Category: Business

Based in Stockholm, Skanska Commercial Development Europe counts among the biggest Real Estate Development company in Europe. Skanska owns Business Link, a fast growing coworking brand in Central and Eastern Europe (CEE), currently operating 5 locations, in Poland and in the Czech Republic. We have interviewed Jaroslaw Bator, Managing Director at Business Link & Business Development Director.  Jaroslaw will be a speaker at the upcoming Coworking Europe 2019 conference, to take place in Warsaw, on November 13-15.

Hi Jaroslaw. Can you introduce Business Link to us?

Jarosław Bator

The Business Link brand was created in 2011, based on the Academic Entrepreneurship Incubator Foundation – an NGO supporting Polish entrepreneurship. The growing scale of the project sparked Skanska’s interest, which in 2017 together with the Foundation as a joint venture, developed the concept much more boldly and directed it to professionals, who expect the best locations, a chique design and perfect customer service. Currently, Business Link is a brand wholly owned by Skanska, an unparalleled model of cooperation between a key developer and an operator of flexible work spaces.

You have plans to open up a total of 50.000 sqm of coworking space in Central Europe. Is the region ready to absorb such an increase?

The attractiveness of the CEE region has already attracted many players in the flexible work space sector. We are slowly beginning to observe market segmentation. We found our niche within – remarkably designed and operated spaces. Therefore, at present, our priority is to further professionalize our current locations, rather than aggressive expansion. Nevertheless, we’re carefully monitoring other CEE markets, noticing in them potential for further growth, fuelled primarily by the professionalization of personnel and increasingly frequent decisions to base business operations in these countries.

We are slowly beginning to observe market segmentation. We found our niche.

Why did a major regional Real Estate operator like Skanska jump into the coworking business directly?

Business Link Astoria (Warsaw)

Every enterprise expecting dynamic growth on the market needs an ambitious strategy and to adopt emerging trends to achieve business success in a changing world. Investment in a new, rapidly growing real estate segment seems to be the natural step forward. Additionally, flexible spaces complement Skanska’s portfolio. This is not about creating a façade about a wide range of services – Business Link truly responds to the needs of other Skanska customers who, for example, underestimated the number of workplaces required or need to diversify their job portfolio, guaranteeing their employees the ability to choose a place at any time outside of the main office.

This is not about creating a façade – Business Link truly responds to the needs of other Skanska customers who, for example, underestimated the number of workplaces required.

Why did it make sense to Skanska to take full ownership, and not keep it as a joint-venture?

Synergy is the key word here – Skanska decided to take full advantage of cooperation with Business Link to more effectively combine a traditional developer’s space leasing operations with the offer of flex space. It is worth noting here that this situation is not frequently encountered – flex spaces are most often managed by relatively young entities without a well-established organizational culture, which is why we believe that Business Link can gain a lot by observing processes and models.

Flex spaces are most often managed by relatively young entities without a well-established organizational culture, which is why we believe that Business Link can gain a lot by observing processes and models.

Isn’t the move cannibalizing the traditional office long term lease market you are in too?

Business Link High5ive (Cracow)

Skanska offers excellent space for the entire company in a traditional lease formula. As Business Link, we supplement this portfolio by providing a more flexible product that can be used as the main office – a solution chosen by small companies, as well as larger teams exceeding a hundred people. An office such as this facilitates communication and enables efficient work coordination, whilst guaranteeing excellent conditions for all employees. We can also offer our clients a design office – used only for a specific time or an office dedicated to remote work outside the company’s main office. Diversification of office space within one organization is one of the most important office trends. Users of such a model are companies wishing to offer more flexibility than the one resulting from the possibility of remote work, e.g. from a home or a cafe.

Diversification of office space within one organization is one of the most important office trends.

What is “coworking 2.0” (name coined in some of your communication material)? Some other players would call themselves business center or serviced office…

Coworking today – in business terms – is an outdated model. Quite a bold statement, but reflected in the space designs of many players in this market. Please note that we can rarely find only open-space spaces or spaces only split up into private offices. Flex space is a model that combines these two formats. It is therefore a balancing act to allocate types of workplaces within the operator’s space – on one hand, in each location, responding to local demand, and on the other hand – ensuring financial viability of the location. It is difficult to build a community without having a penny.

Coworking today – in business terms – is an outdated model. Quite a bold statement, but reflected in the space designs of many players in this market.

You now speak a lot about ecosystem, engagement, green surroundings… Are hospitality and service more important than technology and facility, nowadays?

Business Link High5ive (Cracow)

Business Link today, above all, we think, has the largest customer service team on the market, providing comprehensive support and service at the highest level. Our offices are located in buildings that meet the highest environmental standards, and the design and equipment offered to customers allows for the enjoyment of green surroundings – from the walls, covered with reindeer lichen, affecting the humidity of the air, to green terraces, guaranteeing rest among greenery in the heart of the city . We don’t try to be the driving force behind our clients’ free time at all costs – we focus on quality, not quantity. We will sooner choose a live film music concert, rather than a mentoring/educational event so popular on this market. We strive to give tools that will allow our clients to organize the work and leisure of their employees at their own discretion.

We strive to give tools that will allow our clients to organize the work and leisure of their employees at their own discretion.

The real estate world is full of the WeWork name. How do you position yourself as opposed to that kind of  big international player? 

Business Link Visionary (Prague)

Business Link offers customers splendidly designed prestigious spaces with an impeccably prepared customer service team, the most numerous on the market. The key to our market success is an individual approach, investing in the professionalism of the team, and responding effectively to the needs of small and large companies. The Business Link strategy is based on building strong business foundations on local markets in Central and Eastern Europe (currently 4 locations in Poland, and 1 in the Czech Republic). We prefer to measure our success with customer satisfaction rather than with geographical coverage. This specific specialization allows us to cater to the needs of the market that we know perfectly well.

We prefer to measure our success with customer satisfaction rather than with geographical coverage.

What are the differences you see between Poland, the Czech Republic and the situation of coworking in Western Europe?

In the real estate segment, including office space, the markets of Central and Eastern Europe are still emerging markets. The stability of these markets, proven during the recent financial crisis, makes them a natural place for investment, guaranteeing high rates of return. The Western European market is more saturated, and some natural market processes – such as the fulfillment of regional demand – having inevitably appeared there before. In the Central and Eastern European markets, in the segment of flexible offices, Business Link is a precursor of the network approach, allowing for the creation of business synergies amongst the large regional cities. At the same time, we’re observing how increasing supply causes gradual segmentation of the market, allowing to meet the needs of various types of customers.

Are your plans limited to Central Europe or do you look beyond?

Our roots and specialization lie in the CEE region, which is why we would rather stay in our comfort zone.

Born a few kilometers away from the Harvard University campus, the Cambridge Innovation Center (CIC) has been a home for great entrepreneurs leading fast-growing companies since 1999. In 2018, CIC raised US$ 58 millions from HB Reavis, the Bratislava based real estate developer. We have interviewed Kari Mruz, the General Manager at CIC Warsaw, to find out more about CIC values, mission, strategies and plans for the future. Kari will also be a speaker at the Coworking Europe 2019 conference, this fall.

Hi Kari. Can you introduce yourself and explain us what CIC is and what’s its mission?

