Coexisting With Coworking
Coworking in Chicago’s West Loop has the look and feel of a company that would
rank as a best place to work: loft ceilings, exposed brick, a skyline view from
the rooftop deck, and on-site happy hours. But most of the people there don’t
work for Onward. They’re entrepreneurs, freelancers, telecommuters, and other
professionals working outside the traditional office environment. They’re
is renting shared office space — a workstation, office, or conference room — on
an hourly, daily, weekly, or monthly basis. It’s part of the broader sharing
economy, where technology helps connect people with things not commonly shared
with strangers — their cars, houses, tools, and even dogs.
real estate brokers aren’t losing million-dollar deals to coworking facilities,
but the trend could impact the industry in a few ways.
spaces like Onward are popping up across the globe. From 2011 to 2012, there
was a 93 percent increase in coworking spaces, according to Deskmag, an online
magazine that covers coworking.
economic factors are making coworking more common. Businesses are cutting costs
by shrinking their office footprint, especially in urban areas. They’re using a
more nimble workforce consisting of telecommuting full-time workers and remote
freelancers. In addition, barriers to becoming a tech entrepreneur are lower
than ever. The possibility of striking IPO gold on the next big innovation is
turning many would-be office workers into CEOs of their own startups. They’re
also looking for cheap space.
75 to 80 percent of the people who use our coworking space are entrepreneurs
who left a job to start their own business,” says Aron Susman, co-founder of
TheSquareFoot, a coworking booking site. “They’re looking to get out of the house
and add a social, collaborative element to their day.”
is suited for businesses or individuals who are overserved by traditional
commercial real estate brokers and leasing arrangements, but underserved by
hunting for space themselves. Most coworking takes place at dedicated coworking
facilities, but businesses with open offices, cubes, or conference rooms can
also rent their space on booking websites. (See table.)
changing makeup of the workforce is reducing the amount of office space
businesses require. In a 2012 study, Norm Miller, professor at the University
of San Diego’s Burnham-Moores Center for Real Estate, noted that office
utilization rates were roughly 180 sf to 220 sf per worker. In five years, that
number is expected to decrease to 100 sf, according to a 2012 CoreNet Global
survey of corporate real estate executives. As a result, office tenants may
factor in alternative work arrangements such as coworking when calculating
their space requirement.
advisers can suggest coworking to potential clients who are starting new
businesses. Renting coworking space frees startups from leases, giving them
more time to assess their space requirements and the viability of their
business plan. Independent commercial real estate professionals might also find
coworking to be an attractive alternative to working from a home office or
leasing a small office.
real estate professionals looking for new business should consider visiting
nearby coworking facilities, especially incubators or accelerators, a variation
on coworking for tech entrepreneurs. Uber, a ride-requesting app that has
raised $50 million since 2010, started in RocketSpace, a Bay Area accelerator.
The company now occupies about 25,000 sf of class A office space on Howard
Street in San Francisco.
coworking spaces can also give commercial real estate professionals a glimpse
into office design trends. A wider variety of office space at a coworking
facility can help draw a broader clientele. As a result, these facilities often
make creative allocations of space.
Look Before You Book
commercial real estate pros should consider coworking’s limitations before
recommending it to clients or booking space for themselves.
a highly touted and heavily funded coworking booking service, went out of
business in November 2012, five months after it received $7.8 million in
funding. The founders didn’t explain why they closed, but its shuttering calls
into question the need for similar services.
not all markets are seeing the impact of coworking. New spaces are popping up
across the globe, but they tend to be concentrated in urban areas where rents
are high. Tim Schaffer, executive vice president of RED Brokerage in Kansas City,
Mo., says coworking hasn’t impacted office space requirements in his market.
“In Kansas City, we have the luxury of liberally using space because rents are
reasonable,” Schaffer says.
LaMantia is interactive marketing manager at
the CCIM Institute.