As lockdowns and restrictions continue to ease, business leaders and employees alike are no doubt thinking about what the future looks like for their workplaces. A big part of this is how and where they will be located, both in the months to come and beyond.
Throughout the past year, there has been much talk of the “work-from-home revolution” as many shared workspaces remain closed and home-based working has become more common than ever before. One industry that finds itself at the centre of this shake-up is coworking spaces. For a sector that has seen dramatic growth in the past five to ten years, the pandemic was inevitably catastrophic – but what will happen next is a source of much speculation.
Coworking giant WeWork has made headlines recently amid news of huge losses (as well as revelations regarding a controversial exit package for its cofounder Adam Neumann). While the company have claimed that demand is higher than it was pre-pandemic, its UK-listed competitor IWG have been more cautious when it comes to their forecasts for 2021, citing continuing lockdowns and new Covid variants as potential stumbling blocks for the industry.
According to research conducted by Plimsoll, 13 companies in the global Coworking Spaces analysis have been rated as “Danger” across their previous 4 years of data. How many of these will make it beyond the lockdowns? As workplaces worldwide begin to reopen, will people want to return to shared offices or has the climate changed irrevocably?
Most workers appear reluctant to return to offices full time: according to research by YouGov 18% of workers want to keep working from home, and 39% would prefer a hybrid approach to their working location. While some may not yet feel comfortable returning to busy offices, they may also want something more flexible in future. One thing is for certain, the prospect of a more tailored approach to workplace location is proving more important than ever. This is central to the coworking philosophy, and many providers are therefore looking to fill the gap between home working and a full return to traditional offices. Lingering uncertainty could paradoxically provide a huge boost for the coworking sector, with shorter contracts and greater flexibility proving popular among business owners wary of signing long-term leases on offices that may remain half-empty.
But is a period of instability enough to boost companies’ profitability in the longer term? Plimsoll’s analysis shows that industry-wide profitability currently sits at 0.8. Going forward many companies may need to reassess their business models, perhaps shifting to a higher volume of short-term contracts rather than the stability of longer-term agreements, which would make the sector as a whole more volatile.
One more permanent benefit of coworking spaces is their location. With demand high in secondary cities and suburbs – the potential to work remotely or from strategically located coworking offices could prove highly advantageous to both employees struggling to live in expensive capitals like London or Paris (or tolerate expensive and stressful commutes) but also to companies looking to hire staff outside of those areas. Many coworking specialists are addressing this issue – the aforementioned IWG’s offices are located away from bigger cities.
The pandemic has also given workers the opportunity to reinforce or re-evaluate their priorities when it comes to their ideal places to work. Spaces with childcare facilities, specialised technology (such as podcasting studios) and interior design focused on comfort and wellbeing – as opposed to efficiency and productivity alone – are proving key points of differentiation for coworking companies.
Increased freedom and flexibility around workplace location is also having a knock-on effect in other sectors. While homeworking and hybrid arrangements have allowed many to cut their commutes, others have been inspired to change location altogether. Both across the UK and further afield, estate agents have reported significant demand for larger properties in coastal or countryside locations, with Cornwall overtaking London earlier this year as the most-searched location on Rightmove.
Another area which could benefit is the relocation services sector. A recent poll by Graebel and Wakefield Research examined 9 global markets and found that 84% of workers would relocate for jobs post-pandemic, with 3 in 5 saying this is more likely now than pre-Covid. According to Plimsoll’s analysis on the UK Relocation Services industry, over 40% of companies are seeing sales increase. Will this continue into the second half of 2021?
Whatever the future holds for the workplace, the pandemic has undoubtedly brought about changes that will remain for many years to come. How both business leaders and employees react now could prove pivotal for the long-term future of traditional offices, coworking companies and related sectors. Now more than ever it will be essential to monitor trends in these markets.
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