Kari Mruz

I am the General Manager at CIC Warsaw. The Cambridge Innovation Center designs, builds and operates innovation spaces and communities. We believe that innovation is the best way to solve local and global problems, so our goal is to provide entrepreneurs with the communities and infrastructure they need to succeed. In 1999, “coworking” wasn’t a household term, let alone a standard office option. That year, CIC became the first provider of shared office space in Cambridge’s Kendall Square, now known as the most innovative square mile on the planet. The mission was the same then as it is now: to support entrepreneurs in fixing the world through innovation.

How does a company from Cambridge MA, close to Harvard and other prestigious names, figures out it makes sense to replicate the model on other continents?

There are talented people with great ideas everywhere, not just at Harvard and MIT, and CIC seeks to support even broader impact by tapping into the innovation potential of other communities throughout the world. The more cities we go to, the bigger network effect we can create. That said, we don’t tend to rush into new cities. We spend a great deal of time developing deep partnerships and collaborating with local leaders before we begin to build anything.

How do you combine the coworking business and the training/innovation inputs you are providing? Why does it make sense to interlink the coworking and “innovation” sides? 

CIC and Venture Cafe, Boston-Cambridge

Coworking is naturally linked with innovation because whenever people share physical spaces, they start to bump into each other, trust each other more, take more risks, share ideas, and collaborate to create things they wouldn’t have on their own. From the other angle, coworking can benefit from innovation, because it is always more fun to work in spaces where people are doing interesting and impactful things. In terms of our business model, we find central locations in core cities to create the nexus for innovation – by leasing office space and then providing it along with additional value to our members who join our communities through a monthly agreement to work in our office space and access additional benefits that go beyond just providing snacks and furniture. The added value includes events programming, shared intellectual capital, and access to the CIC network, which includes investors and corporate innovators who seek to work with entrepreneurs.

Coworking is naturally linked with innovation because whenever people share physical spaces, they start to bump into each other, trust each other more, take more risks, share ideas, and collaborate to create things they wouldn’t have on their own.

You raised capital, as did some other big international coworking players, recently. How do you differentiate from these other brands?

Lab at CIC

Similar to other big coworking players, we do aim to change the nature of workspaces, but primarily as a means to innovation, not just to make office life cooler. CIC’s type of deep, concentrated “innovation communities” are not simple to build. Our locations require very capable senior leadership and thoughtful staffing to thoroughly support the entrepreneurs who choose to work in our spaces. Also, keeping innovation as our central premise means that we end up building not just game rooms with ping pong tables, but also more complicated pieces like shared lab spaces and equipment that draw in scientists and technologists. This means we’ll probably expand slower than some of the other big players, with the intention of creating powerful ecosystems that generate long-lasting, impactful innovations.

Keeping innovation as our central premise means that we end up building not just game rooms with ping pong tables, but also more complicated pieces like shared lab spaces and equipment that draw in scientists and technologists

CIC is opening up in Warsaw and has already a location in operation in Rotterdam. What are the plans for Europe?

CIC is exploring a number of other locations in Europe and open to initiating discussions with other cities as well through our expansion initiatives. Our goal is to have 50 locations open in ten years, and Europe is a significant part of our growth plan as well as other regions globally.

Our goal is to have 50 locations open in ten years, and Europe is a significant part of our growth plan as well as other regions globally.

Why does Europe makes sense to you and how does it differentiate from the US or Asia?

CIC Rotterdam

European communities are unique, with each country offering its own set of innovators who respond differently to coworking environments. CIC looks to enter markets that are receptive to creating an impact through innovation. We partner with cities that understand how an innovation center can attract entrepreneurs and stimulate economic development, and work closely with local leaders to ensure that our strategies align with the region. We take a local, community-focused approach in all the ecosystems we build, whether it’s in Europe, the U.S., Asia, or elsewhere.

You will be located in the second tallest building in Europe to be completed soon in Warsaw. Does locating yourself in prime buildings belong to your strategy?

Choosing the right location and facility is really important for us, we’re really picky. We look for facilities that can provide a premium experience for our members, and locations that have the potential to be the center of gravity for innovation in the city. We couldn’t have picked a better location than the Varso tower complex in Warsaw. Not only will the Varso tower be one of the tallest building in Europe, but it will have direct underground access to the central train station, and huge floor plates in the Varso 2 building we will be located in, allowing us to build large event spaces on the same floor as our office space offering.

You focus on some specific industries, such as “port activities” in Rotterdam. Is the focus a case by case assessed choice or are you globally focusing on a limited number of areas?

CIC St Louis

A focus on specialized industries is one of the things I’m most excited about for CIC’s future. For now many of these are very case by case, determined by the particular strengths and goals of a given city. However, ultimately these communities can and should be linked – for example, technology developed in our robotics community in Boston could be used in a port in Rotterdam.

Ultimately these communities can and should be linked – for example, technology developed in our robotics community in Boston could be used in a port in Rotterdam.

 

Coworking has be around for more than a decade in Europe. Nowadays, coworking reaches out to every corner of the continent. BNP Paribas Real Estate released a study spotting the new upcoming coworking hotspots in Europe and what drives the growth. We interviewed Richard Malle, Global Head of Research and Vincent Voute, Senior Research Analyst, to tell us more about their findings.

Hello Richard. Hello Vincent. According to your research, London and Paris are experiencing a deceleration in terms of coworking growth. Are the best days over for coworking in these metropolises?

Richard Malle

The growth rate of coworking is indeed slightly decelerating in London and Paris. However, with +13% and +19% of space taken-up by coworking operators, 2018 still saw a 2-digit growth in both cities. In terms of volumes (transacted m2), the take-up for coworking spaces reached significant values in both cities already two years ago, and represented again by far more than 100,000 m² of new coworking space in 2018. Consequently, the slowdown in growth is not a sign of a weakening market. This is just more difficult to achieve a high growth rate when it is calculated on the basis of big volumes. On the contrary, it seems that coworking still has room to expand in the two metropolises. Indeed, existing coworking spaces show high rates of occupancy while coworking still represent a limited share of the total take-up (13% in London, 5% in Paris). The demand for coworking workstations is far from fading. Rather than being saturated, we consider that the market is becoming more mature.

The demand for coworking workstations is far from fading. Rather than being saturated, we consider that the market is becoming more mature.

Frankfurt, Munich, Madrid, Brussels, on the other hand, show no signs of slowing down. Do you expect the saturation level to come soon in all the other major cities in Europe?

The new trend about coworking is that the market is no longer limited to the usual largest commercial real estate markets that are London and Paris.

In other European dynamic cities, coworking now represents a significant share of the market activity, for instance in Amsterdam, Brussels, Dublin, Madrid or Warsaw (NB : Warsaw will the the hosting city of the Coworking Europe 2019 conference , organized by SocialWorkplaces.com), where it represents more than 10% of the total office market.

Major global coworking operators seem to consider these cities as potential drivers for future growth and are now starting to take a close look at these markets.

The growth of the EU coworking market is driven by the big international players. Have independent operators to find a niche?

Our European coworking research shows that most of the new coworking spaces are created in central parts of the cities, or at least in the well-established business districts. This appeal for these sought-after districts has a cost: this is where the rents are the highest and where the competition for the best buildings is the fiercest.

Big international players can afford to pay high rents to lease large units in the most modern buildings located in prime districts. They are also able to provide a lot of services – which requires more employees –, or advantages such as a global membership that enables their members to access their spaces everywhere in the world, etc…

This is very unlikely that independent operators will be strong enough to compete on such levels. They consequently have to find a way to differentiate themselves from the big players to attract customers and to position themselves on their own market segment.

