But where's the coworking going?
Coworking is almost 15 years old and the movement has evolved since the creation of Spiral Muse in the United States in 2005. In its early days, the word "coworking" referred to the emergence of needs for collaborative office spaces, open between independents or start-ups. The idealism of the pioneers now gives way to a very rapid industrialization of the sector. The proliferation of spaces and operators, especially financially powerful and ambitious players such as Spaces, Knotel or WeWork, has made the concept widely known. But this acceleration questions at the same time about the future of the movement.
How is this movement evolving in full swing? Who are the main players and the different models? What developments can we imagine for the next few years? Neo-nomad offers you a small snapshot of the movement and its evolution, seen from the inside for 10 years.
The origins of coworking
The first coworking spaces appeared in the mid-2000s in the United States and Germany. In order to overcome loneliness, entrepreneurs and freelancers decide to gather in common workplaces. They form communities that share resources, knowledge and social connection. Coworking undeniably has its origins in the rejection of the hierarchical and impersonal codes of big business: informality and the sharing economy are the watchwords of these new workspaces.
In France, the first coworking spaces appeared in the late 2000s in Paris (La Cantine, La Ruche and then Mutinerie in particular) and in the early 2010s in other metropolises (with la Cordée in Lyon, Coworking Lille, Les Satellites in Nice...). It should be noted that the rural world is not left behind with telecentres that are gradually transforming into rural coworking spaces (Murat Telecentre, Boitron,...).
Aimed at the self-employed, they are a real success thanks to the friendliness they offer, but are rarely economically viable and often supported by public, private or their own founders. Thus, in 2010, the Ile-de-France Region invested in helping to create third-places through its digital agency, La Fonderie. The former Aquitaine Region also supports the creation of the Third Places Cooperative to help develop and structure a network of coworking spaces on the territory.
The emergence of "hybrid" workspaces
The international development of the Spaces (acquired by IWG) and Wework chains from 2010 represents a turning point in the evolution of the coworking market. While in the United States and Europe, the number of small independent coworking spaces (300-400m2) is exploding, these new operators are creating hybrid spaces.
They converge the value proposition of these small coworking spaces with the business centre business model by leasing large office trays and subletting them to self-employed and small business ecosystems.
In France one of the first actors to embark on this scheme is the Nantes Euptouyou.
This hybrid model is becoming more popular: the TPEs are abandoning their offices for a monthly subscription in coworking, and large companies are gradually venturing some of their project teams. Combining the codes of coworking and those of the business center, it allows to meet the demand of flexible real estate of companies and soon competes with the traditional real estate sectors.
What are the 3 major principles of coworking?
With the arrival of Wework and its competitors, coworking evolves. The term "coworking" now refers to a heterogeneous reality far from mere open-space, ranging from a third place centred on resource sharing and social connection to behemoths whose model is closer to that of business centres.
However, all these spaces meet a few key principles:
- flexibility (daily or monthly subscription, flexibility of "rented" surfaces),
- A community of members with levels of animation by dedicated staff that can, however, vary widely from one space to another,
- and services included in the package (support, event, drinks, etc.).
Since 2015, it can reasonably be said that coworking has become a market and that it has entered a phase of structuring and concentration of supply.
Coworking Statistics: A Growing Market
The number of coworking spaces continues to grow. By the end of 2019, there will be nearly 22,400 coworking spaces around the world and more than 2.1 million users.
The number of coworking spaces increased ninefold between 2012 and 2017! And the pace of space creation does not decelerate. Nearly 25% of the coworking spaces open today in the world did not exist a year ago. (Source: Deskmag - Coworking survey 2019).
The area of coworking spaces is also growing: 70% of the open spaces in France between 2016 and 2017 have an area of more than 2000 m2 (source: Arthur Lloyd). The average area of the "hybrid centres" is 4000 m2 (source: JLL, 2018).
