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This article originally published in the inaugural edition of the Business of Furniture on January 6, 2016 and can be found at this link. If you enjoy this story, you will love the first issue of Workplaces Magazine, a sister publication of the Bellow Press that will launch February 1, 2016. The first issue will explore the world of coworking.


“The word coworking won’t be a word in the future, it will probably just be the way we work.” -Rahul Prakash, partner at Hatch Today.

Twenty years ago, the goal was to get the job, then work your way up “Madmen” style to the office on the 30th floor. Now people on average — not just millennials — stay at their jobs only 4.4years. As workers redefine the goal line from the corner office to autonomy and work-life balance, you can bet the landscape of the office will drastically change. We are already seeing it with the rapid emergence of coworking offices everywhere. However, it’s not just coworking, it’s the motivation behind coworking -autonomy, independence, choice and meaning- that is changing the face of the workplace overall.

 

That said, coworking can’t completely take over the workplace just yet. One of the challenges of coworking is the vulnerability of the revenue model. Since most operators typically stumble into coworking space ownership from other, unrelated industries, it can be a steep learning curve. Rebecca Brian Pan of Covo Coworking says, “Coworking is a vulnerable business model in and of itself. It is not a high margin endeavor. Having all of your revenue come from membership dues, especially when you don’t own the property - and most don’t - there is a lot of risk.” She goes on to explain that lease negotiations are very dependent on market swings. When the lease expires, some landlords push rent up as much as 300%. Suddenly, what was a perfectly viable, profitable business is now working really hard just to exist.

A lot of coworking spaces, upon recognizing the vulnerability of the model, try to buy property or add additional revenue streams. In other countries, like Canada, it is possible to crowd source funding for buildings (i.e. each coworking member pays a portion and becomes an “owner”). Pan explains, “In Canada there is something like an equity bond where any individual can invest in anything they want. A friend owns The Foundry in Toronto. Members can purchase a minimum $1K bond certificate (or more if desired). By this, they were able to crowd source funding to buy the building that they originally had a lease on. We can’t do that in the US.” She went on to explain that in the US, due to laws, in order to invest every one of those people would have to be an “accredited investor.” This means they would have to have at least one million dollars in assets to qualify to invest. Laws have changed, but are not yet executable because regulations aren’t yet in place through the SEC. When this movement fully realizes, it will be a huge coup for coworking spaces.

 

https://www.huffingtonpost.com/entry/the-future-of-coworking_b_8950140.html

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