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Disruption may be on the horizon with the rapid growth of big players in co-working spaces such as WeWork. These could threaten existing shared work spaces by absorbing customers and competitively leasing out available buildings. Shared work spaces could potentially contribute to the gentrification of older neighbourhoods by pushing up the price of real estate, and displacing established small businesses and residential tenants.

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Cities are seeing a growing number of shared working, or co-working, spaces. They include spaces where individuals and businesses can flexibly rent desks or rooms, or do shared work in "third spaces" such as libraries and cafes.

Co-working spaces offer a range of benefits and risks to the local economy. Our research looked at the role policy-makers, regulators and city planners can play in ensuring that these spaces make a positive contribution to our cities.

We found shared work spaces emerging in regulatory voids left by outdated policy frameworks. To exist, they are relying on the forward thinking of local innovators seeking to revitalise urban centres.

Read more: Co-working is evolving to combine co-living

Types of spaces

Shared work spaces vary by the type of work they facilitate, from knowledge work (such as IT and professional services) to small-scale manufacturing. Some are purpose-built for co-working, whereas others (such as cafes) are informally used as such.

Some also target particular markets by offering additional services such as a crèche for childcare, seminars for professional development and events for networking.

Shared working spaces also differ in their models of ownership. These range from privately owned and managed, to government subsidised and cooperatively managed community resource centres.

Carey Curtis

The ownership and funding of individual co-working spaces may also change through time, as they may receive new sources of government funding, attract new types of clients or relocate to new facilities.

What are the benefits?

There are many potential benefits for sharing a working space, including access to common spaces, equipment, tools, and technologies. Some people may only need a space for a few hours a day or on one occasion for a special project, so they can hire spaces in desirable locations without high rental charges.

Shared working spaces also offer social benefits through greater opportunities to interact, network and collaborate with like-minded workers.

A co-working space can be a good use of unused spaces in buildings and be birthing places of new enterprises. They can also support local businesses by hosting large groups of potential customers.

And they may afford people a place to work closer from home, reducing the need for long commutes.

What are the downsides?

Big players in the sharing economy - such as Uber, Lyft and Airbnb - have had a disruptive effect on existing markets by reducing opportunities for less advantaged people and workers in the market, and confusing regulators.

A similar scale of disruption may be on the horizon with the rapid growth of big players in co-working spaces such as WeWork. These could threaten existing shared work spaces by absorbing customers and competitively leasing out available buildings.

Read more: Airbnb: who's in, who's out, and what this tells us about rental impacts in Sydney and Melbourne

Shared work spaces could potentially contribute to the gentrification of older neighbourhoods by pushing up the price of real estate, and displacing established small businesses and residential tenants.

Co-working spaces has also been seen as representative of an increasing casualised workforce, as such spaces may host short-term contractors doing work that was previously performed by full-time internal staff members.

What we found

We analysed planning and economic development policy and interviewed founders and users of shared working spaces in Western Australia.

We identified around 20 shared work spaces in Perth and regional Western Australia. Many were in retrofitted older and under-used buildings such as an old department store, maternity hospital or converted office space.

Most founders told us that shared working spaces needed to be accessible to be viable. Many also identified the quality and intensity of activities around the area as essential to attracting workers to their space.

Carey Curtis

But founders identified regulatory frameworks, including land use permission controls, as significant barriers to establishing these spaces. For instance, a shared work space where people repair furniture or make jewellery could be considered as being used for manufacturing.

This type of activity may not be permitted in a disused department store that falls within a retail zone.

We found that often, local councillors and economic developers, have thrown their hat in the ring to help establish shared work spaces in their area. They would do so by helping founders secure required approvals, such as building accessibility certifications and emergency management plans.

Knowing the potential contribution of such spaces to the economy, they've also helped founders navigate regulations and planning controls intended for more permanent use of spaces.

But we found that town planners were rarely engaged in early conversations with shared work space founders. Planners generally didn't identify or facilitate opportunities to host shared working spaces in unused buildings.

Planning policy documents and city planning departments didn't actively recognise co-working spaces as a major new way people use buildings in cities.

Sharing spaces better

Technologies are creating new ways to match a mobile and flexible workforce with work spaces. This is leaving regulators to manage the impacts from the temporary uses of many shared work spaces.

City planners should be prepared to recognise and plan for the benefits these spaces bring, while minimising possible negative impacts on users, neighbours, and the broader community.

