Economy

Co-working Spaces – The New Normal

A co-working space is a flexible, ready-to-use, plug-and-play office sharing plan where persons from different professional backgrounds, interests, organizations, and institutions work in the same place. These individuals can often not afford their own office space, and thus co-working spaces offer a cost-effective solution. Over the last many years, office space formats have been evolving significantly and are considered more than just a convenient location with plain desks, chairs, and cabins. The work environment plays a crucial role in enhancing employee productivity and motivation. Minor factors like office design, amenities provided, and even the color of the setup seems to have a significant impact on employee performance and efficiency. The new age workforce views the companies offering well-designed flexible space options as increasingly desirable places to work for. The shift towards viewing ‘space as a service’, and not just a commodity is the biggest driver of growth in demand for flexible workplaces today. With newer business paths opening up, office space design continues to evolve at a sturdy pace, covering not only its structural facade but also involving aspects such as amenities and the digitalization of the office.

The co-working sharing economy model allows increased mobility, cost-efficiency, and flexibility of scaling up or downsizing office spaces. In addition, such spaces provide a collaboration platform for like-minded individuals who come together to form a community. Even though traditional business centers have been and will always be a part of the commercial real estate offering, the rapid rise in start-ups led to the need for more synergic spaces. While the co-working model was initially targeted at start-ups and freelancers to facilitate the gig economy, due to its flexible and lower-cost option, the concept has become attractive to large multinational corporations as well. For example – during the initial years of the US-based co-working space provider WeWork, small start-ups and freelancers made up a large chunk of their clientele. However, enterprise clients comprised more than 50% of WeWork’s core revenue during the second quarter of 2020.

COVID-19 Impact on the Co-working Spaces

In the last year or more, the COVID-19 situation has not spared anyone from its repercussions. As the office market recovers from the second wave, the co-working industry speculates an overall revamp in commercial work spaces’ strategic model and functioning. The flexible workspace segment has seen a considerable surge in demand within the office market and has become an alternate workspace solution for many other players. In the wake of the second wave of COVID-19 as well as predictions of a third consecutive wave, almost all large operators globally have created a flexible workplace portfolio comprising a combination of managed space solutions and co-working. This has led to the transformation in the working model. At the same time, organizations need to prioritize a positive mindset and be open to a more flexible work arrangement. The work-from-home consequences on the permanent workplace are too many to navigate through in one glance. The companies are re-strategizing their working culture while bringing more flexibility to ensure higher productivity that was lost during the last year. At this point in time, co-working spaces are gaining massive prominence in offering agility and engagement while following preventive protocols at the workplace.

What Makes the Co-working Model Attractive for Consumers in the Current Scenario?

Cost-effective and Efficient Model
Co-working spaces lessen financial burdens established in a traditional business structure. It allows entrepreneurs and young businesses to operate in a fully functional office space without worrying about the setup costs while reducing heavy rentals, long-term leases, and saving overhead costs on administration and maintenance. During the ongoing pandemic, this has become a significant factor contributing to organizational decisions. Since remote working has become the norm, investing in an office space is being seen as an additional overhead cost that not many companies are willing to put their money in or simply cannot afford it. So co-working players stepped in, offering valuable benefits to companies ranging from affordable seating costs to robust infrastructure to networking opportunities. In addition, they have provided clients with a hassle-free experience in terms of highly compliant, ready, and completely equipped setups. They have also enabled businesses of different sizes to save on overall capital costs while reducing their operating costs by approximately 15% to 20%. For instance, prominent co-working operators like WeWork, IWG (previously known as Regus), Quest Workspaces, etc., are slashing prices to hold onto their pandemic-hit customers or providing them with the option of partial exit.

