Co-working: a new way of working?September 8, 2017 / By
Working styles have changed considerably over the last decade. There has been a movement away from the traditional partitioned desks and closed offices, mainly for senior personnel, towards open plan offices and now to agile work spaces and unassigned desks.
The lack of rigidity in the workplace lately has not only become commonplace, but it is now desired and expected by existing and incoming employees, due to it facilitating approachability of all seniority levels within an organisation and well as collaborative environments.
The community-style workplace is also attractive to small businesses which would normally work out of closed-off suites or home offices. The co-working environment presents an opportunity for these small industries and businesses to grow at a heightened pace than in alternate spaces due to exposure to ideas, similar businesses and funding sources.
Both small and large businesses attracted to co-working spaces
Strong demand for co-working space is represented by the fact that not only small business and start-ups have taken space in co-working offices, as initially expected, but that large multinational companies like Microsoft and Google, for example, are current tenants in WeWork’s Sydney offices. In global terms, the growth of co-working spaces is showing no signs of stagnating. WeWork, one of the world’s largest co-working providers was listed as the eleventh largest occupier of space in New York City in 2016. WeWork also has a significant footprint in San Francisco and London, alongside current plans to expand into China.
Since 2010, co-working providers have contributed 95,700 sqm positive net absorption to the six Australian CBD markets, representing 18.4 per cent of total net absorption over this time period (519,200 sqm). The majority of this activity has been concentrated in the last five years, with 77 per cent of that net absorption recorded since 2014 (comprising only of moves > 1,000 sqm).
This recent surge in take up of co-working space is attributable to not only this rising trend of co-working but has also been sustained by demand from small and large businesses due to its practicality and flexibility. However, whether this current pace of expansion of these providers is sustainable in the long term is contentious.
Source: JLL Research
Over the last seven years, Sydney CBD has seen the strongest take up activity of co-work providers (47.4 per cent), experiencing positive net absorption of these companies of 45,400 sqm. Melbourne CBD has followed close behind with 28,900 sqm (30.2 per cent) of positive net occupier take up over the past seven years.
A trend towards co-working appears to have been established. Historically, most co-working operators’ tenants consisted of start-ups – a sector with high business failure rates when the economy slows.
However, larger co-working operators are reporting that a high proportion of the space is being leased by established listed companies. We believe that that large organisations are seeking flexibility in their workplace solutions. The importance of the corporate office will not be diminished, but a strategy for co-working and suburban office is important for attracting and retaining a diverse and highly skilled workforce.
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