A decade ago, Steve Jobs introduced the new iPhone. It was met with skepticism, but today it’s practically a part of the human body. “There’s an app for that” are five words that changed the world. Today, we expect an app for everything we need before we know we need it, said Kane Willmott, co-founder of iQ Office Suites, founding partner and broker of record for Spire Commercial Realty Inc. and president of the Global Workspace Association, at CRE.Converge 2017 this week in Chicago.
This digital revolution untethered organizations from the way they’d delivered products and services for years. More importantly, it untethered you from the traditional desk and PC setup you needed to work. Now, work happens on your phone and on your laptop, and you’re free to move around the world without losing your connection to the office.
Apple, Netflix, Uber, Airbnb – these early adopters have capitalized on the digital revolution and disrupted business like never before (just ask Blockbuster, taxi cabs and the hotel industry). Coworking has created a similar disruption in commercial real estate, and particularly in the office sector, offering business-ready or on-demand space and elite amenities.
Side-by-side, the ease, condensed timeline and benefit of utilizing a coworking space are clear:
Coworking is not new – it’s just a new term for “shared office space.” Consider Regus – the company started in 1989 with one location. By 2010 there were 1,012 spaces; and in 2017, Regus had 3,000. WeWork had one location in 2010; by 2017, they had 160 – and are opening up to three locations a week.
So who is the coworking customer? Microbusinesses are defined as enterprises with fewer than five employees including the owner. They represent 92 percent of all businesses and, in 2011, accounted for 26 million jobs in the U.S. Beyond these small businesses, large organizations like KPMG, Deloitte, Conair, Adidas, Capital One and more are in coworking facilities.
Commercial real estate developers and owners need a coworking strategy, says Willmott, noting that the development of coworking facilities can’t keep up with demand. The benefit for CRE space is clear: developing a coworking facilities helps future-proof the asset and maximize underutilized space. Owners are able to meet the demand of a changing market, attract and retain new and existing tenants with a broader offering of amenities, establish new income streams and increase retention and immediate cash flow.
Tenants are willing to pay for flexibility, opting for a shorter-term deal. Companies want to grow and can’t project the space they’ll need in five years, so they are opting for flexible space that allows them to grow and reshape their space needs.
NAIOP and GWA will further explore the future of coworking and how it’s impacting office real estate at The Office Evolution conference, November 9-10, in Brooklyn.