Five million people will embrace coworking by 2022. To put that figure into context, that’s more than the current number of employees at both Walmart and the U.S. Department of Defense combined. Another survey also predicts that the majority of the U.S. workforce will be freelance by 2027.
We’re obviously at a tipping point for the world of work. To match this burgeoning demand, coworking spaces provide the perfect environment for the flexible workforce.
But can the coworking industry adapt as the future of work continues to evolve? Here are our predictions for coworking and the trends shaping the industry:
Remote workers find a home thanks to tech
Advancing digitization is a catalyst for flexible working practices. Ubiquitous WiFi and smart devices have combined to keep everyone connected, anywhere. Suddenly, it no longer mattered whether you were physically in the office or not – as long as you had a solid internet connection.
This combination of connectivity and increasing demand for flexible work has helped drive the success of coworking spaces. Business owners don’t have to lease a dedicated office and can, instead, allow remote workers to use coworking spaces as and when they need to.
Research also reveals that remote employees are happier when they have access to a coworking space where they can learn, grow and succeed. The annual Global Coworking Survey from Deskmag found that 64% of workers are better able to meet deadlines, 68% have better focus and 71% reported an increase in creativity when they used a coworking space.
Upcoming technical advances, such as the much-anticipated 5G network, will further enable coworking spaces to open their doors in more rural and suburban areas.
PropTech is another phenomenon that’s slowly changing the property industry with the common goal of improving customer experience by transforming the agent-tenant relationship.
While not exclusive to coworking, PropTech is a blanket term to describe everything from robot receptionists to smart access systems that will help operators provide a 24/7 and seamless user experience to tenants. It’s the perfect fit for coworking spaces and will help tech-savvy spaces stand out from the crowd.
The future of coworking – WeWork 2.0?
Industry incumbent WeWork’s spaces are everywhere and the business was recently valued at a whopping $20 billion.
However, a recent article in the Wall Street Journal examined which current multi-billion-dollar valued businesses are most likely to fail. The article’s author, Andy Kessler, wrote: “venture capitalists are funding questionable businesses they pray will scale.”
These questionable businesses share certain features, according to Kessler, including unproven business models, minimal sales and huge losses. In reaction to the WSJ piece, one industry expert writes: “For those in the flexible workspace industry, it’s quite likely the first name that will pop into your mind is WeWork.”
The sustainability of WeWork’s business model has come under fire from some in the industry. Others predict the future of work will only further drive WeWork’s growth.
However, it’s not just WeWork that’s at risk. A question remains about the entire coworking industry’s ability to survive a major market downturn.
According to Kessler’s article, this type of business model “works great in up cycles but is still unproven, especially in downturns…what happens when startups disappear and WeWork gets stuck with a lot of expensive space?”
Boom or bust, it’ll be interesting to see how the wider coworking business model and those models from the likes of WeWork adapt over the next few years.
Corporates and niche spaces invade coworking
The coworking business model is already adapting to changes in the industry as corporates enter the market and demand for specialist spaces increases.
Research reveals an increasing number of corporates are turning to coworking to embrace innovation and flexible work practices. While some corporates are setting up their own spaces, many are turning to established coworking brands.
In fact, WeWork has 20,000 companies on its books, and those businesses with 1,000 employees or more are now its fastest-growing segment. One-fifth of companies of that size make up WeWork’s customer base, including big names such as Facebook, Microsoft, Pinterest, Salesforce, Samsung, and Starbucks.
Coworking spaces that target a specific industry will also flood the market. Niche spaces are already starting to open their doors, but will continue to thrive and meet the needs of the startup and freelance communities, as larger coworking brands take on corporate clients.
This is because such niche spaces tailor their approach to the industries they serve, providing them with the ability to stand out and survive an increasingly saturated coworking market.
Coworking is a global phenomenon. There are now more than 4,000 flexible spaces in more than 100 countries around the world.
Coworking is also breaking out of traditional spaces. For example, restaurants and libraries are already adopting coworking spaces to fill off-peak hours and boost their income.
The retail industry is another emerging area for coworking. Research reveals coworking spaces in malls, street fronts and other retail properties will grow at an annual rate of 25% through 2023 to reach about 3.4 million square feet.
Other new entrants to the market include boutique Space-as-a-Service businesses, like Bold, that create flexible workspaces with a smaller footprint compared to the likes to WeWork. For example, a floor of a building could easily be transformed into a coworking space, giving corporates and landlords an easy entry point into flexible working.
The coworking industry isn’t just expanding at an impressive rate – it’s also innovating and adapting to meet the demands of the future of work by combining technical innovation, a vast variety of business models, global availability and a cross-industry appeal. If coworking is able to prove itself as an industry by remaining viable through the next recession, then it could play a long-term role in the global economy.