Jeff Green and Jerry Hoffman / Area Development – A new, alternative workspace is emerging where freelancers, entrepreneurs, contract workers, and small businesses collaborate and create a business community — a space where professionals reserve a desk, room, or “hot seat” at a table without the fixed financial strings attached. It’s a cheaper office space alternative placed in an ideal downtown or urban location with added amenities, flexibility, and scalability. It offers the opportunity to be working amidst a variety of like-minded people in an environment that inspires innovation and nurtures creativity. The concept is gaining considerable traction around the country and world with nearly 1,000 co-working locations in the U.S. alone.
The effect these co-working environments have in shaping the surrounding urban landscape is particularly interesting. Where co-working spaces exist, a creative class is emerging — individuals who share an appetite for places, spaces, and resources that meet their unique personal and professional preferences. These communal hubs are creating an entrepreneurial “ecosystem” that is part of a milieu where the whole is greater than the sum of its parts. And those parts are a mix of local retail boutiques, pop-ups, chef-driven restaurant concepts, micro-apartments, and trendy national retailers. Creative, socially-driven and entrepreneurial-minded people that work and dwell in these urban populations value diverse and different dining options and entertainment, along with coffee shops and communal areas that support social engagement. Such urban ecosystems exist in major cities like San Francisco, Los Angeles, New York, Austin, and Dallas. Other areas booming with development of alternative working spaces include Denver’s Union Station/LoDo/RiNo area, Chicago’s West Loop and Hyde Park, and Boston’s downtown area around Prudential Center Plaza.
A player that recognized the strength in developing hot office markets early on is New York-based We Work. The co-working startup has 47 locations in 16 cities and is making its way into London and Israel. And the co-working trend has even started to impact large companies such as Google, Amazon, and Twitter, which all offer their staff temporary spaces to get work done on the road. The business model is allowing companies to test a new market in a prime location relatively risk-free.
A Byproduct of the Recession
There’s no question that the emergence of co-working spaces was a byproduct of the recession. Recent grads found themselves without jobs, leaving them to carve paths as freelancers and entrepreneurs. Ironic as it may be that a recession was an inspiration for one of the most influential drivers of commercial real estate in successful mixed-use urban developments — the results are impactful. As revitalized urban centers continue to surface in major cities across the U.S., the upward trajectory of co-working spaces looks like it’s here to stay. It can even be considered a disruptive idea for office property owners.
Also contributing to the healthy outlook for co-working spaces, the demand for freelancers is on the rise as employers seek to streamline operations and reduce overhead. About 34 percent of the U.S. workforce is comprised of freelancers. Millennials are particularly driving this shift, as they prefer greater flexibility and a project-to-project lifestyle. Employers and developers must accommodate this increasingly diverse workforce with different expectations of what work is, and where and when it should happen.