Around 10 years ago I opened a coworking space in Grove Street – by Jersey City, NJ. The purpose was to create affordable office space solutions to freelancers. My husband and I rented 1500 sq feet – and soon we had 10 tenants occupying the space. We had to close the business despite the fact that my rent was paid up. Simple reason, saw the real estate aspect of coworking. So when my lease came up for renewal he made it hard for us to renew. I am so grateful that he did, because, we realized coworking was not just for the entrepreneur or freelancer, it made more sense for big companies.
Within a year WorkSocial became home to large tech firms and their cohorts. Over the past 3 years, larger companies are now on a wait list for the benefits of locating to Jersey City and get “Powered by WorkSocial.”
Sixty-five percent of the companies expect to use coworking as part of their office portfolio in the Americas by 2020. JLL, a major brokerage firm, predicts that by 2030 up to 30 percent of all office space will be, in some form, flexible or have an open layout design. The report cited a wide variety of factors for switching to the coworking office space approach, from financial incentives to a need to spur collaboration and innovation.
Over the last several years there has been a steady stream of announcements for new corporate headquarters. In order to improve productivity among millennial employees, Pricewaterhouse Cooper (PwC) recently converted all of their US offices into open layout coworking spaces with no assigned desks. Apple, Google, Facebook, Linkedin, GE, SalesForce, American Airlines and Workday all completed or unveiled plans for new offices.
Even big companies trying to enter into new markets usually start with relatively small and agile teams. In these scenarios, shared workspaces make sense in order to keep costs under control and the logistics easier. Even as the office scales, a rapid team expansion favors adding space on-demand. Uncertainty around team growth rates can sometimes push companies, such as American Express, Merck and Business Insider, to look for semi-permanent spaces. This would allow them to give their employees the same feel of a fully-stocked, traditional office environment, but without the traditional five to 10-year commercial office leasing commitments.
According to Zoltan Szalas, who is the head partnerships at the coworking app Croissant, “Corporations are recognizing coworking as a viable option for their employees. There are a lot of benefits for a corporation to divest real estate and use a complete end-to-end turnkey solution like WeWork or Knotel.”
Croissant has been seeing demand and building a new product that caters to a different type of corporate worker. They have been targeting the remote and traveling employee segments. Consulting firms like McKinsey & Company have thousands of consultants who travel three or four days a week to client offices. They are essentially building an end to end solution for the remote and traveling employees.
“Croissant helps these traveling consultants on the days when they are not working onsite to replace the lackluster coffee shop experience with flexible curated workspaces, where they hop into private meetings with clients and book a conference room through the app,” Szalas said.
The demand for shared office coworking spaces is surging in the US and around the world, with several mega corporates over this past year deciding to jump into the game.
A number of factors drive the demand for co-working. Telecommuting work keeps growing, and independent workers — contractors, developers, freelancers and the like — make up a bigger part of the of the growing labor force. Corporations are able to see opportunities in the growing coworking space trend. They are able to tap into the local innovation and recruit top talent by partnering with coworking spaces and forming partnerships to provide startups with resources; while at the same time keeping their eyes open to new and potentially disruptive technologies that could either be competitive or useful as an acquisition target.