Planning strategies that seek to regenerate urban places and provide economic and social opportunities in urban growth areas will need to prompt more engagement with shared work space proponents, users, neighbouring businesses and residents, and local government divisions.

Shared work spaces have a positive role to play in Australian cities and regional centres. However, it seems planners are at risk of missing the boat when it comes to using shared work space to achieve more socially and economically viable planning outcomes.

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Co-working spaces are part of the new economy, so town planners better get with the times

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Cities are seeing a growing number of shared working, or co-working, spaces. They include spaces where individuals and businesses can flexibly rent desks or rooms, or do shared work in "third spaces" such as libraries and cafes. Co-working spaces offer a range of benefits and risks to the local economy.

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Competitors against the co-working space industry include free co-working spaces, such as library's and cafes, or even own offices at home. Therefore, co-working spaces need to have "an edge" to succeed, the feeling of community and ability to network is a big draw in to the industry, as well as adapting to more niche audiences.

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The sharing economy is emerging as a global trend now diffused in different economic activities, such as retail, logistics, transportation, tourism, and in various spheres such as the labour market organisation, finance, and office spaces. Being a widespread phenomenon, the sharing economy is affecting the entire economy. The increasing number of activities involving sharing practices is shaping cities, and rural areas are also now experiencing some of the transformative effects of the sharing economy.

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The millennial-driven sharing economy, such as Uber and Airbnb, will help see continued growth of coworking space. As well as the declining car ownership of millenials, with nearly 80% of coworking spaces within walking distance for the members, or at least easily accessible.

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Co-working space will grow at an annual rate of 25% through 2023 to reach about 3.4 million square feet, commercial real estate research and services firm JLL.

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The drumbeat of retail store closings and struggles has dominated news headlines, led by Toys "R" Us' recent closing of its entire U.S. store fleet. While the closings of underperforming retailers are far from over, the brick-and-mortar retail sector can take some comfort in the fact that it still holds plenty of appeal: Just look at the crop of coworking spaces, housing retailers' coveted millennial customers, that are eager to move in.

Coworking space in malls, street fronts and other retail properties will grow at an annual rate of 25% through 2023 to reach about 3.4 million square feet, commercial real estate research and services firm wrote in a study published Thursday. How significant is that? The average annual growth rate in occupied retail square footage between 2010 and 2017 was just 0.9%, JLL said.

"Coworking presents a viable solution for vacant retail space by decreasing vacancy and driving additional foot traffic with a guaranteed daytime population," the research firm said in its first-ever study looking at 75 U.S. coworking retail spaces, totaling one million square feet. "Added foot traffic may also help revitalize the center and attract new retail tenants."

Why? The millennial-driven sharing economy - think of Uber and Airbnb - makes a positive case for the continued growth of coworking space. JLL forecast "flexible space" will grow to 30% of all office stock by 2030 as some 43% of the employed U.S. workforce work remotely at least some of the time.

Since 2010, flexible working space has risen an average of 23% each year, outpacing the 1% annual average occupancy rate of the overall U.S. office-property market.

What's more, the study found coworking retail spaces tend to be in areas with above-average consumption power: The average household income within a three-mile radius of coworking retail spaces is about $100,000. Playing well to the needs of millennials with declining car ownership, nearly 80% of the retail coworking spaces are either very or somewhat walkable, according to the study.

As millennials start their own families and buy homes outside cities, more retail coworking spaces will open in the suburbs, which already house 55% of coworking spaces, JLL said.

The study found that the retail and coworking relationship is mutually beneficial. Coworking space hosts are increasingly including retail space as a perk for members. There's also a growing trend for these spaces to play the role of "retail incubators" to give retail startup and online brands easy access to consumers to test demand without being saddled with traditional longer-term retail leases.

"Retail-based coworking spaces are successfully integrating work and play; bringing makers, workers and consumers together; and bringing new life and experience to retail locations," the study said. "We expect further growth in these hybrid spaces."

There are plenty of examples to back up the study's findings. Chicago's Water Tower Place, for instance, is working with startup Cowork at the Mall to open a 15,000-square-foot coworking space that reportedly housed the now-defunct Sports Authority.

"Our retail space offers pop-up shops and displays, where early-stage companies can sell their wares in a mall" that drives millions of shoppers in traffic annually, Cowork at the Mall said on its LinkedIn page. "Our event space offers anything from meet-the-maker events to runway shows to product activation."

