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Companies come in all shapes and sizes, but we’ve found it’s often the size of an organization that dictates its decision in choosing coworking space in today’s market, and they each have their different reasons for doing so.

Small Businesses are Choosing Coworking for Culture and Risk Aversion

Up to 25 Employees

Small businesses do choose coworking spaces for some of the same reasons as larger corporate teams, in that their decisions are fairly practical, which we’ll explore in more detail later on. However, the decision is much more driven by culture and risk aversion.

First, coworking spaces often come with a host of cultural perks. From startup-focused events and classes to a pool of freelance talent and potential investors, coworking spaces are a great cultural fit for early-stage companies. These features cover gaps in management and culture that most small companies can’t afford to fill on their own.

Second, and possibly more importantly, we know that most small businesses inside coworking spaces are early-stage startups, and the life of a startup is a volatile one. When you don’t know whether or not your next funding round will come in, signing a multi-year lease on an office space is incredibly risky, not to mention the capital expenditure that comes with fitting out an office. The flexibility of coworking allows small businesses to easily scale up and down with fluctuations in their performance.

Related: Learn how Upsuite works with teams

Medium-sized Businesses are Leaving for… Culture

25 to 100 Employees

We see that medium-sized companies are leaving coworking spaces in droves, and the reason, like with small businesses, has to do with culture.

At a certain scale, medium-sized businesses start thinking seriously about developing their own company culture. Their desire to build a brand that attracts and retains talent simply can’t happen in the open and inclusive environment of a coworking space. They realize, perhaps rightly so, that best way to build a unique culture is to remove those outside influences and create a closed box where that culture can grow and flourish.

But don’t worry, they’ll be back, someday.

Large Businesses are Choosing Coworking for Practical Reasons

100+ Employees

Unlike the other two categories, the decision of whether or not a large business joins a coworking space has nothing to do with culture.

Their reasons are far more practical. They think about things like recruiting in new labor markets, quickly accessing additional office space, and reducing the administrative burden that comes with scouting and managing their own real estate.

And it’s with large businesses that we’ve seen the most significant shifts in choosing coworking. So much so that we’ll focus the rest of this piece on how large businesses and corporations are choosing coworking spaces and how coworking brands are adapting to corporate needs.

Related: What is a perfect fit coworking office space?

Coworking Solves Practical Growth Problems for Corporates

As any company grows, there are problems. But many of them are eased by the adoption of coworking.

The most notable problems we’ve identified for scaling large businesses are:

  • Talent acquisition
  • Quickly locating additional and suitable office space at scale
  • Opening up in new markets

The Talent Problem

The labor market is highly competitive in any industry, and large companies do everything they can to get an edge. But to attract and retain talent, one can’t simply be a great place to work, one must also be an accessible place to work.

If a job requires a candidate to move between cities, the chances of the candidate accepting, let alone applying in the first place, go down significantly. If the job requires relocation to another state or country, the odds drop even further.

Traditionally, the only possibility for increasing these odds has been to lease and open additional offices in new labor markets. But doing so came at an incredible cost, not only because of rent and utilities, but also because of the significant time and labor costs accrued from scouting locations, refitting the space, sourcing furniture and equipment, setting up services, and negotiating a good deal. Moreover, the company needed to retain a real estate or workplace strategy team to maintain various leases and landlord relations.

In the end, expanding to a new city could net a business millions of dollars in extra costs not tied to the expenses of the lease of office space or recruiting efforts.

Enter: Coworking

As coworking spaces have become larger and more professionally managed, corporates have realized that choosing coworking and flexible office space are the silver bullet to their talent problem. Now, a company can open a new office in a new city in almost no time, instead of spending months building out office space.

Corporate Office Expansion Graphic

What’s more, they can ramp up space as they hire additional team members, which means they can mitigate the risk of having too much space during a slow hiring period.

All this means that corporates can much more easily access talent markets all over the world.

The Scaling Problem

The second problem is closer to home. Sometimes large companies simply run out of office space.

One such case was a large Toronto-based consulting firm. The firm was looking to close a multi-million dollar contract which required them to hire an additional 100 developers within a mere three months. The problem was, they were out of space.

As you’ve realized by now, the typical path would have them searching for private office space, negotiating a deal, and so forth. But this simply wasn’t possible.

This was a big project for the firm, with an incredibly short window to work within. They couldn’t have built out an office in that time, so coworking was really the only option to gain access to a high-end environment that could attract the high level of talent they needed. So, the firm signed a $1M lease with a local coworking space.

This allowed them to be up and running in a professional and beautiful workspace in mere weeks, which let them focus all their efforts on hiring the talent they needed for the project.

The Market Expansion Problem

Of course, not all space expansion has to do with creating space for new employees. In some cases, large businesses simply need to open a physical space to do business in a particular area, or at the very least must acquire a virtual address. And coworking provides the solution here as well.

Many coworking spaces offer virtual office packages, which are permitted in many places around the United States. However, in places where a physical location is required, small office suites, perhaps with a skeleton crew, can be opened up in days, allowing any corporate to begin operating in a new market very quickly.

Now that we know why corporates are choosing coworking in general, it’s important to understand why large businesses choose specific workplaces over others.

Corporates Are Choosing Coworking Spaces For Simple Reasons

While many workspace operators attempt to pitch potential corporate tenants with words like vibe and culture, corporate team needs are simpler and less ethereal.

Corporates are looking for things like privacy, security, proper IT infrastructure, and clean and functioning facilities. In truth, they are looking for the same things they look for when leasing office real estate.

Coworking Concerns For Companies

Related: Download our free eBook
Practical tactics to find the best coworking space for your team

Silicon Valley Bank provides an interesting example. SVB recognizes the advantages of placing customer service and marketing employees inside coworking spaces because it puts SVB physically closer to their customers. And while they’d love to have bank employees in every coworking space, they simply aren’t allowed to do so.

Legally, banking data is private information which must be handled with the utmost care. That means SVB can only place employees in coworking spaces that are willing to comply with their security needs. If a coworking space can’t provide fully enclosed frosted glass office suites and the necessary network security setup, that space is untouchable.

This means that for corporates, the choice to pick one space over another is almost never about design, vibe, or culture. The choice is almost always about the practical things.

If you’ve made it this far, we applaud your thirst for knowledge about this burgeoning market. We’ll keep our close-out short and sweet. We only want to add that we’re sincerely looking forward to a empowering coworking search and selection and hope that our future this year includes working alongside you and your team to find your new workspace home.

If and when you’re ready to move, expand, or merely satisfy your curiosity about coworking, please drop us a line. We’d love to chat.

Ready to start your search for coworking space?

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