After discussing the global impact of COVID-19 with coworkintel, the way workspaces will adapt in terms of purpose and design with Paperspace and the future of access systems with Welcomr, let’s talk about the crowd gravitating around coworking spaces. One of the questions in everyone’s mind is: will there be a new type of member joining coworking spaces following the pandemic? And if so, who will they be and how to adapt spaces to suit everyone’s needs?
Who better to answer all those questions than Adam Lis, Flexible Office Solution Manager at JLL. We invited Adam to share his expertise and perspective on the future crowd of coworking spaces aka employees of larger companies, who now have the possibility to work remotely and seek, naturally, a workspace close to where they live to avoid commuting and putting themselves at risk in public transports.
With Adam, we discussed how to attract and retain those “bigger’ fish by first understanding their needs.
Below the key takeaways of his talk.
“Coworking may be the biggest disruption to real estate since the invention of the elevator”
Adam started his presentation by talking about the concept of flex office, which actually started in the 80’s when Regus created their first serviced office. The internet boom, in the late 90s early 2000s facilitated, in 2005, the rise of coworking in San Francisco. Today, more and more operators are actually offering a hybrid model, that combines both serviced offices and coworking under one roof.
New Kid on the (office) block
Before flex offices came into play, landlords used to be in direct contact with their tenants, adding, along the way lawyers, real estate agents, and accountants. When flex operators arrived in the commercial real estate market, they suddenly started to act as the “middleman” between landlords and members. What became interesting in this new dynamic is that flex operators became both landlords and tenants.
- Landlord to their members, aka people renting spaces/desks from them.
- Tenants to their landlords, meaning the people and/or companies owning the building they are based in.
At first flex operators were rather ignored by landlords, mainly because they could not understand the concept behind flex offices but, thanks to large operators like IWG or WeWork, landlords started to get more familiar with the idea and, as a consequence, more receptive to leasing their facilities to people eager to start a coworking space.
Changing the nature of the demand
Where originally, most flex offices “consumers” were freelancers and/or SMEs because the model suited their needs, the demand has changed over time. We’ve actually learned, through Adam’s presentation, that the arrival of corporate companies into the flex market was actually already predicted… a decade ago!
But what drives Corporate companies into the flex world? According to Adam, 3 main factors:
- Flexibility and Agility: not just flexibility in size, but also in the length of the contracts flex operators are offering. Where traditional offices require corporate companies to lease for 5 to 7 years, flex operators offer more flexibility and agility. The other issue Adam raised is related to the time it takes to actually fit out the office to the needs of Corporate clients. With traditional offices, the process can take up to a year.
- Project and swing space: As a result, it is becoming more and more common for Corporate companies to lease office space in flex offices while waiting for their traditional office to be ready and use the space they get as a project-based type of space, dedicated to certain teams and/or certain projects.
- Talent attraction and retention: probably one of the key-strength of flex operators. Through the effort they put in the interior design of their space, making it look nice, cozy, clean and fun, it is easier for companies to not only attract talents to work there but also retained them (something we, at Coworkies notice every day through our job board targeted at coworking spaces and their communities).
40% of large flex operators such as Mindspace or WeWork consist of large enterprises
Through this figure, Adam reminded the audience that although attracting corporate clients sounds interesting, it is not for every coworking space. Due to the nature of their demands, not every space needs them and they can actually sometimes be a big disruption to coworking communities who are not familiar with this type of crowd.
But so, why would corporate clients be interested in going more and more into flex offices?
Aside from the flexibility it provides, which we talked about a few seconds ago, enterprise clients actually value and appreciate:
- The plug-and-play solutions offered by flex operators, simple and convenient for them and their employees. On the same day, the contract can be signed and their employees can start joining the space, which is far from being the case when dealing with traditional landlords.
- Getting easier access to innovation, because of the nature of coworking spaces usually being attractive to startups and makers, enterprise clients can suddenly access innovations they would struggle to find it not in a coworking space.
- *Building a sense of communit*y. A concept that has been long ignored by Corporate companies but that is becoming more and more attractive, especially for their HR departments.
- The lower cost flex offices provide, although sometimes, and as Adam reminded, flex offices can end up being more expensive.
The things larger enterprises fear in flex offices
There are, obviously, many things that are still preventing larger enterprises to fully consider flex offices for their teams and this is something any coworking operator interested in working with/for larger enterprises should be aware of and should tackle.
- Privacy breach
- Data protection
- IT compliance
- Security compliance
Adam then dug deeper into the topic, presenting the main flex scenarios they usually discuss with their corporate clients.
- Membership in external flex office centers: an option JLL uses to help corporate companies get familiar with the concept of flex offices but also to help corporate companies offer their employees lesser commuting times by allowing them to choose a workspace closer from their home.
- External flex space for projects and seasonal use: an interesting option for corporate companies who often work with consultants. JLL offers them the ability to rent a room in a flex space for those external service providers to use and send their employees to them instead of making them come to their office.
- Internal flex space for versatile use: when larger companies decide to develop flex space inside their own buildings, JLL often connects them with flex operators interested in managing the flex part inside their HQ for them.
- HQ within a flex space: this option, which applies usually to smaller enterprise clients, offers them the possibility to create their HQ within a flexible office space, mostly as a way to attract talents.
The service (re)volution
Looking at the side of the tenants, flex operators really helped them in changing the way they perceive commercial real estate. Thanks to coworking spaces and flex offices, tenants now understand that the office does not have and should not be boring. Workspaces can actually be environments where it is also possible to have fun, be it through interior design and/or through the events that happen in the space.
Interestingly enough, when landlords used to ignore flex operators in the past, they are now trying to catch up with them, understanding the model and finding ways to integrate it into their own facilities. According to JLL, it is even what the future office building will look like: a healthy mix between traditional offices, event and communal spaces, and flexible offices.
“Flexible office solutions are complementary to the traditional real estate strategy”
As a wrap-up, Adam gave a lot of food for thoughts for the viewers in the form of open questions:
- “What do large companies most often require from operators?”
Apart from the flexibility, Adam highlighted that they expect coworking spaces/flex operators to also understand their business and the type of security/compliance they might require/need when it comes to security but also to health and safety regulations. * “How to deal with the large company’s agent(s)?”
As most large companies work with agents, it can sometimes be overwhelming for flex operators to work with them. According to Adam, the best way to tackle this is by really working hand in hand with the agents, understanding that (s)he is here to help their clients with taking the best decision for them. * “How do large companies impact the member mix of a coworking space?”
As large companies usually bring 20 to 60 people into flex offices, it is crucial for coworking operators/flex operators to understand that they will want some privacy for their team. When it comes to community activities offered by the space, employees might join or not, a factor that depends on the company policy and regulations. Having such a big influx of corporate employees at once can also be badly perceived by existing members, as they might think your space is going too commercial and that they matter less to you then the big enterprise clients. * “What does it entail to have large companies in your coworking space?”
Good revenue stream and involving your lawyer and/or legal department in the process is key to a successful integration/deal as enterprise clients tend to go deep into details when it comes to contracts. * “When to say no to large companies?” * An important question that ended Adam’s talk. Depending on your space and what you offer, it is important to know when to say no to larger enterprise clients in order to preserve your existing community and avoid bad business relationships with larger clients. Saying no is also something companies like JLL really value because it proves that as a coworking operator, you really think about what you have and what you want to have.