Faced with the exponential growth of Wework or Knotel, real estate and operators of business centers decide to compete and enter this new market of flexible real estate:
- IWG owns Regus, Spaces and Stop -Work;
- Bouygues Real Estate invests in Wojo (formerly Nextdoor) before selling 50% of it to AccorHotels, which also owns the Mama Works chain;
- Nexity, after launching its own coworking chain, BlueOffice, decides to end it and take stakes in Morning Coworking, then diversifies its portfolio by betting on the franchises Anticafé and Cocoon space...
- Deskeo, on the other hand, continued its rapid development thanks to the arrival of Knotel.
These real estate players contribute to the growth and concentration of supply.
Who are the coworking actors?
In the world of coworking, the actors are numerous and the models very varied. Even though the exercise is delicate (and probably imperfect) we have drawn large categories of actors and some distinctive characteristics for each model.
Half of the coworking spaces are independents that operate only one site (source: Arthur Lloyd, 2017). These spaces of 300 to 600 m2 are primarily aimed at self-employed workers and small businesses. They offer shared workspaces and a few private offices.
Particular attention is paid to community animation, events and member-building, such as Casaco, Cool and Workers, Remix Coworking, Mozaik Coworking, etc.
The "pure players"
"Pure players" are coworkings that offer workstations to a clientele composed of independents and start-ups. Focused on start-ups and innovation, they offer a qualitative offer more accessible than that of hybrid centers, with a lower range design.
Their average area is between 400 and 5000 square metres.
Initially independent, these spaces have opened their capital to major players in real estate or hospitality and are currently experiencing exponential growth.
Some coworking spaces have adopted an ultra-premium positioning focused on well-being: such as Kwerk, Welkin-Meraki and the coworking The Bureau.
These spaces from 2000 to 10,000 m2 offer a full range of services (restoration, sports...) with a marked orientation around well-being.
Their tariff is the highest on the market and they target primarily professionals (lawyers, bankers, etc.).
These spaces offer little community animation.
Hybrid centres are the new operators of flexible real estate. Backed by powerful investors, they benefit from a strike force that allows them to rapidly develop internationally on surfaces ranging from 2,000 to 20,000 square metres.
They target a mixed clientele, from start-ups to large companies, with premium spaces and services.
These spaces focus on the professional network they offer and the dynamics of community animation. Unlike other categories of operators, these players have the know-how and size to offer real estate flexibility offers to large accounts. Knotel and Wework are now able to operate corporate headquarters flexibly.
Business centres still account for 63% of the office space available without a lease in ile-de-France (source: Orie). In this region, this market is dominated by Regus business centres (excluding Spaces) which account for at least 20% of the region's flexible office space, or 30% of the business centre area.
The rest of the market is relatively atomized.
Coworking cafes are at the crossroads between coworking spaces and cafes.
The layout of the spaces allows you to work, the billing depends on the time spent (by the time or the day) and light catering is included in the price. These self-contained spaces have surfacesof less than 300 square metres.
Their business model is based on freelancers, nomadic workers and privatization. Anticafé, the first "coworking café", opened 9 coworking spaces in Paris and 4 in the region. Hubsy has 3 Parisian spaces in the business districts.
Who are the users of coworking spaces?
TPE and SMEs - mature segments
While independents fuelled the growth of coworking in the 2010s, their proportion within the spaces is decreasing. They now account for only 41% of users just ahead of company employees - 36% of users (source: Coworking Survey 2019 - Deskmag).
Year after year, coworking spaces attract more and more important structures.
After start-ups and SMEs, it is now the big accounts (ETIs, large companies and the same administrations like the Ile-de-France region) that use coworking.
User profiles vary greatly depending on the types of coworking spaces mentioned above. The self-employed and "pure player" are geared towards the self-employed and small structures, where hybrid centres develop services and privatized spaces dedicated to the largest structures (privatized platform, custom layout and services, head office, meeting room, ..)