How about property owners developing their own coworking brand and offering, like in Warsaw: is it a marginal phenomenon or do you expect it to strengthen? 

As an always growing phenomenon, this is logical that the flexible office market arouses interest among the whole real estate sector. However we consider that property owners should make sure to implement a solid and well-thought strategy and business model when entering the coworking market.

Running their own brand is indeed a new kind of activity for them to which they have to adjust. The question of the economic risks is also important: launching their own brand implies that risks are not shared with the tenant but fully taken by them.

The acquisition of existing coworking brands by major investors is another possibility for real estate players to enter the market while benefitting from the experience of these existing brands. As long as the market continues to grow, we can logically expect this phenomenon to strengthen.

You refer to new forms of collaboration. You mean between operators? Maybe another kind of players? 

We actually referred to the new forms of work organization which tend to require more flexibility for which coworking seems to be an appropriate response.

The percentage of teleworkers has been gradually increasing over the past 20 years in the US. Modern employees demand home-working options but what about teleworking in coworking spaces? How do coworking and teleworking work hand in hand, nowadays, in Europe? We asked Xavier de Mazenod, one of the most famous teleworking and coworking expert in France.

Hi Xavier. Can you introduce yourself as well as Zevillage?

Xavier de Mazenod

Being a former journalist, I created the company Adverbe in 2004: A consulting and training company regarding new forms of work. Since then, we have been publishing the Zevillage website, a site specialized in the transformation of work, organizations and workspaces. We try to convey to companies all the practices and changes we observe.  

How would you depict the acceptance of teleworking in France, in 2019, and what still keeps companies from embracing it fully?

Teleworking is an old idea in France that goes back to the 90s. But in reality, it has long progressed underground and informally in companies. Few had formalized it and incorporated it into a human resources strategy.

For the last 3-4 years, we have witnessed a rapid change. Teleworking has become part of HR policies for quality of work life balance. Perhaps because companies are realizing that millennials are demanding flexibility in the organization of their work and a greater harmony between their personal time and their time at work. This is important for the image of the company, its “employer brand”. We even have testimonials from young candidates refusing job offers from companies that did not set up teleworking.

The anti-teleworking blockade is still coming from the same cultural cause as 20 years ago: a presidential view of management, a too hierarchical organization and management methods that rely on control and not on trust.

This is not to blame on managers, they do as they can and as they have learned. It’s just a statement.

For what you know, do you see a wide difference between countries in Europe with respect to the teleworking acceptance rate and practices?

Less than ten years ago, in 2009, there were two distinct blocks: Northern Europe (32.4% of the employed population in Finland, 26.8%, 22.3% in the UK) who already had a high rate of teleworkers, and southern countries (France 8.4%, Italy 5%) at the back of the pack. Since then, France has come back quickly. In fact, teleworking works as a indicator of the degree of trust between managers and employees.

The French utility group EDF announced the creation of internal coworking all over their locations spread out across France. Is this a new step in teleworking policies by French companies, would you say?

I will not say that corpoworking (“Corpoworking” is a word used in France in the corporate world to refer to a coworking model designed for a specific corporate audience which has no equivalent anywhere else) is a mutation of teleworking – but rather a complementary offer. An offer that also reassures companies, since their employees remain in a controlled environment.

Until about 5 years ago, in France, teleworking was practiced in 80 or 90% from home. Since then, employees have greater access to “corpoworking” mainly because professional-level offers have appeared with “industrial” players such as Bouygues Immobilier and Accor or the evolution of former business centers like Regus or the emergence of operators like WeWork (although they claim to not be coworking anymore).

These offers have reassured businesses, even if we do not necessarily find the spirit of historic coworking spaces there anymore. On the other hand, we have to understand that when one teleworks only one day a week, he/she will prefer teleworking from home. Once weekly duration increases, the need to leave one’s home or not to be isolated, often manifests.

Can you mention some other examples of companies doing the same or dealing with another approach?

Corpoworking is not a very massive phenomenon. In France, we can mention SNCF or Orange, among the most famous companies to have adopted it. In Switzerland, I would mention examples such as SIG, BrainGym or Swisscom. In Germany, Modul57, TUI, AppHaus or SAP.

It seems companies are still reluctant to let their employees work out of third parties coworking spaces. Is this the case? Why?

That’s true, indeed, for France. Some companies fear that giving their employees space in coworking spaces creates a double cost: one for the office and another for the coworking space. However, the right solution would be to think about the flexibility of the company in a global way by integrating telecommuting, improving office spaces and using coworking spaces. One only has to look at the dramatic transformation of the Belgian social security, for instance, which introduced flex-office and teleworking in order to increase people’s productivity, motivation and quality of life… And it ultimately worked.

Does it start because of a change in companies’ culture or because of the growth of the coworking offering?

I would say both. Without understanding the coworking phenomenon, a company is unlikely to let its employees work outside their offices. But coworking is becoming more and more successful, probably because it gives real estate businesses flexibility. And without sufficient supply of space, no access to coworking is possible.

Do you see the coworking offering in France improving to host companies’ employees, fitting needs in size, locations and amenities?

Nowadays, yes. In bigger cities, at least, all coworking spaces are well attended, and there are also spaces in more rural areas. In France there are 1,800 spaces (all types of third-places included). That’s a very fast progression. And the quality improves. We see that companies are using them more and more. It’s no longer about flexible workstation rentals, only. Coworking also becomes a natural solution to host temporary project teams for example. In that case, the objective is to put them calmly outside the company environment and confront them with diversity. For that reason, you see more and more tools coming up, such as creativity rooms, within coworking spaces.

What is missing?

Time to convert companies to this mode of management.

Speaking about geography, do you notice big differences in terms of behavior between Paris, on the on hand and the rest of France on the other hand?

Image source: Mutinerie Village, Coworking in the French Countryside. Copass SAS

The difference in behavior is more between the city and the countryside than between Paris and other cities in the province. The economic model of the urban spaces is viable because one can reach the minimum size for a correct profitability, around 1500/2000 m2. In rural areas, the smaller size of spaces, linked to a lower population density, makes breaking even difficult.

Who are the drivers of change (players) in France in the new ways of work? What excites you? What disappoints you?

There are many innovators in the new forms of work. One could even say that this innovation is a characteristic of third places. To name a few, I will mention Neo-Nomade, a platform that connects researchers and the suppliers of workspaces. They have a very fine knowledge of the market and are one of the important players who have changed the clientele of coworking spaces to a professional audience. I also want to mention Bureaux à partager, which is growing strongly in major French cities. Among other things, they have acquired a good know-how to install pop-up coworkings. We can also mention Now coworking who chose a high-end positioning with lots of activities offered – similar to the WeWork model but maintaining a stronger culture of community.

Their ambition is to open at least a dozen places in major French cities, outside Paris, in mythical places. Startway’s strategy is also interesting. It is that their spaces have a strong “entrepreneurship” orientation, with a lot of activities for the members. La Poste has entered into their capital and accelerated their development.

Finally, on the side of the spaces that are more “third-places” than coworking we can say that each large or medium city has one. I will mention Darwin in Bordeaux, the WIP being developed in Caen or The Station in the old station of Saint-Omer (14000 inhabitants).

