Mar 19, 2020
The proportion of millennials in any workforce demographic is and will continue to grow at a significant rate. This group…
Since the world’s first coworking spaces were launched in the early 2000s, the number of flexible office spaces has expanded yearly, with an estimate of 22,400 coworking spaces now available globally.
Coworking spaces are constantly evolving every day. To add to this a hybrid model of coworking has geared up as vacant retail stores, large hotel chains, restaurants etc are offering their space as a “drop-in” coworking space in non-operable times.
While it’s true that larger coworking players have dominated the market for years and continue to broaden their global reach, an increasing number of privately-owned, independent spaces are making moves to expand in 2020. On an international scale, spaces that began as a single, small community of 25 to 50 members are facing a greater demand for additional legroom. In a recent survey of 7,500 international coworking spaces, Coworker found that 71.14% coworking spaces have plans to expand to new locations, with 37.76% of respondents on track to open two to three locations in 2020 alone.
But the unprecedented phenomena, COVID19, came to light and impacted the coworking industry.
Most of the organizations using coworking spaces for their operations have been asking for discounts or reduced prices as they are working for a limited time in the office and barely with full strength. Since many of these organizations have chosen to work from home due to COVID19, coworking spaces have seen a huge drop in the number of walk-ins to the office.
With a slowdown in the economy over the last few months and the current pandemic adding to it, clients are now asking for more flexible plans. As the number of confirmed cases rise in the country, almost all the startups – which form the major clientele – have issued a mandatory work-from-home policy.
The growing concerns surrounding the outbreak have made co-working firms ramp up hygiene checks as part of precautionary measures. Companies have stopped planning for the long-term, which was not the case earlier. Co-working companies are also facing a slowdown as new clients are not coming on board due to the economic uncertainty as a result of the outbreak. Startups are now using online and collaborative tools like Slack and Zoom, while teams are working from home.
“We have engaged our clientele at iKeva by building virtual alternatives to keep our members engaged in the interim,” said Monika Misra, Founder of iKeva.
Industry experts, however, expect the impact to be short-term, as demand for flexible workspaces would only rise in times of uncertainties.
Companies are striving to maintain a fine balance between landlords and clients by passing along the waivers available on fixed rental payment and savings on variable operating costs, to customers in the form of concessions on monthly rentals.
These are hard times and coworking space provides are following the industry norms for waivers, generally provided on a case to case basis. Even though some companies have noticed an increase in the number of inquiries from enterprises in the last few weeks, the materialization of deals might take longer than usual. This situation surely impacts the coworking companies that are still the process of figuring out a model that works for them to scale the business. Besides, many freelancers, startups and SMEs have been asking for huge discounts, some even asking for a full waiver of rentals or even canceling the contracts. Therefore, co-working operators are now coming together to exercise force majeure to cease rentals outflow to landlords. It is still the early days to assess the full impact of COVID-19 on the leasing activity of co-working operators. However, most players who were inactive discussions with landlords for leasing premises prior to lockdown, have not pulled away from such discussions.
“Coworking is going to see a change in the way they (coworking space providers) provide SLA driven services. The business model has to be revamped to survive the crisis now – Said Dr. Ramesh – Investor, Endiya Partners”
That would seem to be a logical and immediate prognosis in this new era of telework and social distancing. The punditry is full of predictions about what aspects of life will be changed forever as a result of the pandemic, lockdowns, and resulting economic fallout.
While the pandemic has brought about a seismic shift in work culture, there’s a lot more at play than what employers and workers want. In order to survive this bad economic situation, the pandemic has brought in, employers are looking for options to cut costs. To avoid layoffs, they are asking people to work from home and saving their office space rents, after all, work from home is less painful than layoffs.
Furthermore, the necessity of working from home brought on by the pandemic has also caused many employers and employees to spend money on new tools and technology, ranging from video conferencing subscriptions as well as new equipment.
Companies where their employees have already made up their guidelines to work from home, where and when can they access the company files and their work desk setup will have an easy time working from home comparatively.
Regardless of how prepared they were, people have done what they had to do to make working from home “work”. In doing so, they moved the needle on what’s acceptable in the at-home office.
Working from home all the time is not for everyone, and many will want to return to the office. As the public health crisis continues, however, office space will probably have to be altered in order for people to feel safe being there. AI will play a role with technologies for example, Amazon Alexa for Business could become a new interface and remove the need for physically pushing a button or touching a surface in an office.
Inevitably, the most consequential way to prevent the spread of germs in an office might just be to limit the number of people allowed inside at once or to uphold social distancing measures. First, social distancing measures might lead to a transition in the current space design of coworking spaces. Secondly, rather than having everyone work in the office from nine to five, companies might want to bring in certain teams at specific times to lessen congestion.
Coworking is not doomed, but it’s destined to change. Proponents of coworking spaces have long argued that companies managing flexible office space would be able to weather a recession. That’s because, while a number of clients at coworking spaces might choose to liquidate their space completely, coworking companies expect an influx of new clients looking to downsize from traditional office space with long lease terms into so-called flexible or coworking space.
What the coworking space enthusiasts didn’t anticipate was fear — and a legitimate safety hazard — of working in close quarters to others. Experts say this setback hardly signals the end of coworking. It’s probably temporary, though it may lead to the demise of some struggling coworking companies.
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