Has COVID-19 accelerated the trend towards coworking or prompted a rethink on flexible space? We checked in with WeWork, IWG and JustCo to find out.
Last year, JLL predicted that coworking would account for 30 per cent of the office market by 2030. The pandemic may have pressed pause on growth, but four Australian leaders in the coworking sector say the long-term trend is clear.
“For more than a decade, annual growth in the global flexible workspace market has averaged 13 per cent, compared with low single-digit growth for traditional office space,” says Damien Sheehan, country head for IWG.
With offices in more than 3,400 locations and 120-plus countries, IWG provides workspace for 2.5 million people.
Sheehan says a range of influences will continue to drive the trend: enterprise-level demand for flexibility, increased choice of offerings and “a broader acceptance that flex space is the preferred place of work, rather than a short-term solution”.
“Our research has found 73 per cent of companies have adopted some form of flexible working policy, and 80 per cent of people would choose a role that offers flexible working arrangements over one that did not, Sheehan adds.
Flex and the city
WeWork already had nearly 40 per cent of Global Fortune 500 companies on its books prior to the pandemic. Enterprise organisations with 500-plus employees are the company's fastest growing segment globally, currently accounting for more than 50 per cent of total memberships.
“Big organisations were increasingly challenged to sign long-term leases because it was hard to predict the future before COVID,” says Balder Tol, WeWork’s general manager for Australia.
Tol says enterprises are now even more motivated to inject flexibility into their real estate. As more employees work from home, companies of all sizes and industries in the region – members and non-members – have been reaching out for multiple workplace options, as part of their future-proofing strategy.
“For us, it’s about offering the scalability, flexibility to scale up and down, and speed to address their needs,” he says.
Coworking is the perfect “third space” for people who can’t work from home or the local café or don’t want to get back on public transport.
Tol’s colleague Lachlan Buchanan, WeWork’s head of real estate for Asia Pacific, says many companies are moving towards more distributed workforces. The hub-and-spoke model is emerging as a favourite, allowing members to effectively distribute their workforce from a centralised location, while preserving connection and company culture, especially as businesses look to new strategies post-COVID.
New terms are emerging to describe this new normal: work from office (#WFO), work from near home (#WFNH), work from home (#WFH), and work from a third or fourth place flex.
Companies will think more deeply about how to create the right settings to suit the task, with the office “skewed towards collaboration, brainstorming, innovation and building culture rather than performing mundane tasks,” Buchanan says.
WeWork is confident that people will return to the city centres, and has just opened a new workspace in the iconic Harry Seidler-designed Riverside Centre at Brisbane’s 123 Eagle Street. Two new Sydney workspaces at 66 King Street and 320 Pitt Street are opening in August and September.
“The fundamental human need to connect doesn’t change. And talent attraction and retention haven’t gone away. As we think about the future of work, resilient enterprises will rely even more heavily on real estate flexibility,” Buchanan adds.
Space to socially distance
Sheree McIntyre, who leads Singapore-based JustCo's Australian operations, has seen an increase in the number of organisations “looking to leverage the benefits of our flexible space-as-a-service model”.
Australia’s sovereign wealth fund, the $162-billion Future Fund, recently took up space in JustCo's 447 Collins Street hub in Melbourne to ensure appropriate social distancing for staff.
“As we emerge from COVID-19, the co-working model is more relevant than ever because businesses have seen how operations can be disrupted overnight, reinforcing the importance of low risk, agile and scalable workspaces,” McIntyre explains.
When it opens later in the year, 447 Collins Street will be JustCo's fifth hub in Australia alongside two Sydney and two Melbourne spaces.
McIntyre says COVID-19 has made remote working a “permanent feature” of business. But rather than signal the office’s obsolescence, the pandemic has “made people realise that social interactions and the community element are an imperative part of our work experiences beyond interacting virtually over a screen”.
The future is flexible
IWG’s Sheehan agrees. Not everyone was prepared for the global work-from-home experiment, but “most companies now understand both the benefits and the limitations of remote work”.
When it comes to a flexible future, Sheehan cautions that there is “no one size fits all” solution. But IWG is backing a “hybrid model that incorporates elements of the head office plus multiple smaller private, flexible offices across decentralised suburban locations”.
Sheehan points to an example of a global financial services firm, that has just signed up to IWG’s offering in Australia.
“They will rotate their staff in teams from home to our centres. There is no core conventional space. The core has become the flex and, when combined with a work from home component, they have reduced their property footprint and lowered their cost base.”
But as companies rethink the way they work, their need for bricks and mortar will remain.
“We’ve seen that many organisations can be productive remotely – but that’s a short-term play,” says WeWork’s Tol.
“In-person work helps people to connect, collaborate, and stay inspired and motivated – and these remain the keys to long-term organisational success. While people will be experimental and try different models as we find our ‘new normal’, we won’t lose the need for the in-person experience at work.”