In 2020, there was a huge decline in the growth of the coworking industry due to the COVID-19 pandemic. As countries went into lockdown, millions of people were forced to work from home, causing a monumental shift in the way we work.
As a result of this changed circumstance, many businesses realized that they could operate effectively with staff working from home. Other companies are now investigating the hybrid work model, meaning less need for formal office space. These are just some of the changes that impact the coworking sector. Read on to learn more about the top trends to watch out for in 2022.
1. Satellite offices and localized workplaces
One of the major shifts that we are going through in how we work is the growth of satellite offices and localized workplaces. A combination of three factors is driving this trend. Firstly, and arguably most importantly, is the shift to hybrid work.
According to a report by Accenture, 63% of high-growth companies offer employees hybrid work opportunities.
Meanwhile, according to the Remote Work and Compensation Pulse Survey, 44% of employees favored hybrid arrangements. Other surveys on working practices consistently show similar interest from the workforce in the hybrid work model.
Companies that implement the hybrid work model have a reduced need for office space. Yet the majority of people still want to come to an office to work.
Many companies and coworking spaces are adapting to this shift by providing satellite offices to workers. Offering office space to people close to where they live can significantly reduce employee commute times. This is an important consideration, given that commuting times to and from work in most major cities are between 45 minutes to an hour.
Localized coworking spaces and satellite offices also offer potential cost savings to businesses by sidestepping prime real estate locations. Major coworking companies like IWG, Industrious, and WeWork are opening up office space in suburban areas to satisfy these needs. It’s certainly something our B2B web design company has been looking at.
2. Corporate coworking
Corporate coworking has been around long before the global pandemic. Corporate companies invented flexible, remote working schedules long ago. One of the best-known examples is Yahoo, which experimented with remote work more than a decade ago.
Now that the coronavirus has fundamentally changed everything about how people work, more small and large enterprises will likely be turning to coworking to:
- Provide support for employees who want full-time remote work
- Provide support for those employees who want to work closer to their home
- Ensure their office space is desensitized and de-densified
- Reduce any long-term lease commitments they have
Large, well-established companies such as Pinterest, BP Plc, Dropbox, and Fujitsu have already demonstrated how the pandemic has played a role in developing and altering how corporate headquarters are operating. For example, Pinterest terminated the lease on its corporate headquarters in San Francisco, while BP plans to sell its London headquarters.
Reducing the size of office space that a company needs can generate enormous cost savings.
The fact that more employers are getting rid of their office space does not remove the need for office space. As mentioned previously, most workers recognize the importance of being in the same physical location as colleagues. Moreover, in cities like New York, expensive real estate and rental prices mean people appreciate the benefits of nice office space.
In this context, it should be unsurprising that global corporations are starting to use coworking space. Corporate clients of WeWork, for example, include Microsoft, IBM, and Verizon. In fact, approximately 25% of WeWork revenue is generated from companies with 1,000+ employees.
3. Growing demand for flexible workspaces
Providing companies and employees with more flexibility is probably one of the most significant trends of recent years. We’ve talked a bit about the new demands from employees and how companies are reacting to these trends earlier.
It’s worth quickly exploring how landlords are reacting to these demands for more flexibility too. After all, they are key stakeholders in this equation.
According to recent statistics, landlords will allocate 10-25% of their property to flexible leases. The Instant Group predicted a 21% increase in flexible workplace supply for 2021, a trend that was expected to continue into 2022.
Landlords are becoming directly involved with the coworking industry, and they are working directly with property investment groups. In some cases, they are even turning their properties into flexible workspaces.
That means that some landlords are now even directly competing with coworking operators. Having landlords involved in this industry increases competition and creates opportunities for coworking operators.
4. Greater competition
As a proportion of total office space, coworking space has seen continued and sustained growth over the last decade, rising from 1.1% in 2017 to 2.1% by 2020. That figure coincides with a global increase in the number of coworking spaces. The graph below displays estimates based on proprietary data from CoworkingResources and Coworker, forecasting the growth in global coworking spaces through to 2024.
The growth in this sector is a positive for businesses that expect more from their coworking space. In fact, increasingly, these facilities provide much more than just office space.
As just one example, the Founder at Launch Pad said that there is now “a demand for coworking spaces to have an integrated wellness approach with catering, relaxation, and exercise areas.” So these are going to become the basic fundamentals that employees expect coworking operators to offer.
Further, operators should ensure that their business has different strong points to keep tenants satisfied. Providing a unique coworking experience is increasingly important for coworking businesses, especially for those operating in first-tier cities.
It’s time to start thinking about how flexible office operators can keep up with the competition as these new coworking trends start to arrive. The coworking industry has been here since the mid-2000s and has been continuously changing and developing ever since.
As we come out of the pandemic and into 2022, we will only see the coworking industry flourish and continue to grow. This article discussed four important trends to monitor. Those trends cover things like increased competition, the growing demand for flexible workspaces, corporate coworking, and satellite offices and localized workspaces.