In another example, mall owner said Wednesday that it's partnering with coworking space operator Industrious, which has big-name clients including Hyatt, Pandora and Pinterest, to design coworking space in its properties. The first showcase of that will come in January 2019 when an Industrious space is set to open at Scottsdale Fashion Square mall in Arizona.

Picture the experience for those people opting to work out of that space. They will be able to walk to shop at the mall's stores, from Sephora to Burberry (and even an Amazon kiosk), or have burgers for lunch at Shake Shack, based on the list of merchants in the mall directory currently online.

As to the poster child of the coworking trend, WeWork in June opened its first WeMRKT retail concept in a downtown New York location to sell snacks, yogurt, apparel and other products, made by its members. WeWork said it will open more WeMRKTs around the country.

WeWork also has partnerships with J. Crew and LinkedIn to host events where its members can get discounts to shop at pop-up J. Crew locations. It's also planning to move in to Lord & Taylor's New York flagship when the department store shuts that location, expected to be early next year.

Elsewhere, at Minnesota's Southdale Center, controlled by No. 1 U.S. mall owner Simon Property Group, fitness chain Life Time will open Life Time Work, which includes coworking space so people can exercise, work and shop all at the same time, reflecting the ever-bigger retail mixed-use trend.

The traditional big-box retailer Staples, feeling the pain of the "digitization of workplace," which has slowed traffic and consumer demand for its ink cartridges and printers, has housed Workbar coworking spaces at stores in its home state of Massachusetts.

Brick-and-mortar retail isn't dead. It's just becoming a place where you can not only shop but also work and do a lot of other things, all at the same time.
Related On Forbes: The Changing Face Of Brick-And-Mortar Retail Related On Forbes: Mass Production Is Actually A Boon For Etsy And Amazon Handmade

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One Big Potential Beneficiary Of The Coworking Space Trend: Brick-And-Mortar Retailers

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While the closings of underperforming retailers are far from over, the brick-and-mortar retail sector can take some comfort in the fact that it still holds plenty of appeal: Just look at the crop of coworking spaces, housing retailers' coveted millennial customers, that are eager to move in.

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Urban growth and increased awareness of environmental issues mean consumers are looking for "greener" options and favour short term use, making co-working spaces very favourable currently, and for the forseeable future.

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In recent years we have seen a shift in thinking among companies - no longer are competitors seen as rivals, but rather as potential co-collaborators. We believe the rise of coworking practices have been a sizable part of this movement. But what is coworking and why have so many companies started adopting this approach? WeWork has certainly proven that coworking is big business. Now even the most unlikely high street candidates, from banks to retail stores, are jumping on the bandwagon. Here is everything you need to know...

Cambridge is a centre for learning and ideas, so it feels only right that 'Eagle Lab', Barclays' flagship incubator, landed there. Before the branch at Chesterton Road was an integral cog within the Cambridge ecosystem, the branch, like many branches before it, became a ghost ship down to a skeleton crew. Banks around the UK told the same ghost story - as business moved online physical branches ceased to exist. Since a refurb in May 2016, the now lively branch has a sleek industrial coworking space, with desks available for rent between £99 and £349 a month.

For large companies like banks and retailers locked into long leases with increasingly unprofitable physical properties, coworking partnerships make commercial sense. Head of Eagle Labs Benjamin Storey says "Closing stores generates bad publicity but helping local businesses has the reverse effect." There are whisperings that other UK retailers will soon follow suit. John Lewis was reported to be mulling over a deal to put coworking spaces into its older stores with poor footfall. A decision will be made in early 2018.
Everything is an office
Our neighbourhood in Central London is home to almost 8 million sq ft of flexible office space, an increase of 73% over the last eight years. The increase of gleaming coworking spaces from WeWork, valued at $20 billion, puts them in league with Palantir and SpaceX as the most highly valued private US tech startups, runners up to the behemoths of Airbnb and Uber. Startups are increasingly willing to work out of unconventional, often temporary offices - examples of which are springing up all over the place.

