’s also significantly more secure for those using the corporate space than co-working locations or Starbucks,” Hampton adds.
Think of a small, creative advertising firm working in the same office as the marketing employees of the large corporation it represents for a global brand launch. Or tax advisers on contract for a company working in the vacant space next to the in-house accountants during the weeks leading up to tax day.
“We all need a productive workplace. Co-working companies and large corporations will inevitability team up and provide more dynamic and productive work environments for the workforce of today and tomorrow,” says Hampton.