As the coronavirus sweeps the nation unexpectedly at an alarming rate, coworking spaces are hit with a harsh new reality. In more recent years co-working space has become extremely popular amongst small and start-up businesses, as well as some of the larger tech-infused corporations. “Occupying approximately 71 million sqft in 40 major cities”, it’s safe to say, shared spaces were invoking and inspiring a new way of working.
Collaborative working space is known to stimulate creative and thought-provoking environments. More recent developments have leaned towards reducing the amount of square footage needed per person. “Shared spaces are known for putting as many people in one space as possible sometimes allotting as little as 36 Sqft per person”. Other co-working facilities don’t even know the amount of space in the office, they simply know “7 people will fit comfortably”. This method can cause challenges for those looking to ensure the safety of their staff and themselves. I foresee companies being more intentional about increasing square footage to be in compliance with the federally recommended social distancing rule of 6 ft.
Many companies were encouraged to office out of these new tech-inspired co-working facilities for their amenities, access to constant networking, and (with their engaging environments) assistance in employee retention. So, how could COVID-19 come in, and in what feels like overnight, change the trajectory of which co-working spaces were headed? And more importantly how do Co-working spaces combat the inevitable?
COVID-19, if nothing else, has shown people across the country that remote working doesn’t have to be a drag. With online services such as Zoom and Teams, companies are being forced to try out technology in a way that they never considered before. While these solutions were meant to be temporary, with the recent extension in the stay at home order, there is talk amongst companies on rather they will ever go back or will this be apart of their new norm. With the economy taking major financial hits, companies are having to take a closer look at how they will operate going forward. Should they downsize their physical footprint to reduce rent amounts? Should there be a hybrid of remote work and on location? Do we “need” an office at all? or will they simply forget the technology that has gotten them through such tumultuous times and go back to work-life pre-COVID 19.
Personally, after experiencing the effects of this pandemic in our own organization, I find it difficult to believe that companies and corporations won’t consider utilizing technology to cut costs. If given the option, many companies may reduce or eliminate rent expenses first (At least until they bounce back from any financial hardships caused by COVID-19). Cutting the overhead that is associated with brick and mortar can free up capital to allocate towards payroll and personnel. I expect many small businesses to cancel contracts with coworking spaces and start taking advantage of home offices, day passes, and coffee shops. This will have a negative impact on co-working space as most facilities have signed long leases (some up to 15 years), while allowing their tenants to sign up for a month to month membership, (removing long term commitments).
Additionally, I believe this virus will leave a lasting psychological scar on individuals across the globe. To some degree, it may even change consumer behavior (especially in the world of commercial real estate/co-working). We see it happening already! People are choosing to be in smaller groups as opposed to large crowds and virtually meeting instead of in person. They no longer want to jeopardize their health and safety or the health and safety of their loved ones by commingling space with strangers. While this behavior may be temporary, I would not be surprised if co-working spaces start to experience large amounts of vacancy in 2020.
The good news is I don’t believe it will be this way forever, however, I would prepare to hunker down and look for ways to be creative in the usage of co-working space going forward. A few things we have seen prior to and during COVID-19 have been:
- Targeting corporate tenants (i.e We work- with 40% of its tenants as corporations)
- Donating/leasing space to companies that are deemed essential
- Removing services that may cause discomfort (suspending barista/food services and large events)
- Implementing heavy sanitary habits (sanitizing desks 3x a day)
With the temporary removal of communal activities (which is what most co-working tenants buy into), co-working spaces will have to consider how can they continue engaging their tenants while increasing the cleanliness and safety practices of their facilities drastically.
Overall I do not believe these creativity hubs will go down without a fight. There is something to be said about their thought-provoking, high energy environments, and opportunities to develop mutually beneficial relationships. These shared spaces have created a winning atmosphere for individuals and companies across the country. Co-working may look different in the coming months, however, I do not believe they will disappear.