Welcome to the beginning of the end for traditional office leasing.
WeWork rode its reputation as an “innovative” tech company all the way to a $47 billion valuation in August, only to crash weeks later in spectacular fashion. Yet, while Adam Neumann’s downfall makes for a good headline, contemplating the company’s next move is a waste a time.
Much has changed in the nine years since We’s founding. The office leasing industry is in the midst of a shift from fixed to flexible offices — or none at all. Even if WeWork wasn’t in a leadership crisis or hemorrhaging billions of dollars per year, its business model is old news.
And, although WeWork’s competitors are primed to scoop up extra market share, they should tread with caution.
Coworker.com’s Founder and CEO, Sam Marks, sees this reality unfolding. He says that,
“Everyone wants the flexibility to scale up, down, and have a more managed office solution.
While it seems obvious that a small startup wouldn’t want a multi-year, fixed office contract, it turns out that most larger enterprises don’t either.”
So, if distributed teams aren’t working in traditional offices, where are they?
In most cases, anywhere but a Regus or a WeWork.
The New Workplace
Today’s workplace is anywhere. Remote employees, startups, and freelancers migrate seamlessly between home offices, coffee shops, and co-working spaces, but the impact of flexible work is still underrated.
While industry influencers like CBRE predict that the market share for flexible office spaces will grow from one to a scant ten percent globally, Marks and his team project that “it will go to 40%, possibly in just the next decade.”
As I write this from a co-working space in the West Fjords of Iceland, I have to agree.
Here are a few of the new concepts that are quietly but swiftly usurping the traditional office — and the leasing industry.
Co-Working Subscriptions and Memberships
Few gig workers will pay $275/month to sit in a WeWork cafeteria when they can spend a fraction of the price for more flexibility.
Enter — co-working subscriptions and temporary office space booking platforms.
Coworker.com — The world’s largest global co-working community — has recognized this shift. To serve the needs of their 3 million members and 13,000 vendors, they’re launching a new, flat-rate membership option called Global Pass.
Global Pass grants “frictionless” access to more than 4,000 co-working spaces in 1,000 cities around the world.”
“By 2030, we believe 1 billion people will be accessing a co-working space annually.
Co-working is not dead, it is just beginning.”
Co-working subscriptions offer something for everyone — from “solopreneurs” to multi-national teams. The concept works in both a macro and micro context.
For example, Common Grounds offers a regional subscription in the Netherlands and Sweden. Members pay a flat rate to access 400 flex desks across 30 spaces in the company’s portfolio, and can cancel anytime.
Non-members can drop in for as low as €10–15 per day, while monthly plans range from €95-€265/month.
The Loop Space app has a similar model, providing access to more than 160 workspaces in 42 countries for $30/month.
Meanwhile, Croissant grants access to many co-working spaces in a single city for €29/month and up.
Hot Desk Booking Sites and Apps
Another big trend in co-working is intermediary booking sites, which function as a TripAdvisor or Expedia for office spaces.
Billions of freelancers and digital nomads will need a place to work in the coming years. Many of them will prefer to book a space by the day rather than commit to a monthly or annual membership.
Coworker, its global competitors, and local sites like Skepp in the Netherlands, fill this need by offering short-term bookings and day passes.
Hybrid Co-Working Spaces at Hotels and Bars
Conventional offices may someday become a relic of the past.
Bars, restaurants, and hotels are joining the flexible work trend by serving as “drop-in” co-working spaces during off-peak hours when they would otherwise sit empty.
As a bonus for flexible workers, many such drop-in rates come with perks like discounted food and drinks.
From New York to Dubai to Tokyo, co-living spaces are all the rage, because more people are working where they live.
Co-living helps people save money on rent while providing added conveniences and built-in access to a community.
Instead of commuting to an office, residents enjoy 24-hour access to fully-equipped offices on-site.
But co-living isn’t only about luxury residences in big cities — nomadic co-working tribes and “workcation” retreat companies like WiFi Tribe make it possible to co-work while traveling.
The Most Amazing Co-Living Spaces in the World
If the daily grind and distractions of working in an open-plan office have been wearing you down, it could be time for…
Hotel Concepts for Business Travelers and Digital Nomads
Finally, major hotel chains are entering into the fray.
Marriott and Hyatt have gone a step further by creating entirely new brands that cater to flexible workers.
Nothing is stopping hospitality brands from competing with WeWork by adding flex desks, day passes, and long-term dedicated workspaces to their product offerings.
In the future, WeWork’s tenants will be more likely to sublet their empty desks on co-working apps rather than expand their square footage.
5G is Coming
It’s worth mentioning that in the next few years, 5G will turn the most remote corners of the globe into virtual offices.
By 2020, all EU member countries will need to have at least one city with 5G connectivity, with uninterrupted 5G coverage expected throughout Europe by 2025. Once that happens, people will truly be able to work from anywhere — without needing to ask for the WiFi password.
Of course, there will always be value in having access to a dedicated workspace and conference rooms. But 5G will allow the global workforce to set up shop anytime, anywhere.
Within a few short weeks, WeWork has gone from innovative unicorn to borderline fraud. But the company’s fall from grace isn’t just a cautionary tale for investors — it marks the beginning of the end for traditional office leasing.
While there’s a lot of focus on WeWork, the real innovators in the sharing economy are those who create value for more than just shareholders.
Savvy developers, entrepreneurs, and travel industry executives are already converting existing real estate into multi-use, flexible work and residential spaces.
They will have a competitive edge over traditional office leasing companies, whose tenants may be more likely to sublet their empty desks on co-working apps rather than sign new leases.
The future of work is already here. Co-working is a part of it, but WeWork, likely, is not.