Christelle Rohaut is an Environmental Engineer, Urban Planner & CEO of Codi, a tech company reinventing how we live and work.
WeWork, once considered a leader in coworking spaces, has experienced a downward spiral, which can be traced back to August 14, 2019. That’s when the company filed its S-1 in advance of an IPO and analysts noticed troubling year-over-year losses. According to PitchBook, WeWork reported a net loss of more than $1.9 billion in 2018—more than twice as much as the company lost in 2017 and roughly four times as much as it lost in 2016. WeWork is not alone. Female-focused coworking company, The Wing, having raised more than $100 million and boasting over 12,000 members at its peak, shut down abruptly last year after a string of controversies. More than just a cautionary tale for MBA students, these examples are an indicator of how much needs to change when it comes to professional office space.
As the founder of a tech company that focuses on helping companies build work hubs, I see firsthand that, despite the turbulence in the market, many businesses are still turning to coworking companies as an option for offices. Teams will always need spaces of their own to meet, share ideas and foster company culture, and the coworking experience can be great for certain kinds of businesses.
If you or your team are searching for a new physical office and are exploring coworking environments, here are three things to consider:
1. Ask about their lease agreement and any plans to move.
Many traditional coworking companies are built on a time-worn real estate standard: subleasing. A company enters into a long-term lease, then divides the space and leases out the portions, aiming to recoup the cost of the lease and profit thereafter. The problem is the risk factor.
This model requires a long-term lease with the property owners, but tenants are offered flexible, short-term subleases. That places all the risk on the coworking company, and it’s up to them to keep their spaces full enough to turn a profit. Some are very successful, to be sure, but it gets increasingly difficult if/when a company attempts to scale.
Therefore, you’ll want to ask your coworking representative how long the space has been in that location and how long they have left on their lease. Then, look around. If you see lots of open desks, you’ll want to dig deeper: Do they plan on renewing for the long term or are they going to move when the lease is up? If they move, you’ll have to as well.
2. Consider how much privacy and security you need.
By its very nature, coworking is a shared experience, complete with communal kitchens, bathrooms, common areas and conference rooms. There will be many other workers and visitors coming through the door who are completely unconnected to your business. In some industries and roles, this is a big plus. With new faces coming and going, there is ample opportunity for networking and business development. Many coworking companies lean into this feature and set up community events to spur engagement.
However, if you’re in an industry that requires an elevated level of privacy—finance or law, for example—keep that in mind. Many coworking offices are designed with a lot of glass to allow natural light to filter throughout the space. It can make the space more pleasant, but it also allows others to see into your office. If you do a lot of private meetings with clients who need to discuss sensitive topics, this setup might not be for you.
Also, the infrastructure is such that you’ll most likely be sharing internet and IT services with other companies. You won’t have control over who is on the network day-by-day, and you may not have the option of setting up your own private systems. If cybersecurity is a primary concern for your company, this is definitely worth keeping in mind.
3. Explore nontraditional options.
Fortune recently quoted one of New York’s biggest commercial landlords in saying that “Fridays in the office are ‘dead forever’ and Mondays are ‘touch and go.’” Relatedly, Gleb Tsipursky, Ph.D., author and CEO of the boutique future-of-work consultancy Disaster Avoidance Experts, maintains that companies should tailor work arrangements to suit individual roles and preferences and that flexible hybrid work is the future. Taken together, we see a shift in the way real estate leaders and workplace advisors are approaching office models, and there is an increasing willingness to consider new approaches.
Whether it’s the “timeshare” model described by Konrad Putzier of the Wall Street Journal or offering “spec suites” as Kylie Ora Lobell reported for FastCompany, landlords are changing with the times, and it’s worth researching and talking to property managers and agents to see what flexible models might be offered. You could uncover a compelling new option outside of coworking spaces entirely.
In conclusion, a well-run coworking environment can be a great fit for your team if you ask the right questions and consider all options. The most important thing is to find the best location for productivity and innovation.
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