How far do you see the workforce to be physically distributed in the coming 5 years time?

Difficult to know but if we look at strong trends, in France or elsewhere, it is likely that freelancers will be much more numerous than today. We are talking about 50% of the active population in the United States by 2030. It means a lot of flexibility, freedom in the choice of places to live and a greater need to freely recreate collective work in coworking spaces.

Some international studies claim flexible workplace will represent 30+% of the whole office market. Are we heading toward that direction?

In addition to the rise of freelancers phenomenon, we must add the demand for real estate flexibility from major rental companies. They no longer want the rigidity of conventional leases of 3-6-9 years and negotiate to get about 20% of space in flexibility. And who can better offer that than a coworking space?

Petr Boruta is the Marketing Manager at Spaceflow, a platform that provides a global tenant experience platform and community engagement as a service that uplift the experience for people in spaces and buildings. Petr is a well-informed expert of what is happening in the workplace market and below we share some of his thoughts, insights and experience.

Hi Petr. Why is Central Europe worth considering today, would you say, with respect to the evolution of the coworking market practices?

Globally, London, New York and Los Angeles are still the top three cities in the number of coworking centres. However, the coworking map, I would say, is evolving rapidly. In Europe, for instance Warsaw and Prague are now becoming  new hotbeds for shared offices. 

When I visited the CEE Summit (Central and Eastern Europe Summit) organized by Property EU and Poland Today magazine, what strucked me was how CEE is already progressive on topics that push boundaries in real estate. In the breakout session that covered current trends, people were mentioning how they enjoy being in coworking.

One of the participants said that he does not mind anymore to go to the « coworking » office during the weekend (if he has to) compared to his former (traditional) office. The motivation doesn’t come from the flexibility or from the physical amenities, like humming coffee machine – although they’re super convenient, don’t get me wrong. What’s appealing at coworking spaces is the possibility to meet people.

What learning do you take from the anecdote?

Humans are by nature social beings. Events, more breakout opportunities and random conversations in the kitchen. That’s where ideas sprout. As a matter of fact, participants of that conversation at the CEE Summit did not mention community in particular straight away. But when suggested, they all agreed it was the key factor.

So?

We think about community as something natural – but actually, it’s not easy to build it up from a random herd of people. According to CBRE 2018 Occupier Survey, more than 80% of tenants perceive amenities as integral to the employee experience and 65% think service-oriented amenities are more important than fixed space-based amenities. Delos, the founder of the WELL standard, is right when it stresses that creating a culture of health and wellness in which employees actively participate, is more than providing a gym and healthy items in the cafeteria or introducing a corporate challenge.

In another survey, respondents claim that they want their workspace to feel more like a community and that they expect landlords will participate in providing this experience.

That’s where flexible office spaces win it all with their workshops and social events. That’s also why, at Spaceflow, we encourage real estate players to think about curated content and community management in order to drive the engagement of people. It’s so important.

Would you say that real estate developers are now ready to figure out that people need more than just a roof and walls to work from?

Absolutely. Landlords and developers used to be rather sceptical about this serviced-office trend. That’s true. If they were to embrace it, then, they rather acquired a seasoned provider who was specialised in that. Nowadays, things are changing rapidly. We see more of those real estate players getting involved in building service by themselves, without much hassle.

In CEE, HB Reavis made a very clever move by starting a new brand, HubHub. Skanska acquired Business Link. In the US, Tishman Speyer has launched Studio. And then you have CBRE  which launched its own coworking brand, Hana, in the US and one cannot doubt they will be rolling-out to Europe.

“We see it expanding to 15% or 20% of the (global) market”, according to Andrew Kupiec, the CEO at Hana.

That being said, as Coworking Mag suggests, catching up with other players will be tough when you have competitors like WeWork, Regus and Knotel who have hundreds of coworking spaces already.

Who will take the juiciest slice of the market, do you think? Big international coworking brands or coworking services developed by Real Estate developers?

As participants of the aforementioned CEE Summit agreed, providing 100% of all their assets as coworking spaces would be too risky. Nevertheless, traditional real estate players are now moving into coworking business in CEE at the same speed or at an even more rapid pace as in other regions. Time will tell who’s going to be the winner but Asia Pacific region, where coworking is gainin  its true momentum, future-proofed that developers are successful with coming up with their own brands.

To come back on the market drives, do you see another reason for the rising popularity of flexible offices, aside of the appeal for communities and amenities?

Definitely: modern company structure. A typical small business life span is 4 years. 4 years! The average life span of 500 Fortune company has dropped from 60 years in the 1950s to about 15 years now. 99% of London companies employ less than 50 people. The simple truth is nobody can predict 5, 10, let alone 15 years ahead in this rapidly changing economy. As JLL puts in its 2017 Flexible Space report, “most organizations only have 24 months of revenue projections and 36 months of strategic planning”. Average lease agreement exceeding 5 years significantly is in sharp contrast with this.

Image source: JLL Flexible Space Report, 2017

It’s almost a no brainer for traditional real estate to build coworking themselves when you consider these numbers: CBRE says 45 % of corporations expect substantial to moderate usage of flexible space by 2020. JLL is forecasting revolution by predicting that by 2030, flexible space will comprise of up to 30% of all offices.

It means corporations will also have to embrace the coworking move, isn’t it?

Again, yes, The most staggering number is that 41% (!) of all leased or owned corporate office space in the U.S. is vacant but paid for. The cost of this is roughly 150 billion USD and what is even more surprising is that the percentages are pretty consistent internationally.

Something is happening and it’s here to stay. What’s clear is that we need a way more effective approach to how we use spaces, one that is more flexible to evolving business needs.

What if you have coffee places with underused premises and people can book a desk through an app for a few hours to work?. Or what if you have restaurants that fill with workers during the mornings. This isn’t sci-fi but a reality already taking place. It’s all just a question of scale.

Last week we talked to Adam Lis, in charge of flexible office solutions at JLL Poland. Adam is a real estate professional, with experience in coworking after having worked for Brain Embassy, a Polish coworking brand. We are happy to share below some of his thoughts, ideas and expertise and we also look forward to welcoming him in our Coworking Europe Conference as one of our 2019 speakers, in Warsaw.

Adam Lis

Hi Adam, what is your take on the relationship between Coworking and the real estate it is located in?

As has been pointed out in other articles, there is a big discussion on how coworking spaces – as tenants – influence yields on office properties. In our experience, landlords have started to see value in having a part of the building occupied by a coworking space and are oftentimes proactively looking to bring them on board. There are many theories on how big the influence is, but the market practice shows that having around 15-25% of an asset dedicated to flex operator has a positive impact on the value of the building, as it represents a desired amenity for other tenants.

Some new deals for corporate clients are already built on the paradigm of mixing traditional long-term lease agreements with flexible space arrangements to complement them. We at JLL have already started to tailor such hybrid solutions for corporate clients, mixing traditional offices with coworking capacity.

What is your experience of the evolution of flexible workspace in Poland?

As in the rest of Europe, the rise of flexible office spaces is the hottest trend on the market in Poland. The volume of operating and secured flexible spaces in major cities reached 250,000 sq m in the end of 2018. Naturally, as the capital and the most important business destination in the country, Warsaw accounts for over ¾ of this volume, but the overall trend is also becoming more and more influential in regional cities.