Ofixu, the self-proclaimed Airbnb of office spaces, is a shining example of a broker that connects workers looking for space with shared offices at a moment's notice, from as little as £7 per day. Dan Hinden, CEO of Oxifu, believes his and similar companies can play a deeper role than merely providing quiet spaces. There is also a chance to connect Ofixu users who have similar interests or that want to be around like-minded people to create a sharing economy.
Loving landlords
Temporary, short-term use or 'meanwhile use' is fundamental for cities and urban growth. "A lot of offices have empty meeting rooms at night or a bank of desks they're not using," says Andrew Cribb, co-founder of 3Space.

Often combative commercial landlords and paralysing property developers are increasingly happy about giving over their empty space for 'meanwhile' use. Properties that are waiting for planning permission take years to fill with new business. This means property developers with these sites are particularly good targets as there is no other obvious use for the space.

3Space, a non-profit urban agency, is helping provide ways to get more out of buildings that are often poised for demolition or restoration, giving them new purpose as hubs for the community. By working with 3Space, developers can benefit from an 80% discount on their business rates, and avoid the cost of safeguarding these empty sites and putting responsibility on 3Space and their inhabitants.

There is a huge branding opportunity for these derelict and unloved spaces to be used again by freelancers and 'solopreneurs' looking for their own space to work.
Open for all
Several startups are hoping to build businesses out of empty space, Haus is one such company making this vision a reality. Kanyit Rayev, founder of the flexible coworking scheme, has started with the hospitality sector. Kanyit says "There are about 200 restaurants in greater London that are only working during the evening period.

Haus' plan is to enter into partnerships with evening venues such as restaurants to create a network of coworking spaces. 100 Wardour Street which opened its doors to Haus on the 10th January is just one of these spaces. The restaurant which is usually closed until 5pm Monday to Friday in Soho is a beautifully designed setting that allows inhabitants to really focus on getting work done 9 till 5. Haus charges just £95 per month, making it the cheapest coworking space in London.

We are all social animals at the end of the day. Freelancers and 'solopreneurs' who want their own space to work often work in isolation. Coworking spaces are an excellent form of community, allowing discussion of a wide variety of subjects or simply a chance to bounce ideas off each other. For many, coworking spaces are the nearest they can get to a conventional working life.

These coworking trends show a serious demand for fresh thinking in this sector and we look forward to seeing which of these coworking space approaches becomes the most mainstream in the year ahead.

To find out more, get in touch at hello@underscore.co.uk
References:

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The Future of....Co-working Spaces Trends 2018 - Underscore | Branding Agency

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In recent years we have seen a shift in thinking among companies - no longer are competitors seen as rivals, but rather as potential co-collaborators. We believe the rise of coworking practices have been a sizable part of this movement. But what is coworking and why have so many companies started adopting this approach?

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As competitive pressures within the industry rise and coworking operators and serviced space providers look to differentiate their offerings we will see niche providers, with a more focused offering, emerge to cater to specific gaps in the marketplace.

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"Over the last seven years, the square footage of flexible office space has grown at a rate of 22%, compared to the 1% growth rate of traditional office space over the same period"

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Convene - The Easiest Place to Meet and Work

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This op-ed piece comes from Convene CEO Ryan Simonetti and was originally published on his LinkedIn. Click here to see more of Ryan's writing, and click "Follow" to be the first to see them!
While 2017 was a transformational year for the flexible workspace industry, 2018 is set to be even more disruptive as economic uncertainties grow, new players emerge, building owners become increasingly proactive, and institutional capital continues to flow into the sector. I recently spoke with the team at Essensys to discuss these trends and share my predictions for their 2018 Flexible Workspace Market Forecast. It's a testament to the disruption underway in the workplace sphere that a comprehensive forecast such as this would be done. Below are a few ways we believe the industry will evolve in the new year.

Flexible workspace goes from "nice to have" to "need to have"

The way companies utilize real estate has changed forever. Over the last seven years, the square footage of flexible office space has grown at a rate of 22%, compared to the 1% growth rate of traditional office space over the same period. According to JLL, by 2030, 30% of all commercial office real estate will be defined as 'flexible.' Things that don't make sense get disrupted, and it's clear that signing long-term leases is bad business. Combined with the benefits of creating a better workplace experience for employees, this is driving an increasing demand for shorter and more flexible-term lease options. In 2018, we expect this trend to accelerate as larger global enterprises commit to flexibility as part of their long-term real estate strategy. This will put additional pressure on traditional landlords, and in response building owners will need to evolve as they look for creative ways to meet the changing needs of today's companies and their most coveted asset - their people.

