Co-working and shared office spaces are no longer solely the domain of the Mac-toting millennial. Instead, recent years have seen these markets mature and appeal to a wider audience – including enterprise size organisations.
The shared workspace environment is experiencing rapid growth, with the global flexible workspace market having grown by 18% in the 12 months prior to April 2017, according to a research report from The Instant Group. London experienced 16% growth in 2016 and now forms 32% of the total UK market. Expansion has similarly been seen in the North West of the county, in cities such as Liverpool and Manchester, in line with centre growth and stable market conditions. And while the UK and US are still the largest global markets, expansion in emerging markets EMEA and APAC has outstripped their more advanced counterparts – with a growth rate of approximately 20%.
2016 and 2017 have also seen movement within the shared office space market, with larger firms beginning to make the move to shared office and co-working spaces. One can already see evidence of this taking place in IBM’s recently signed deal to move 600 employees into a 10-storey New York building leased by co-working poster-child, WeWork. This follows HSBC’s rental of more than 300 hot desks in WeWork’s Hong Kong space, Amazon’s lease of 200 WeWork desks in Boston, and Microsoft’s purchase of 300 memberships for New York employees and 37 in Atlanta. This forms part of WeWork’s strategy to work with large corporates, exemplified by their launch of an Enterprise division that caters to this market.
But what is driving enterprise size firms to the co-working model? It is possible that global recession and market uncertainty have helped drive their interest in shared office spaces. This model first emerged as a way to avoid long-term traditional leases and the associated financial commitments. Forthcoming changes to lease accounting rules will require companies to show long or new leases on their balance sheets, so we can expect to see an increasing number of larger businesses making the shift to shared office spaces as they seek to reduce their balance sheets.
It is also possible that the likes of IBM and Amazon are seeking to reflect a start-up culture, to appeal to a workforce now comprised predominantly of millennials, with Deloitte predicting that they will form 75% of the global workforce by 2025. With these millennials, comes a shift to a more collaborative way of working, with a focus on networking. Today’s employees are more likely to prioritise lifestyle and work/life balance and people that utilise co-working spaces report levels of thriving that approach an average of 6 on a 7-point scale according to the Harvard Business Review.
With the provision of additional amenities and perks, such as modern design, a more relaxed atmosphere, and co-ordinated networking opportunities; shared office spaces allow enterprises access to the start-up culture of young tech businesses. Professional services and auditing giant, KPMG, has recognised the benefits of working in such an environment. With a team in the North London LABS co-working space, KPMG is able to capitalise on the positive branding of being seen to inhabit such a space, while gaining access to interesting start-ups by providing advice and services.
With larger enterprises displaying increased interest in the shared office sector, this market can be expected to see continued growth. This growth, coupled with an increasingly stable and proven business model, makes the shared office sector perfectly suited to growth funding. In July 2017, The Clubhouse, one of London’s leading business club, lounge and meeting spaces, secured a £3.5M growth capital investment from BOOST&Co. Click here, for more on how this funding has assisted The Clubhouse in reaching its growth objectives.