Like it has happened in other markets, the entrance of WeWork in the end of last year has acted as a catalyst for the flex segment, kickstarting its development and forcing the competition to expand faster. Flex operators have leased an astonishing 112,000 m² in Warsaw last year, which accounts for 13% of the total office space demand. Interestingly, over half of it came from just two players: WeWork and IWG (Regus & Spaces).

Have revenue share deals already arrived in Poland?

Revenue share deals between flexible office providers and landlords are still scarce in Poland. It’s mainly due to the risk aversion of the latter, as well as their strong position, given the vacancy rate in Warsaw’s Central zones now stands at ca. 5%, which is the lowest since 2009. This means that availability of lease options in existing developments here is extremely limited. Therefore landlords don’t see the need to try out new business models. Management agreements seem, however, to work better at less attractive locations and buildings, where landlords are pushed to be more innovative in order to lease their assets.

Where do you see the market moving? Can small boutique spaces survive against international chains?

Image Sourse: Hotel Schani Wien – coworking lobby

The whole office market is rapidly changing as big players expand and grow the market, especially by attracting corporate clients. Smaller ones on the other hand emerge and push from the bottom. We see some landlords and developers experimenting with their own coworking concepts. Hotels and shopping malls are trying to find their place in this new segment too. I believe that the market will become more and more competitive, but also that there will be enough space for a variety of highly specialized niche providers. It seems like the market is heading towards a world where coworking is becoming the new workplace.

I believe that the market will become more and more competitive, but also that there will be enough space for a variety of highly specialized niche providers.

Innv8 is among the first coworking brand launched in India. Last month, the company was bought by one of the biggest Indian hotel platform, OYO, for a total of 31 millions US$. Meanwhile, OYO announced the takeover of two other coworking brands (PowerStation, for corporations, and Workflow, more focused on startups), demonstrating a strong will to develop its position in the coworking field. Interesting to note, OYO is supported by Softbank, one of WeWork’s main investors. Innov8 is the fourth coworking acquisition by OYO. We interviewed Ritesh Malik, Innov8‘s founder, who used to be a speaker at the Coworking India conference organized by SocialWorkplaces.com, about the vision behind the deal.

Hi Ritesh. Can you tell us the story behind Innov8?

We launched our first centre at the Heart of New Delhi- Connaught in December 2015. We wanted to revolutionise how Indian work. Innov8 is not just a place for people to work, it’s a place for people to connect. We at Innov8 want to transform real estate into a beautiful and premium workspace designed to encourage community engagement for the creators and innovators. In June 2016, US-based fund Y-Combinator backed Innov8 for its investment in the coworking industry.

We were hoping to create a collaborative community where business opportunities and activities can take place freely. We were committed to delivering excellence through design, experience, and services. Our Vision was to revolutionize real estate into beautifully designed, experience centers to empower the process and journey of creating meaningful work. Our Mission: to be World’s Most Loved Workspace brand through excellence in design, experience and delivering value.

Innov8 is now taken over by OYO. Why are the two companies complementary?

Ritesh Malik, Innov8

Innov8 and OYO are both in the business of real estate and hospitality. It’s a perfectly complementary business. OYO already has a strong play in the real estate market worldwide both as a tenant and as a supplier, with existing offerings like OYO Home, OYO LIFE, Weddigz.in and MICE offerings. Also, OYO already has thousands of corporate customers that help generate over 30% of OYO’s business. Additionally, in India, OYO works with over 8.000 asset owners, and many of them have ready space available for commercial business. The decision to, therefore, open managed workspaces is a natural transition and step forward. With vast experience of acquiring properties, creating processes and great user experiences, it will be great backing on Innov8 scalability.

With vast experience of acquiring properties, creating processes and great user experiences, it will be great backing on Innov8 scalability.

OYO is known in India as a hotel booking platform. Coworking seems quite far away from their focus, no? 

Firstly, OYO is not a hotel booking platform. OYO is a full-scale tech-driven hospitality company that operates over 18.000 franchised and leased hotels across 10 countries and 500+ cities globally. Interestingly, the company has globally leased or franchised over 200 million square feet of real estate, and have emerged as a preferred tenant of choice. Thousands of real estate owners around the world work with OYO and respect the company’s ability to upgrade all forms of real estate and deliver good quality experiences. OYO is also amongst the most preferred lesses and franchisors of real estate yields worldwide.

Over the last six years, OYO has invested heavily in building key competencies, where our operational expertise in supply acquisition and management, renovation, operations, revenue management, and distribution, through both offline and online channels, that has helped the company gain significant momentum, and emerge as the most preferred brand in the budget to mid-segment hospitality space in several markets like India and China.

We are certain that OYO’s existing competencies and international reach, will help us seamlessly deliver great quality experiences to our real estate customers as well. We are all therefore excited about our plans to create and deliver chic workspaces that will be designed to provide a hassle-free, comfortable and productive experience to coworkers, and cost-effective workspace solutions to corporates.

According to you, what does the transaction say about the office and workplace industry moving to a hospitality and services model?

The managed office space industry is inherently a unique combination of hospitality led real estate experience. With this transaction, it is a huge validation for Innov8 and the whole industry. The industry is extremely positive with the potential of office spaces market.

How would you define hospitality in the workplace world?

More than desks, chairs, coffee and office infrastructure, workspaces should provide the environment and support to make every company and coworkers grow and do their best work. Our community and value-added services make Innov8 a second home; creating an ethos of happiness at the workplace.

Would you say the Indian market is specific for this kind of approach?

Indian market is ripe for managed office spaces. India is one of the most penetrated markets by managed offices.

Startups are driving the coworking demand in India. Do you see or expect coworking to become a solution for SME and bigger corporations? Is it already happening? What’s Innov8 experience on those regards?

It is already happening. SME and bigger corporates now accepting the trend and it is beneficial for both the industry. Managed offices are the way to go for any workspace needs. At Innov8, we have already been focussing on and catering to ME and corporation. Majority of our clients are SME or corporates.

What are the specific challenges Indian coworking players have to face, nowadays, to keep up with the pace of growth?

Identify prime properties, capital, and speed of scale.

Lately, we are reading that big international players such as Airbnb are also looking towards the coworking business. Do you think this can work? Why?

The coworking or managed office market is huge with rooms for different price points and variation of the product/ service.

Do OYO and Innov8 have plans to grow beyond India?

We plan to expand and cater to the huge Indian market first.

In general, Indian coworking brands are not very active outside India, yet. Do you expect it to change? 

Yes, most definitely. There is a lot of potential. Having said that, we are currently focused on strengthening our business in India. Once we have nailed it, then the sky’s the limit.

Berlin based CoWomen is a community club and a coworking space for “driven women”. The space focuses on women on the rise. CoWomen, explain the founders, supports those “women on the rise” to achieve their goals with a workspace with beautiful atmosphere, experts and masterclasses to develop professional and personal skills and community events to find inspiration for the big goals. Hannah Dahl and Sara-Marie Wiechmann are two of the three co-founders.

Hello Hannah and Sara. Can you introduce the CoWomen project you run?

We aim at offering the perfect membership for women to build their careers and lives they love.

Our mission is to connect rising women to help them unleash their potential. We firmly believe in the positive effect of strengthening women in business and the enormous impact they can have on society and the economy. Everyone profits from more successfully working women! And because building networks is the deciding factor to achieve this, it’s what we focus on at CoWomen.

