Long associated with tech start-ups, the option for coworking space is now being increasingly taken up by the corporate real estate sector
The concept of coworking has erupted from its place as the favoured workplace solution for start-ups and has now become a viable option for corporate real estate professionals.
‘Coworking’ is defined as the use of an office or other environment by the self-employed or those working for different employers, typically to share equipment, ideas and knowledge.
According to a new report from JLL, A New Era of Coworking, the practice is now being considered by bigger organisations keen for flexible, adaptable space and the benefits of start-up culture.
From early beginnings in the mid-1990s, the adoption of coworking began to accelerate in the mid-2000s. By 2010 there were 600 coworking spaces worldwide, and by 2011 it was doubling every year, with corporates seeing it as an investment opportunity and are now starting to experiment with it. At the end of 2015 the number of coworking spaces had reached nearly 8000.
According to JLL’s latest Global Corporate Real Estate Survey report, the practice is catching on fast at the corporate level, with 76 percent of respondents planning initiatives aimed at enhancing workplace experience over the next three years.
“With a growing number of companies looking to tap into these benefits, it is only a matter of time before coworking becomes an integral part of the corporate real estate toolkit,” says Grant Morrison, Head of Consulting, Asia Pacific, JLL.
“Coworking is being used by companies to support the wider strategic agenda around collaboration, innovation, flexibility as well as talent attraction and retention. These strategic pressures around performance and efficiency are encouraging companies to focus more intently on workplace strategies and coworking solutions.”
“Companies are turning to alternative workplace solutions, such as coworking, to encourage collaboration.”
Flexibility and the desire to attract and retain talent—particularly millennials—are driving the push towards coworking solutions.
“Companies are being challenged to support more mobile and flexible forms of working. There is also growing pressure to bring more flexibility to the real estate portfolio and create greater volumes of on-demand space,” Morrison says. “Coworking can help satisfy this growing demand for agility, fluidity, and liquidity of space.”
JLL’s A New Era of Coworking report identifies four primary models for implementing coworking, each with their own advantages:
- Internal collaboration: Typically used for employees within a company’s own office, providing flexible, creative space to suit different work settings. This encourages greater collaboration and knowledge sharing, can promote innovative thinking and help drive cultural change.
- Coworking memberships: Memberships in external coworking spaces may be purchased to accommodate temporary increases in workforce and offer locational variety to employees. They don’t require costly modifications to existing real estate portfolios, and can be established with minimal disruption.
- External coworking space: Companies can experiment with collaborative space by working with a specialist provider to create a ring-fenced coworking area. It provides benefits of internal and external innovation with low risk of disruption.
- Internal coworking space: Companies may provide internal coworking space to entrepreneurs and start-ups. The space may be provided for free and come with mentoring services by the parent organisation. In this way, the provider can access breakthrough technology or ideas at an early stage, while maintaining control over the space.
However, with advantages come risks to. Security—both physical and of data—is high on the list of barriers to effective coworking, but can be overcome.
“Effective policy frameworks and procedures can help mitigate risks, while solutions—such as internal collaboration space or innovation hubs—substantially reduce external risks,” Morrison says.
Privacy is another barrier, with organisations genuinely fearing a loss of intellectual property, ideas or other sensitive information—particularly if spaces are shared with competitors. Adapting existing processes to manage this risk is the best strategy.
If large organisations introduce coworking practices only selectively, there is a risk that culture clash, division or resentment amongst staff may develop.
However, putting risks aside, coworking is not a trend that CRE professionals can ignore.
“Organisations that aspire to innovate and want to tap into entrepreneurial culture simply cannot ignore coworking,” Morrison says. “Coworking is a cost-efficient way of creating a flexible environment but, most importantly, it can provide a range of intangible benefits for companies looking to improve their competitive position.”
“Companies need to embrace the new reality of employees’ expectations and technology enabled ways of working and adapt their workplace strategies accordingly.”
Head of Consulting, Asia Pacific, JLL