With names like Second Home, The Trampery and Camden Collective, hundreds of co-work spaces have popped up across the city in recent years. Even Soho House, the bastion of the private members’ club, recently announced it was to open several co-working office spaces around the world, under the brand Homework.
With a diverse membership made up of start-ups, freelancers, micro-businesses and remote workers, co-working is a communal model of shared workspaces, with flexible daily or monthly rates. But is co-working a bubble, closely tied to the boom in technology start-ups, or is it a long-term trend in changing patterns of work, with implications for businesses large and small?
The term co-working was first used in 2005 to describe a relatively small shared office community called The Hat Factory in San Francisco. London’s great boom in co-working was primed by Google’s launch of Campus London in 2012, as part of the government backed Tech City initiative. With origins in the tech sector, it’s not surprising that as much as 50% of co-working space in London is dedicated to tech and digital services.
To understand the rise in co-working, you need to look at the economics. If you’re a young, ambitious business, then signing a long-term lease on an office is usually a bad decision. Not only could it limit your growth, but the pressure to pay rent can limit a founder’s ability to give up on early revenues and change direction.
Even if you were happy to take a permanent space, the office property industry will do its best to put you off: they will ask for three years of company accounts (which you probably won’t have) and demand lengthy rent guarantees (which you can’t afford). And after all that, you will still probably end up paying more than in a co-work space. According to property consultancy DTZ, the average cost per workstation in traditional offices in the West End of London is about £1,350 per month (falling to about £800 in the City), while co-working costs typically range from £300 to £700 for a desk, and critically leases are flexible.
McCann New York reception by Tom Dixon's Design Research Studio.
While compelling, the economic case is rarely the main attraction of a co-working office space. Instead, its members see significant value and productivity in the community; as a start-up or freelancer, you have instant access to colleagues with whom to share your ups (and downs), from whom to seek advice and with whom to share ideas—a huge improvement from the crippling isolation of operating from a home office or a Starbucks.
For many members the community is a source of collaboration and innovation. Many players, like Second Home, curate regular events to entertain and educate members, and foster a valuable social network that justifies and sustains above-market membership fees. Simon Pitkeathley, CEO of co-working space Camden Collective, believes many new operators have misunderstood the market. “You have some single site operators who have paid too much for their spaces, haven’t curated a sufficient community, and don’t have the scale to constantly fill their spaces. These will be the casualties if the market slows, or supply begins to exceed demand.”
And what of this demand? In 2014, the UK had 4.2 million home workers, 1.3 million more than 15 years earlier. 96% of businesses in the UK are actually microbusinesses— with less than five employees—and Oxford Economics predicts that self-employment, once vaguely disreputable, will increase by 15% in the next decade, moving five million more people into this sector. The post-recession increase in self-employment, typical of all bust periods, seems to be permanent, and growing.
These trends are also generational. PWC’s 2013 NextGen study shows how millennials desire more flexibility in their work; 64% would like to work from home one day a week and 66% would like to shift their working hours. On top of this there has been a seismic shift in young people’s views of entrepreneurship as a career. 58% of 18-to-30-year-olds say they would like to start their own business (compared with under 30% for the rest of us). 90% of UK universities have an active entrepreneurship club, while schools and colleges are embedding enterprise into the heart of their programmes.
Compare this to 20 or 30 years ago, where theschool child who said they wanted to be an entrepreneur or a freelancer was the odd-ball, the drop-out or the lost soul. Now they are the alpha males and females—they want success, but they also who want flexibility and autonomy at work, and co-working will provide a robust infrastructure for those with these ambitions. So what can traditional businesses learn from this innovative concept? Ryan Mullenix, Design Partner at NBBJ, sees “co-working spaces more as an evolution in how we work—or want to work—rather than a bubble or trend.” He continues: “Co-work spaces attempt to capture an elusive experience that most workplaces seek—a place of social connectivity, diverse inputs, and personal choice. We no longer have to swing on the pendulum of open office versus closed office, but rather focus on how to create the desired behaviours that stimulate the desired culture.”
McCann New York Office by Tom Dixon's Design Research Studio.
Neil Usher, Workplace Director at Sky, agrees, and argues that larger organisations need to “get in to the co-working mindset” if they are to retain employees. “Co-working offices are commercial ventures; they have to persuade people to part with their own cash, which makes them inherently more consumer-focused. They excel in collaborative and social workspaces, with a warm, residential and engaging aesthetic. Larger organisations are taking notice of how effective this can be. Where employees have an ever increasing choice of where to work, they have to make their workspace the most compelling option available.”
As a consequence many organisations are adopting some of co-working’s key design concepts. Many businesses looking to increase creativity are increasing the amount of collaboration space in their offices, with the trend moving towards a 1:1 ratio in some workplaces.
Other businesses, like innocent drinks, sit people at desks randomly in the office, and move them every three months. Camden Council has gone to a full co-working office design at their King’s Cross base—no-one has their own desk, just a locker to store things in overnight and a laptop to work on. Instead of the annual Christmas party, many companies seek to develop and enhance their values and their communities through regular events, activities, inspiring talks and other shared experiences. And as Ryan Mullenix points out, “many companies are realising that being exposed to new ways of thinking sometimes trumps the protection of ideas.” Google and Menlo Innovations, for example, have both embedded co-working spaces for entrepreneurs and freelancers inside their own offices, hoping that co-locating with creative start-ups will improve collaboration and innovation in their own business.
As office designers get more creative, adopting co-working principles, so businesses will need to be even more innovative in their organisational design and operations. Perhaps the biggest challenge, and the greatest opportunity, is how to mimic the autonomy that members of co-working communities enjoy. For the freelancer, the entrepreneur or the micro-business owner, control over where you work and when you work are fundamental benefits of the career choice.
And so we see an increasing use of flexible contracts, and flexible operations, among the most forward thinking businesses—some now even let employees choose how much holiday they take. Co-working is so much more than an innovative office layout. It is about freedom, purpose and autonomy, and that’s the greatest opportunity for businesses looking for inspiration from the co-working movement.
To make employment as rewarding as self-employment, to make operating within a business as exciting and stimulating as running your own business, and to create a community of like-minded, passionate individuals who want to support, and learn from, their colleagues.
Our newest co-working environment will be unveiled on 19th May 2016 at Interchange, Camden, London, UK.