Hannah’s story is the birth of the CoWomen idea: When my first son was three months old I started to work again as a software and process management consultant. And while standing in the client’s bathroom pumping milk and being on the phone with colleagues, I started to realise that we need new work spaces. Spaces with other functionalities but also other messages and other purpose. A couple of months later I thought about starting a coworking space with child care but I was happy to see that we already have amazing spaces in Berlin that provide this service and childcare was not the only pain we wanted to solve with CoWomen. After networking in female networks for a while, it really hit me. There are so many topics we share and work on as women and being amongst women is so much fun – what an energy! An idea was born. Since then, my idea has grown into a place and space that offers everything a working woman needs.

I was not alone on my journey. When I reached out for more women to join CoWomen, I didn’t have to look too far. Sara has been a colleague and work friend of mine in our former company in software consultancy for a while and she got on board really quickly.

Sara:

I have a passion for digitalisation, for change and modern feminism. I lived these topics all my life and in my studies in Cologne and London. Transitioning into our classic working world – and we were working in public management which is also culturally impacted and not known for fast innovation processes – literally meant a culture shock for me. So, I analysed this new culture I was surrounded by and tried to master it and what I found was that the women in my company were driven and going big. They were all more or less in my age group and career stage. We were heard and promoted and needed to take on responsibility. But, there were no female role models for us.

So I left the company that I liked and started my journeys with Hannah to bring those great women together and understand how we can change the classic working world we experienced.

We were heard and promoted and needed to take on responsibility. But, there were no female role models for us.

Kat is the third woman in our founding team. She is a globetrotter always passionate about amplifying women’s voices. Having gained ample marketing experience in NYC, London, and Berlin, she can create clear and human-friendly messaging and content. That’s why she is developing and executing our marketing strategy to spread the word about the amazing connections happening every day at CoWomen.

We three founders work with a lot of heart and vision to make it possible for the women to achieve what will bring them forward, whether as a community or in their personal and professional development.

Our “Code of CoWomen” makes it clear which values and goals we pursue as a community. The code also encourages you to be yourself in a professional space and to feel comfortable with what you are doing. We live by what we expect from other work environments and employers.

Why did you feel the need for a coworking for “women only” space?

Because it’s so much fun! Really, the energy that is within a women only space is unbelievable. But mainly because we experience the need to create a space that serves a specific purpose. We want to change the working world and coworking spaces are the perfect place to do so. They offer an alternative working atmosphere and the chance to talk to like minded people to make change happen together. In our case this purpose is creating a better working world for women and strengthen them so we all profit from more working women. We were networking for over a year, we see the trend of rising female networks meeting in cafes sporadically. They need a physical space to make a difference.

And in addition, we see and experienced the pain points of women in the business world so we know that these networks are more than necessary. We exchange profoundly, openly and honestly and we meet the same challenges in life. For example, we often deal with topics such as the different ways men and women communicate, leadership styles, further education, work-life integration, the compatibility of work and family, an attentive life and often also finding or creating meaningful work. So what happens in the CoWomen space is not picking on the pain points. It is striving for big dreams and big change. It’s a very special energy when there are only women in the room.

We see and experienced the pain points of women in the business world so we know that these networks are more than necessary. (…) The CoWomen space is not picking on the pain points. It is striving for big dreams and big change.

And even if we don’t call it that, the space is a kind of safe environment where women can leave their comfort zone and try out new things. Both in the role of a participant and of a workshop leader. And you simply feel more comfortable and courageous among women. Some women need the specific exchange, some women find their customers in our community and some are merely happy not to be in the minority for once. Especially women who work in areas that are currently dominated by men, such as in the tech industry or the start-up world. It is a special experience to come together with women who are just as ambitious and determined. That gives new energy for the own everyday life.

Some women need the specific exchange, some women find their customers in our community and some are merely happy not to be in the minority for once.

We are at a time when the society promote diversity and inclusivity. Isn’t there a risk to be perceived as creating a new kind of exclusivity? 

Diversity and inclusivity are a result that desperately needs to be achieved in a lot of spaces in society, yes. Especially in spaces that mean power and designing the lives as we live them. But how do you achieve a good mix in managing and powerful roles? If there is a misbalance the minority needs to get the focus. Or as Tarana Burke (Meetoo movement) would say: “It’s not about exclusion. It’s about managing the inclusion, because otherwise they will not be pulled in the centre.” As CoWomen, we focus on including the demand of the female workforce into the classic working world. And also more females. We understand that the lack of female role models is one dominant factor in some areas and we understand that exchange amongst women on professional topics is not possible in every work environment. Therefore, we focus on women.

Without entering into the discussion about where different behaviours come from, which socialisations predominate or what is biologically predetermined, we find that women often act, prioritise and decide differently than men. Of course, we are all individuals, so – as we have learned in some of our workshops – we should rather say “typically female” action deviates. However, it is guided by values that have long been demanded of a modern working world and modern leadership. Authenticity, flexibility, commitment to one’s own values, inclusion and collaboration, but at the same time independence, empowerment and adaptability. These and many other behaviours are urgently needed in a complex, individualising society and in complex markets, so we are here to push them forward. By the way, Brigitte Zypries is also one of our fans. CoWomen makes women’s lives easier and gives them the network they need to reach the top! CoWomen is more than just a coworking space. Our vision is to connect and support the next generation of female leaders. We connect them with each other as well as mentors and offer them the perfect work environment to realise their dreams. We want to feel comfortable in the rooms we work in, almost like at home.

CoWomen is more than just a coworking space. Our vision is to connect and support the next generation of female leaders.

Is there a mainstream profile of member within your community?

Women with a certain “drive” who don’t always know what they want, but have the energy and the wish to find out and pursue it. Women who want to create value for the economy and above all for society. Women who know the meaning of networks and want to live the values of our code. Our members come from different industries and have all kinds of professional situations.They mirror the typical working woman in Germany, but in regards to the aspects above. They need to want more and develop together. As you can see, we are not strictly depending on women who work with us in the space every day, but we have members who join us for an occasional work day and a lot of events after their work day is done. The majority of women at the moment are freelancers which is also a cultural phenomenon in Germany. We love that they come to our space to develop their business, their projects and themselves.

The US have been among the first to see the emergence of “for women only” coworking space: would you say the situation is similar in Europe? 

We are not sure that we have an answer to comparing the American culture to a European culture regarding female coworking spaces. From what we have seen, the call for feminism and female-only spaces in Europe is not as “loud” as in the US. In Sweden and London, there are “female focused” spaces: Spaces created by women but not only for women. We are the second space that opened for women only in Europe and we are going to open many more. There are amazing spaces for women in the US that we don’t usually read about in Germany or Europe. And they are in parts also our role models: empowering women by bringing them together and catering their needs. Without bashing men. And Kat already visited some on her last trip to the States. So we think we share our goals, but we are living our European culture as well. But most important is: we are always open for cooperation. Together we are stronger.

We are the second space that opened for women only in Europe and we are going to open many more.

Would you say the struggle for more gender balance is similar in Europe than in other places?

