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The Corporate Adoption of Coworking Isn’t News, But It’s Changing

The fact that large corporates are moving into coworking spaces isn’t exactly news anymore. It’s a trend the industry has seen for the last few years. But our analysis shows that this trend is accelerating faster than people realize, and that the spaces are being utilized far differently than historical coworking stereotypes would have us believe.

We see that coworking has fundamentally transformed from a hip novelty for early adopters into a robust and accessible real estate package that early-majority corporates now understand and of which they are starting to take advantage. It’s now a highly practical and beneficial move for more and more large-scale businesses in all industries.

Adoption Of Coworking Spaces

Suffice to say, coworking is no longer a niche phenomenon. It’s not a phenomenon at all, so please ban this word from your vocabulary in regards to coworking.

That said, the way in which corporates use coworking spaces are a far cry from typical small businesses or individual members. For corporates, the choice of coworking isn’t about freedom, community, or culture, though for some those features may be a small factor. For corporates it’s about teams, and about getting teams up and running as quickly and efficiently as possible in the most optimal work environment.

Corporates are Distributing Teams

Another interesting trend we’ve seen is the distribution of corporate teams. No longer do corporates feel beholden to housing employees in a single office. Instead, they are taking advantage of what’s called the Flex and Core model.

For example, behemoth software company, SAP, recently reached out to Colliers International to find a suitable space for 1500 employees because they were struggling to find a location that would fit their needs at such a scale. Being the savvy and modern real estate professionals that they are, Colliers recommended that SAP create a permanent office for 500 people, but use flexible workspaces orbiting that space for the remaining 1000. This is Flex and Core.

This allowed two important things:

  • A larger selection of suitable office spaces (sized for 500 instead of 1500 employees)
  • The ability to select flexible workspaces suitable for specific teams or employee roles

Related: What is a perfect fit coworking office?

The Market Is Diversifying More Than You Realize

With the advent of brands like WeWork, some may feel that the coworking industry is becoming more homogenous, but the truth is quite the opposite. While large, multi-location brands focused on tech and startups get most of the press, we’ve seen a significant increase in emerging niche coworking spaces just as much as national or international brands with traditional focuses.

National and international brands are those we’ve all heard about: WeWork, Galvanize, Industrious, etc. Their workplace options are identical from market to market. Similar to how somebody would visit a Starbucks when traveling, one might go to a WeWork because they can rely on a high-quality experience.

But niche coworking spaces are those that cater to specific groups of people or industries. Examples include healthcare-focused spaces, spaces for women entrepreneurs, and spaces for legal professionals, as well as dozens more.

Industries Using Coworking

Niche coworking spaces can be found in nearly every major city in America, as well as abroad.

For now, we consider these “niche spaces” different than traditional independent coworking spaces. However, if we look back at the coffee shop example, we see a future where most independent spaces will be considered boutique or niche simply because they aren’t chains.

One thing is clear. We are only at the beginning of the niche market. There’s much more to come.

The Decentralization of Real Estate Decision-Making

Because of the flexible nature of coworking, in some cases corporates are empowering lower-level employees to make decisions about workplace strategy.

In one case, a team lead for Hubspot in San Francisco needed to hire a team of six people. Instead of slow the process down with corporate bureaucracy, Hubspot provided the team lead with a budget and the authority to find a suitable space for the team on his own.

And they’re not the only company to do that.

There are countless examples of companies like Uber providing this same level of autonomy for low-level managers to scout out coworking spaces and make their own deals within their budget.

In both cases, these companies knew the risk was minimal because their teams could get out of their respective workspaces very quickly if things didn’t work out or the spaces were deemed unsuitable. And the benefit is that teams get a sense of autonomy and are able to choose a workspace that fits their needs and tastes.

Corporate Teams Are Not Transient

The old notion held that an individual or a small team would join any given coworking space and, if successful, would take on more desks, eventually growing into one of the space’s private offices. Then at some point, the team would be too large for the coworking space entirely and would move into an off-site private office.

While this pattern of behavior still exists for business growing from small to medium-sized companies, we now see that corporate teams are moving into flexible workspaces and coworking spaces for the long haul.

Most teams stay for a minimum of 18 months, which is longer than most coworking operators expect. But many teams relocate to coworking spaces and never leave.

Related: Learn how Upsuite works with teams

This trend towards longer-staying, permanent teams is happening at break-neck pace, but you don’t have to take our word for it. According to research by GCUC, 40% of coworking spaces are already made up of permanent teams. And additional research by JLL shows that by 2030, teams inside coworking spaces will make up nearly 30% of the entire office market, not just coworking.

That not only makes makes permanent teams the largest subset of coworking users, but also the fastest growing.

All this is to say that, even though these teams may be offered a flexible lease option, these teams aren’t transient. In fact, they are quite the opposite. Permanent teams are here to stay.

But the question remains: why? Why are corporates choosing coworking spaces and flexible workspaces over traditional office space? After all, in almost all cases, coworking spaces are more expensive for teams when compared to leasing office space the traditional way.

The answer is simple. While some may believe the reasons to be an evolving and younger workforce that’s looking for the connection and culture provided by coworking spaces, the reality is far more practical.

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