The Evolution of the Coworking Office Industry

The Evolution of the Coworking Office Industry

CoworkingCoworking, the term used to describe a shared office model, is evolving once again. These communal workplaces have been around since the 1960s, and recently experienced a resurgence throughout the past 10-15 years, thanks to start-ups who needed a flexible, affordable office space to grow their businesses.

These low-rent offices with short-term leases and adaptable space arrangements have grown exponentially in recent years. At a time when the country was in the worst economic decline since the Great Depression, a few corporate powerhouses recognized the potential of providing cheap office space to a legion of newly unemployed workers trying to freelance or launch startups and bought in early.

Challenges in the Coworking Environment

Growth in the shared office industry hasn’t always pointed in an upward direction. It stuttered during economic downturns, as well as through mergers, acquisitions, and for some, bankruptcies. As a result, the coworking business model’s value proposition was lost on landlords they approached about leasing space. Traditional landlords who relied on dependable tenants were reluctant to lease space to shared office providers whose business models were based on speculative tenant demand.

In fact, an excess of sublease space at the time added pressure to the down market. Further exasperating the landlords’ concerns, many tenants were willing to share a portion of their space with others. Coworking tenants seemed to have the lion’s share of options available to them. Subsequently, Liquid Space, Pivot Desk, and other coworking space investors reevaluated their strategies and resurfaced as service providers for tenants with excess office space.

Recent Growth in the Industry

More recently, sweeping changes disrupted the coworking niche, including broader workplaces appealing to friends driven by a collaborative and creative spirit, mobility and flexibility. As of mid-2016, the industry occupied 27 million square feet of space across more than 1,400 locations, which represents less than one percent of the U.S. office market.

Today’s coworking spaces come with Wi-Fi. Freelancers, independent contractors, and small businesses remain fixtures in these establishments due to convenience and limited cost. You’ll also find a good number of tech startups growing their businesses, and corporations leasing coworking office space to provide alternative workplaces for the convenience of employees.

The coworking movement is no passing trend. Mobility and flexibility are two of the qualities in highest demand in the current market. Seen as a risky venture by traditional landlords back in their startup days, those same traditional landlords are now scratching their heads and wondering what they missed. No longer regarded as a potential liability, the coworking industry is considered an added amenity to the building.

Protect Your Building and Tenants

If you’re managing a building with coworking tenants, security can be even more important. Implementing a visitor management system can improve security through enhanced check-in processes, visitor and tenant ID badges, auditable reporting, and more. Contact Veristream at 888-718-0807 today to learn how our iVisitor system can protect your business and your tenants.

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