Why Co-Working Firms are Primed for Success

Co-Working firms have gotten a bad rep over the past few years. The downfall of the once hot startup, WeWork, has made co-working firms synonyms with being overvalued and overbuilt, but will things change in the post-Covid economy? 

Covid-19 showed that many companies can have their employees working from their living rooms and be just as productive, and in some cases more effective, than when they were working in the office. Though, going forward employers will not want to give up the synergies, spontaneous interactions, and camaraderie that many office environments produce. A recent study from Microsoft shows that employees who work from home are more likely to contact current team members, but less likely to get in contact with new ones. A pitfall of the work from home model.

Yet, in a race to attract and retain top-talent, employers will be forced to continue to provide flexible work from home policies as many employees have become accustomed to not commuting an hour each-way five days a week. A ritual that anyone will be reluctant to go back to. 

The trend towards remote working has already been underway for two decades. In 2018, 1.54 million people worked remotely in the U.K., a 74% increase over the prior decade. While this trend would have continued without Covid-19, the pandemic has forced the issue to the forefront of challenges and opportunities in commercial real estate. As we enter a post-Covid world, companies are now starting to ask questions such as whether or not traditional centralized headquarters that are costly to company’s balance sheets are worth the expense? Can workers be just as productive only coming in three days a week? How does this effect mentorship? Are our employees as productive as before?

According to Instant Group and Hickey & Associates 57% of employees want to work closer to home and 77% of office workers have said that having an office located more conveniently to their home is a necessity in their next job. It is becoming apparent to corporate executives throughout the western world, whether they admit it publicly or not, that in order to attract and retain the crème de la crème of up-and-coming talent, they will have to provide flexible policies for how and where people can work.   

A relatively new working model that is being floated that can benefit workers, save company’s money, and help increase demand for co-working space is the hub-and-spoke model. The hub-and-spoke model is a setup where companies rely on a central business district headquarters, the hub, for important meetings and events, and a web of smaller regional offices for employees to have a professional setting to work in if-needed, the spoke, but near where workers live.

The hub-and-spoke model may specifically work well for enterprise tenants, medium-to-large companies. A company may theoretically downsize their central business office space by 40% and buy some of their employees that don’t need to come in five days a week an annual subscription to a co-working firm like a WeWork or a Regus. When there are large company-wide presentations or gatherings, employees can come into the company’s headquarters. On most days though, employees can work from home. If employees have a client meeting and need a conference room or on some days want to interact with other professionals, they can then go into a co-working facility that is within a ten or fifteen minute commute from their home and use an already built out office space that is suited to their basic professional needs.

The hub-and-spoke model provides teams with access to office amenities, but closer to where they live. Giving employees the option to work closer to home a few days a week, rather than solely at home, helps to alleviate some of the pitfalls of remote working, poor collaboration and a lack of mentorship, but still keeps some of the benefits of working from home such as less commuting and stress, that can lead to higher productivity.   

Company’s are only as good as the people that work in them, that is why attracting and retaining top talent is always a priority for organizations. According to a recent survey conducted by Paul Mizen and Shivani Taneja at Nottingham University, working in the office three days a week was the most popular choice for employees when given an array of options from working from home 100% of the time too coming into the office five days a week. Employees regarded the perk of not having to come into the office two days a week as worth about 6% of their wages. 

A hub-and-spoke model can provide companies with a way to attract and retain the best employees by not only offering them the highest salaries, but also offering them the flexibility to work where and when they want to some of the time.  For instance, maybe an employee will only be required to come into a central business district office one day a week and can work in a satellite office location the other days of the week. That satellite office location may be near an employee’s home, but let’s say an employee wants to go visit a friend in Denver for part of the week, if a company has bought that employee a subscription to a co-working firm, now that employee can work in a WeWork location in Denver for the remainder of the week. 

While this idea may seem alien and abhorrent to those who grew up in the corporate culture of the 1990s and 2000s, having flexibility to work in different locations will not only become a perk but an expectation for many talented younger employees. They believe that as long as they are just as productive, they should be given the option to work where they want to part of the time. 

While no-one for sure knows how work environments will continue to change over the next decade, it is clear that work from home policies will continue to be commoditized, like a salary or health benefits, that employers can and will use to lure talent to their organizations. While employees continue to put more value on work from home policies, co-working firms will continue to see a resurgence as they fill a niche for allowing companies to have their employees work in different settings at various times.