Quick Scalability or Downsizing
With flexible agreements and rental contracts, co-working spaces allow small enterprises to upscale or large MNCs to downsize at their own pace, without any pressure of long-term or rigid lock-in periods. As the impact on enterprises continues to change due to the evolving situation of COVID-19, workspace requirements are also developing constantly. Thus, enterprises have the authority to take a call – whether they want to expand or consolidate. Scalability as an option is what organizations would not be able to get in a conventional office setup.

Tech-driven Environment
Co-working spaces merge the physical spaces with technology, providing businesses with innovative facilities that adapt as they grow. Operation metrics suggest that co-working spaces allow organizations and institutions to tap into enriching usage and efficiency insights. Such data-driven takeaways empower consumers to make a more informed decision on real estate investment and improve their spaces more efficiently. The pandemic has undoubtedly changed the dynamics of a regular working model, making it imperative for corporates to think beyond the typical office scenario. Technological advancements and association tools can be used to deliver a more tailored and all-in-one workplace experience to push people to work effectively and efficiently. Tech-enabled office space is one that effortlessly binds all workspaces: the office, co-working, and work-from-home together. Technologies such as automation, mobility, artificial intelligence (AI), and Internet-of-Things (IoT) will ensure that personnel is constantly connected virtually, even if not in person, while also promoting contactless operations at work.

More Networking Opportunities
One of the most commonly flaunted benefits of co-working is the ability to connect with people that an individual otherwise would not meet. While co-working spaces are often excellent locations for client meetings and team meetups, they also provide unique in-person networking opportunities. Many co-working spaces offer regular on-site networking events so one can take the time to get to know their co-working colleagues. Meeting people doing different work can help one feel like a part of a community and may even provide some avenues for new business or collaboration. While some of these activities cannot be performed post the COVID-19 outbreak, networking can continue to thrive in this new tech-enabled environment if the co-working community adapts accordingly.

Greater Location Flexibility
Another essential benefit of co-working spaces is the mobility and flexibility element in terms of location. Some organizations have incorporated the work-from-home culture, while some still require a certain percentage of their employees to work from an office location. As a result, many organizations are demanding multiple small-sized offices across various locations instead of a single consolidated office. In addition, these companies are currently looking towards co-working spaces to accomplish this need to abate their current office headcount while following the social distancing norms.

Appealing Office Design
For the new-age workforce, co-working spaces with modern office designs, rich community culture, and access to the latest disruptive systems and tools help create a balance between company culture and employee satisfaction while providing a more attractive environment than the standard cubicle. Thus, co-working spaces allow employees to network and collaborate with individuals outside their immediate organizational workforce, elevating employee happiness, wellness, and productivity, resulting in more muscular retention and better-recruiting outcomes.

Compliance Check and Security
While compliance check is a critical function for all workspaces, it is all the more vital for co-working spaces because they are pre-designed and equipped with facilities catering to employees from diverse organizations. Co-working spaces have been trying to put their best foot forward to ensure that all compliance requirements are achieved. Such provisions include regulatory compliance, identity and access management compliance, lift and fire no-objection certificates, various kinds of due diligence, and the new safety and social distancing compliance on the back of post-pandemic norms. Additionally, co-working spaces have to try and avert all kinds of cyber threats in terms of malware, data loss, etc. One way of assuring these compliance requirements is to work with reliable partners who help companies feel that the regulations are thoroughly met, and they can simply focus on their major operations.

With the prevailing global scenario, the next few years will be defined by trial-and-error, along with business re-evaluating their office needs and expectations. Before the onset of COVID-19, companies were increasingly taking up co-working spaces to accommodate expansion instead of committing to long-term leases. It is expected that this trend shall strengthen as the uncertain environment today will compel more companies to look for flexible options that can adapt to and fulfill their changing requirements without having to take on a longer-term commitment. However, we expect that the increasing need for flexibility and the competitive advantage of being a workspace expert will sustain the industry in the long run.

– Aishwarya Lalchandani (Student of MA in Applied Economics at Christ College, Bengaluru)

Picture Credits: thereceptionist.com



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