Gender balance is highly culturally determined and different in every society. What we are aiming for is a switch of mindset and therefore we have to understand it first. What we know is, there is huge potential in Europe and in Germany to improve leadership and work by including more females. So similar, we don’t know, but there are a lot of numbers, that show us, that balance is missing. It is hard however to compare numbers. We need to ask the right questions first. And this is where coworking can help as it creates the space to get into topics of imbalance more deeply with women who are aspiring to reach the top. So they ask the right questions to themselves already. And we all see the movement of women working together on creating this big momentum and movement towards a great female vision. In addition to that, Coworking spaces themselves are a manifestation of the problem of imbalance in the modern working world. There are women missing in a lot of coworking spaces too. In the German-speaking coworking scene we notice a big shift towards this topic. Coworkers and owners are very aware of the low number of women in their spaces, on diversity topics or are even interested in opening more female spaces.

Our vision is to create an inspiring place where aspiring women can come together to change the world of work, even the world. Together we are stronger. We care a lot about building our shared vision sustainably. In Germany, coworking spaces for women are new, even though almost everyone in Berlin already knows about “coworking”. Nevertheless, for us it is as important to take our knowledge and experiences and support organisations and companies to bring more diversity into their corporate culture. We are all faced with challenges and can master them if we take the needs of our colleagues into account and transform the world of work accordingly.

There are some clichés that a coworking space for women will naturally include a “child care” service. Your project is definitely not about that. 

Hannah:

I usually answer that there aren’t men at the space so who should take care of the kids?! Haha. But yes, this is an ambiguous topic for us. And in a very early stage as described above, we actually thought about a space that includes child care services as this was my initial impulse. But it’s not our focus now. We are learning through our work at CoWomen that family planning is (still) a classic female issue but is very far from being the only one that keeps us from taking on more responsibility in the working world. So there is a 100%-acceptance policy on family topics and the need to bring your child with you sometimes. I take my Babyboy to any (business) meeting that I have. But at the space, we focus on working and changing the working world. Our moms also do. We work on creating a narrative to change the system. It is much more than just creating places that include child care services to ease the pain of not having time to work. It is about showing the world that there are things that need to be done, women or men, with or without kids.

What are Co-Women’s plans for the coming two and five years?

Two years: Become a well-known and fast growing thought leader promoting a great free life with power and responsibility for women all over the world.

Five years: We are building an empire 😀

Eric van den Broek, Sophie Ozdzinski, Stefano Borghi and Augustin Riedinger are co-founders of Copass, a marketplace that offers a selection of workspaces around the globe: vibrant or calm, huge or small, classic or atypical, they got everyone covered.

We have interviewed Eric van den Broek to find out more about trends in nomad coworking as well as in new group working patterns.

Can you introduce Copass, the philosophy behind it and how do you compete in such a “coworking platforms” dense environment?

Of course! Copass is a global coworking membership enabling its users to access a network of more than 950 independent coworking spaces around the globe with one single subscription. Basically, it’s like being a member of a thousand spaces at once.

Copass was born 6 years ago, in early 2013 as the brainchild of former coworking space founders. I’ve been involved in the coworking movement since 2011. In 2014, coworking was growing rapidly and what started as a genuine bottom-up movement started to get structured as a market. Big players started to join the movement with big money and were able to open networks of locations. 

As I naturally became friends with many coworking space managers all over the world, we started discussing the possibility of offering a seamless experience for coworkers to work from any coworking space. The idea was the following: we could offer the value of a network to our members while staying independent at the same time. That’s basically how Copass started!

You were not alone on the market, were you?

In terms of competition, we’ve seen a lot of platforms come and go. Most listing platforms did fail as members would simply bypass the platform and deal directly with the space when they found it. Some competitors do work by focusing on meeting rooms and closed office spaces but that’s a very different audience. Copass stayed true to its roots by focusing on offering a seamless experience for coworkers and coworking space managers.

As we are self funded, we also could deal with a slower growth than what a VC funded company might expect. When we started, coworking was still pretty niche so the idea needed a little time to really make sense. Some say we’ve been patient but I would say we’ve been passionate.

You once said coworking leans towards “team consumption” instead of individual subscription. Can you elaborate? 

I often think back about the old times when we had to explain 10 times a day what coworking actually is back in 2011. Nobody had even heard of it! Now if you walk in a random café and ask the question, most of the people know exactly what it is and what is the benefit of using one. Coworking has become mainstream, and as it became mainstream, it went way passed it’s initial target audience that was mostly made of freelancers.

Teams and companies could now have instant access to cool facilities and ecosystems anywhere they want without the burden of a formal lease. This change also reflects on Copass. Companies can create groups, attribute individual memberships to their teammates or share a pool of daypasses, centralizing all their coworking expenses in one place. The value of a network for this new audience is even greater than for individuals so Copass is an excellent fit for them. I would say that today, around 30% of checkins are done by teams.

Shall coworking spaces focus more on “teams” rather than individual freelancers, then? 

It’s hard to answer this question as I think both approaches can be valid. Coworking Spaces focusing on freelancers can understand and answer their needs better. Community for freelancers is way more important than the actual facility as you’re talking to people who suffer from isolation when working from home. This isn’t so much the case for teams and companies. For them, the services and the facilities play a much bigger role. In a way, working with teams and companies is way more “transactional”.

In terms of community, teams usually don’t blend in as much as individuals as the team is “socially self sufficient”. In the early days of coworking, that was super community focused, this was actually a problem as too many teams in a space could affect the overall vibe of spaces and I remember having discussions with other operators on this very topic.

So I think freelancers and teams are actually two very different things. What happens is that, as coworking grew as a market and as the real estate pressure became stronger on space operators, coworking spaces needed to grow in size and to do so, they had to address different needs. Teams offer a more predictable income and working with teams is more “scalable” than working with freelancers as refining a service and a space design is easier done at scale than maintaining a unique community vibe.

I think freelancers and teams are actually two very different things.

The final answer would be: if you’re going into coworking for business and money, you should go big and find a way to accommodate teams within your space. If you’re going for the love of community, you might be able to go smaller and work only with freelancers. But there is no definite answer here.

From your data, it seems coworking users keep being more urban. Does it mean rural coworking remain an exception?

As much as I’d love to say no, I would have to agree on that. Coworking is still an urban phenomenon and there are many reasons for that:

1. People feel the need for coworking spaces when they lack space at home. When you’ve got a 150sqm house in the countryside with your own office in it,  you don’t feel the urge to get out as much as when you live in a 30swm flat in Paris
2. To make sense from a financial point of view for a coworking space, you need a certain density of potential members around.
3. As you’re going away from big cities, the economy is a lot less about services and a lot more about the industry or agriculture. 99% of coworkers are actually service providers.

That being said, in the long run, I could see a future where people move away from the cities and work remotely. I would actually love that as I think centralization causes many problems, but that’s a topic for another day 🙂 

In the beginning, you were more focused on coworking travelers. Now, it seems Copass users tend more to cast their coworking need locally…

I think the so-called digital nomad lifestyle is for people a bit like sex for teenagers: many talk about it but few actually do it. Don’t get me wrong: I’ve been considered a Digital Nomad myself and I loved it. It’s just that looking at the media, it appears bigger than it actually is because it’s sexy and tickles people’s curiosity, especially when you’re stuck in a crappy office doing a job you don’t like and daydream everyday about quitting your job to go around the world 🙂 

It’s true that Copass has been perceived a lot like a tool for nomads and I think we suffered from it as many people would think “this product is so cool but it’s not for me as as I don’t travel that much”. At the end, most of our users actually roam within the same city and sometime travel with Copass! For urbans, coworking is the new normal and as they have many options around, it makes a lot of sense for them to not commit to one but to use different spaces based on their needs. If you’ve got a meeting with a client at the other end of the city, it doesn’t make sense to go all the way back to your homespace.

