“Co-working spaces offer individuals and businesses the chance to work in a fully-equipped office,” Kymbal Dunne, Director of Office Leasing at Knight Frank, explained. “Setting up an office can be frustrating, time consuming and expensive, but with co-working spaces everything is already set up and it’s effectively ‘plug and play’. Pricing models, which charge members by the workstation or office, generally include services such as security, reception, high-speed internet, printing, café and common area facilities, conference rooms, lounge areas, cleaning services and more.
“There’s a lot of buzz about co-working, but it’s not a new phenomenon. The first co-working spaces opened in Australia more than a decade ago – and since then we’ve seen spaces pop up across the country and become more and more popular.”
So what are the key drivers fuelling the rise of co-working and what are the potential impacts for the commercial property market?
Creating a community
Co-working spaces are much more than an alternative to the traditional serviced office. Over the years they’ve evolved into communities of ambitious and driven individuals, creating prime opportunities for businesses to establish connections, expand their contacts and grow their business without the overhead costs that come with traditional office spaces.
“The desire to feel part of a community is a big reason why people choose to co-work,” Kymbal explained. “Each co-working space has its own vibe and operators deliberately cultivate a unique experience that meets the needs of their members.
“Co-working operators go out of their way to create a genuine community. ‘All work and no play’ is not something you’ll experience in these spaces. From the way the facilities are laid out to regular social events and on-site educational sessions, everything is aimed at creating a place where people work to make a life, not just a living.
“Importantly, co-workers can choose when and how they want to interact with others. They might enjoy a discussion with someone over a coffee in the on-site café or in one of the many common areas, but there’s also plenty of opportunity for solo time.”
The advent of the internet in the 1990s prompted forecasts that working from home would lead to a rapid fall in the demand for office space. But it hasn’t eventuated because humans, by nature, crave interaction. While people may sometimes be more productive when they’re alone, they’re more collaborative and innovative when they’re together.
“When you work in a co-working space, you’re surrounded by an incredibly diverse ecosystem of people,” Kymbal said. “The environment is specifically created to enhance the ability to interact with others in a professional and productive setting.
“Co-workers find themselves connecting with potential clients, suppliers or even new business partners. In a co-working space, you’re guaranteed to connect with talented and like-minded people to add to your network. You never know who you’ll meet and how you might be able to collaborate.”
Changing office market
Once the domain of creatives and freelancers, co-working spaces have become an attractive, practical and affordable alternative to conventional offices for more traditional and established businesses.
“At Knight Frank, our figures show that almost 90 per cent of tenants in the market are businesses that employ less than 20 people, and a big proportion of those employ four or fewer,” Kymbal said. “Is it economically viable to have your own dedicated office space at that size? When you factor in all the costs of a traditional office space – rent, insurance, IT and more – it’s easy to see why a co-working environment is a very attractive alternative.
“Flexibility is another plus because businesses can grow or contract as needed and they have access to floor space and facilities on an as-needs basis.”
But it’s not just small and micro businesses that are enjoying the benefits of co-working environments. Some well-known global corporations have been moving out of their dedicated office buildings and into co-working hubs.
“In the US, technology giant IBM recently signed a deal with WeWork – the world’s largest co-working operator – to accommodate more than 600 employees,” Kymbal said. “Rather than managing their own office facilities, they see the benefits in moving to a co-working space and letting WeWork do it for them. I think it’s something we’ll see happen here before too long.
“The way people work has shifted. Today’s worker wants an environment that’s not only flexible, creative and collaborative, but also affordable – and co-working spaces provide all of this and more.”