Landlords evolve from "space-sellers" to "place-makers"

The motivations of today's talent has changed from previous generations. Choice, flexibility, and experiences at work are vital factors in job satisfaction for millennial workers- outweighing salary for many. With millennials making up over 50% of the workforce today, flexibility and tenant experience will shift from being part of the landlord conversation to the only conversation. Landlords, who have historically stood on the sidelines while the serviced office sector catered to the flexible requirements of companies, will have no choice but to take a more active role or fear being disrupted. Every major landlord in the world will be running their buy, build, partner analysis in 2018, which should prove fruitful for industry operators as landlords evolve from "space-sellers" to true "place-makers." With an increasing focus from asset owners on the sector, more shared workspace players will start to emerge, and the flexible workspace industry will solidify its position as a viable, sustainable segment of the future office market.

The race to create integrated platforms

As competitive pressures within the industry rise and coworking operators and serviced space providers look to differentiate their offerings, the amenity "arms race" will continue to accelerate. This will be the catalyst to a next-generation platform that seamlessly integrates meeting and collaboration spaces, flexible work spaces, coworking desks, a social club, curated retail spaces, and in-building community programing under the same roof. This integrated solution will become the new norm as current providers look to create best-in-class experiences for their customers. The platform race has already begun and several companies will fight to become the dominant, global "workplace-as-a-service" provider. As that race intensifies, we will see niche providers, with a more focused offering, emerge to cater to specific gaps in the marketplace, as evident by WeWork's recent investment in the women's-only coworking space The Wing.

The emerging role of technology

The office of the future will look and feel more like a full-service, lifestyle hotel, with a mobile application that brings the experience of the workplace to the fingertips of its occupiers. Just as phones in hotel rooms can be used to order room service, future workplaces will need to leverage technology to reduce--and even remove--the friction in areas like security, meeting room booking, food ordering, and concierge services. The engineering team at Convene is developing a mobile software platform that will seamlessly connect building tenants to the spaces and services that Convene already provides in office buildings. Technology will continue to play a huge role in shaping the future of the industry as new technologies continue to disrupt the way space is designed, built, sold, and operated.

The consolidation wave is coming

With co-working reaching the "bubble" phase, it's only a matter of time before the consolidation wave sets in. Almost every major coworking company and serviced space provider raised capital in 2017, with many more planning large financings in 2018. Growing industry fragmentation driven by the emergence of new players, the potential supply and demand imbalances caused by the massive growth of WeWork and others, combined with the increased attention from institutional private equity investors and global landlords signals that the industry is on the verge of a massive consolidation. I expect to see some big partnerships and M&A deals announced in 2018 as the larger players look to broaden their networks, get benefits from economies of scale, and seek to reduce their cost of capital. The race to unseat major players is on, and the recent announcement of Brookfield looking to take Regus private should spark additional buy-out opportunities. For smaller quality operators looking to exit, 2018 could be a great year to transact (and Convene is actively looking to buy or partner!). 😊

There is no doubt 2018 is going to be an exciting year for the flexible workspace industry. With the economy expected to stay solid through the end of the year, it will be another strong year for the "space-as-a-service" sector.

Despite all the change, one thing is for certain: as the lines between work and life continue to blur, our future workspaces won't just be desks and chairs that we go to, but places that truly inspire us. For more thoughts on the Future of Work, check out my ebook or view the video below.
An earlier version of this article misidentified the source of data regarding millennial workplace motivators. The source of this information comes from PwC's NextGen survey 2013, Fidelity Investment's Evaluate a Job Offer Study, and internal company research.

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Big Changes Coming for the Shared Workspace Industry in 2018

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This op-ed piece comes from Convene CEO Ryan Simonetti and was originally published on his LinkedIn. Click here to see more of Ryan's writing, and click "Follow" to be the first to see them!

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The industry blurring the lines between work and play:

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The industry blurring the lines between work and play:

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"Private leisure market"
"Co-working spaces industry"
"Members' club"

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New breed of members' club blurs lines between business and pleasure

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Forget cigars and suits, the latest business clubs offer co-working spaces, restaurants, gyms and even private libraries

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The Wing’s mission is the advancement of women through community. Wikipedia defines The Wing as a women's co-working space collective and club. A co-working space is defined as a business services provision model that involves individuals working independently or collaboratively in shared office space.