The office, which was a constraint before, has become a tool and you can now use the best tool based on your needs and constraints.

Do you see big differences between countries in the way people interact with coworking? 

I think in the end, what is the most striking are the similarities between spaces rather than the differences. From a sociological perspective, it’s very interesting to see that there is way more in common between a freelancer in a coworking space in New York City and in Indonesia than between this same freelancer and a farmer in minnesota. There is a global culture that emerged beyond countries which is a pretty unique phenomenon. You’ll still see some differences though but not that much.

How do you see the main coworking usage patterns and profiles evolve in the coming 2-5 years?

I see coworking as becoming a feature of almost anything. A lot of big real estate players already include coworking in their projects alongside restaurants and accommodation. Coworking has found a place in the real estate industry.

I’ve got mixed feelings about it and I know a lot of coworking pioneers also do. We came in this space and shaped the movement for the community and the values and not for selling square meters. The real estate part of it was only something we had to deal with. Let’s not fool ourselves: the intentions behind a WeWork or Spaces and an indy space are not the same…

That being said, there is no need to get too mad about it. That is the way things go and in a way, we all knew that was going to happen. Also, keep in mind that those big players address a different market I believe. For them, business comes down to flexibilizing the workspace, which is something companies need and have needed for a long time. When you’re creating a business, it all comes down to the problem you are solving. While pioneers in coworking solved the problem of isolation by creating communities, real estate players solve the problem of flexibility by offering office as a service.

Those two things are going to grow together, the latter being mechanically much bigger in size than the former.

Founded in 1999, The Instant Group rethinks workspace on behalf of its clients, injecting flexibility, reducing cost and driving enterprise performance. Instant places more than 7.000 companies a year in flexible workspace such as serviced, managed or coworking offices workspace (Instant Offices hosts more than 12,000 flexible workspace centres across the world).  The Instant Group employs 230 experts worldwide. We asked John Williams, Head of Marketing of The Instant Group, about his vision of the evolution of the international flexible social workplace market.

How is the conventional property market anticipating the rise of the demand for flexible workplaces?

John Williams, Instant Group

We are witnessing a seismic change in the flexible workspace market.

Clients are demanding more from their office space and the growth in operators is serving this increasing and changing demand. Landlords are entering the market with a variety of flexible office solutions and there will continue to be consolidation of the market where there are opportunities for growth and a shift to an outsourced office model.

There is a clear difference in terms of market maturity between the UK, a handful of digital startups friendly metropoles (Paris, Berlin or Dublin), on the one hand, and the rest of the continent, on the other hand. Does coworking only fit with dense urban environments? 

Defining the differences in flexible working is critical, as coworking only makes up a small percentage of the market. Flexible workspaces offer all types of space including dedicated private offices, hybrid space and coworking. The growth of flexible workspaces and coworking will continue as companies of all sizes adapt and demand greater agility and flexibility with reduced risk. In terms of specific location growth, there are some factors which could make other European city contenders against London; largely whether Brexit will mean businesses no longer want to retain their portfolios in the UK.  Some businesses may seek a flexible solution in a key European city, with Dublin already being the European headquarters for some of the largest tech companies such as Google, Facebook and Paypal. Whilst markets such as Paris and Amsterdam continue to go from strength to strength seeing consistent growth, attracting a range of companies into the flex market as well as seeing an increased range of operators in these cities. Whilst London continues to be the most mature European market, other key cities are beginning to really tap into flex space with an abundance of new centres and operators launching in the market.

Defining the differences in flexible working is critical, as coworking only makes up a small percentage of the market.

Is the move supported mainly by coworking “multinationals” or by independent local operators?

The three largest providers of serviced office space in London in 2017 only made up 17% of the total market with a huge number of niche providers. These smaller operators cater for unique but growing segments of the market such as specialist TMT space or women-only centres.  As we have seen in the US, the number of smaller operators, who run only one or two centres, has continued to proliferate despite the growth of the larger players and represent a large proportion of supply to the market.

The three largest providers of serviced office space in London in 2017 only made up 17% of the total market with a huge number of niche providers.

Are traditional business centers all getting in and supporting the growth in offering?

Whilst the initial response was sceptical, many traditional landlords are beginning to see the benefits of flex space within their workspace. According to the Financial Times, increased client demand for flex space is having a significant impact on UK landlords.  As business demand for greater agility grows and the size number of requirements increases to all-time highs, in fact the number of deals done across London for 20+ desk requirements is up a staggering 46% in the last year alone.

Traditional landlords are seeking a new route to cater for this demand; Instant recently complete a first of its kind with a co-lease solution with landlord, Dorrington, for a client seeking a larger desk requirement.

The number of deals done across London for 20+ desk requirements is up a staggering 46% in the last year alone.

How does pricing and amenity provision compare, and what do you expect to be the respective USP’s (Unique Selling Proposition) ?

Service, Calibre of space, Quality of physical space, Additional amenities, Gyms on site, Community aspect and network (WeWork, The Wing, etc.).   Much like many other models; the higher the calibre of the amenities, the higher the pricing. However, desk rates are continuously climbing in correlation with increased demand.  We have commissioned a number of surveys over the last 24 months with our vast occupier database. They are seeking workspaces with amenities more akin to a hotel environment with gyms, creches’ and yoga spaces to name just a few – and operators are listening. 

They [occupiers] are seeking workspaces with amenities more akin to a hotel environment with gyms, creches’ and yoga spaces to name just a few – and operators are listening.

What are, according to you, the other growth areas – and the reasons why we think they are going to expand ?

Events, meeting rooms, gyms etc, concessions (pop ups, etc)… Operators are beginning to diversify and add value to existing clients; for example WeWork has begun providing pop-ups for retailers within their locations, providing a one-stop shop for occupiers.  Other ventures include single use meeting rooms. Within the wider market, adding value with improved or innovative amenities will help operators stand out from the crowd. 

What could slow or stop the expansion dynamic ?

There are several key trends that will significantly shape the future of what is still a nascent industry. The flex market is only 30 years old, at most, but the majority of its growth has come in the past decade with supply ramping up and more operators joining the market. This rapid growth and increasing interest in flexible solutions from the more traditional side of the property sector is already creating issues that the market will have to address. As competition grows across the market and is compounded by increased cost to operators of taking space, square meters allocation per desk has fallen dramatically to ensure margins are retained. We have also witnessed consolidation of the market through a number of acquisitions. In APAC, WeWork has been acquiring a number of local operators including Naked Hub and Space Mob. There are over 5.000 centres across EMEA and we have witnessed growth of 15% in the last 12 months. A number of operators including Mindspace and WeWork have expanded their footprint in Paris, Berlin, Amsterdam, and Tel Aviv.  While there is growing demand in all markets for flex space, there are a few factors which could impact the growth of the flex market : 1) Saturation of the market with too many; 2) operators, Recession / Financial down-turn; 3) Consolidation of the market.

As competition grows across the market and is compounded by increased cost to operators of taking space, square meters allocation per desk has fallen dramatically to ensure margins are retained.

John Williams will be a speaker at the upcoming Coworking Europe 2018 conference. 

Picture : The Space – Source : Instant Offices