Coworking is getting everyone excited nowadays, with the number of such spaces worldwide reaching 15,500 this year. In the U.S., there are currently 4,043 flexible workspaces, and the number is projected to grow roughly 30% over the next 10 years. While there are many local companies trying to make their way onto the scene and entice prospective tenants with their offers, the overall trend is shaped by the market’s largest players.
Regus is the largest provider of coworking solutions around the world and it was one of the first to recognize the value of this office layout long before some of the sector’s other household names today. The company’s role as a pioneer in terms of flexible work space is part of its creation story. In 1989, an English businessman on a company trip to Brussels found himself befuddled by the lack of space available to work while traveling and created a company to address this issue. Since then, the company has acquired more than 3,000 business centers across the globe. However, due to its origins, Regus has mostly been associated with a more conventional business environment, rather than the hip face of coworking beloved by Millennials today.
This is something that the company decided to address by acquiring Spaces, a Netherlands-based firm leading the way within the creative office and coworking industry. Regus will continue to look out for the business needs of their traditional customers, but they’re expanding their footprint by reaching out to a more flexible audience.
As part of our Expert Insight series, we got in touch with Michael Berretta, head of growth strategy for Regus and Spaces. Michael has been active in the industry for nearly 20 years and has closely followed the evolution of the flexible work trend and the changing needs and requirements of companies and entrepreneurs. Here are some of his thoughts on the current state of the coworking office scene.
Q: How did you end up working in this field and what drew you to it?
A: I have always had a strong interest in real estate and in 1989 I was fortunate to start working in this industry for OminOffices, one of the original pioneer companies in the US. I experienced the flexible workplace business from the ground up, starting in sales and management and later focusing on development of new locations globally. It is endlessly fascinating to watch world economies drive businesses toward flexible workspaces. More and more, companies of all sizes are moving in this direction so they can move people into a new market quickly or adjust up or down as needed.
Q: Describe your most challenging project so far. How did you deal with it?
A: My biggest challenge is to stay ahead of the trends. To provide a global answer to the rising demand for flexible workplace alternatives, IWG (the network which owns Spaces as well as Regus) must be agile and dynamic, while making long-term decisions that fit our company strategy. It’s a unique balance between staying aggressive and keeping the best interests of our customers at the forefront of our planning. That means sometimes saying no to a location that seems fantastic but just doesn’t make great long-term sense.
Q: What does it take to be successful in this competitive coworking market?
A: Over the past ten years there has been a significant uptick in demand from businesses of all sizes looking for flexible workspace options. Much of this demand is related to scale. Companies are turning toward flexible work solutions that have scale so they can move people into a new market quickly or adjust up or down as needed. Being the global leader in flexible workspaces, our world-wide footprint is unmatched by any other provider and attractive to multinationals and expanding business. We can provide access to more than 3,000 flexible workspace options, 60 million secure Wi-Fi hotspots and more than 9,000 professional meeting spaces around the world through the IWG network.
Q: By 2027, most of the U.S. workforce will be freelance, according to a recent Upwork analysis. How can companies prepare for this dramatic change and what role will coworking play in it?
A: With the rise of the mobile worker, businesses need to have the flexibility to provide a workspace option closer to where their employees live, and this includes the suburbs. Contrary to what many people believe, there’s an increase in suburban growth. Recent reports show that population growth in big cities is slowing while population growth is accelerating in the more sprawling counties that surround them. Regus has been in suburban markets for several years. Our diverse portfolio has a healthy mix of suburban and urban options so that our clients can access our location where they need to work on any given day.
Q: Which do you think are some of the main challenges that the coworking industry will face in the following years (if any)?
A: There is a steep learning curve when it comes to operating a coworking space and one of the biggest challenges I have seen is the misallocation of resources. Regus kickstarted the coworking revolution 30 years ago and we have the benefit of three decades of experience. Many providers are coming in and starting these spaces from outside industries. One of the largest hurdles I’ve seen is figuring out the proper resource allocation to have members keep coming back. Owners often lean into what they like or what they think their members like, versus taking the time to understand what the people working in their space want and need. At Regus, for instance, we’re focused on productivity and everything we do is driven by a desire to help companies be as productive as possible.
Q: Coworking companies are doing their best to attract Millennials. How do the older generations fit into this story, and how should coworking providers try to reach them?
A: This question is directly related to the move towards the suburbs. The “older generation,” many of whom are married and have children, are increasingly heeding the call of suburbia. Larger corporations will need to be able to provide working options closer to where these employees live if they want to attract and retain this seasoned talent. With that in mind, coworking companies will need to look beyond dense urban areas and incorporate the suburbs into their growth strategy. At IWG, we’re focused across the full spectrum of workers. The diversity of our client base provides an environment where Millennials can learn and hear from professionals across a host of industries.
Q: Young entrepreneurs view coworking spaces as a good fit in the early stages of their business, but once they surpass a certain growth threshold, they tend to search for a more traditional office space. How can coworking providers keep these companies as clients for the long haul?
A: Choice is important when it comes coworking spaces. While free flowing kombucha, “Fri’yay” parties and pump-you-up music might appeal to an early stage startup, this isn’t always appealing to a more established entity or a company that is ready to create its own culture. This is why IWG offers a broad portfolio of flexible workspace options. Spaces, for example, offers a creative environment with bright and modern design, and things that foster community like networking events, on-site cafés and open-area business lounges. Regus, on the other hand, is designed to elevate productivity with less of a focus on shared amenities and more of a focus on a space that enhances workforce efficiency.
Q: There are some well-established coworking markets, such as New York City and San Francisco. In your opinion, which are the next markets set to become coworking clusters?
A: I believe that the next markets to experience the revolution are those that are booming startup cities such as Raleigh, NC, Boulder, CO, and St. Louis, MO. More and more entrepreneurs are moving to these areas due to the lower cost of living, their proximity to top universities (and therefore proximity to talent), and rising access to capital.