ETI and Large Enterprises - untapped potential?
On the side of medium and large companies, they are still few to have taken the plunge. However, pioneers who use coworking are already weighing heavily on demand for flexible real estate.
In 2018, companies with more than 50 employees occupied 51% of the jobs of hybrid centres in France (Source: JLL).
The use of coworking spaces by companies meets various needs: alternative workspaces for teleworkers and nomads, meeting or event spaces, private offices for project teams or extra surface.
Although highly anticipated in the coworking segment due to structural changes in work, nomads and teleworkers still use it marginally:
- The nomads work mainly from restaurants, cafes and passenger areas at the train station or airport. 38% have already tested coworking, but less than 10% use it regularly.
- Only 2% of companies in France offer their employees to telework in a third place (source: CROCIS, 2016). However, within these companies, only 5 to 10% of teleworkers use this option (source: Neo-nomad). Some pioneering companies have nevertheless launched on the subject successfully.
Today, we are looking for private offices within the coworking spaces, seen as an extension of the policy of flexibilization of the housing stock. This trend is global, since almost 25% of the average income generated by coworking spaces is now quite paradoxically based on the sale of private offices.
What are the 3 big trends for coworking?
Wework's recent setbacks will fuel questions about the sustainability of coworking in the coming weeks, but it's not just a unicorn and its opaque valuation models. The movement is much deeper and the virus is already well established. However, it mutates quickly and takes various forms. Here are some trends we've identified.
1. Resistance of the "small" coworking spaces
Faced with the diversity of requests and types of users, the coexistence of several models of coworking spaces is bound to last.
The development of coworking in smaller and rural cities will help support the development of human-sized spaces,strongly anchored in their neighbourhood and favoured by self-employed workers and TPEs.
For these spaces the question of profitability and a minimum of financial balance will remain the major issue. With limited room for manoeuvre to optimize costs (optimization of rents or partnerships public/private actors, reduction of operational expenses through the reduction of the level of services or user involvement, ...) they will have to ensure a sufficient and stable level of income (user loyalty via excellent community animation and/or competitive prices, good visibility via a good policy of partnerships and communication,...).
2. Multiplication of hybrid workspaces
To support the growth in the number of self-employed workers and to meet the growing demands of businesses for flexible real estate, the number of large hybrid workspaces will continue to grow.
From a workspace point of view, small coworking remains the majority.
If we take a m2 approach, it is likely that 80% to 90% of the coworking market expressed in m2 is in the next 5 years on the side of hybrid or pure player workspaces that offer surfaces of more than 800 m2.
The proliferation of hybrid workspaces, however, is a question because these spaces differ from the traditional coworking method. Thus the latest Deskmag survey shows that "Private offices now occupy as much space as open workspaces (34%).
Only the extra coffee/living area (9%) preserves the open and shared nature of these spaces.
Almost one in nine space even rents more than 60% of its space as private offices. In times of high demand for such spaces, this less innovative form of subletting provides a solid financial basis, but calls into question their classification as coworking space.
Some channels like Wellio assume it quite by talking about spaces of "proworking" and no longer coworking. With the rise of demand from large accounts and hybrid spaces, we should no longer be talking only about the coworking market but about the flexible real estate market.
3. Spreading coworking in companies
"If you don't go to coworking, the coworking will come to you." In a prescient article written in 2011, we announced that the coworking virus would spread within companies and we even gave it a name:"corpoworking". After several years of trial and error several forms of internal coworking have emerged.
As a result, nomadic workspaces and meeting places have been networked in several large French companies. Bouygues Construction, for example, has created a network of flexible workspaces throughout France, including the integration of "revisited" construction huts in meeting space. Although these initiatives are still marginal, the playing field remains on how to open buildings and create traffic between sites.
Mini "headquarters" are now created and operated by coworking players: customizable spaces, in the company's colours but taking up the main principles of coworking. Worldwide, Knotel and its subsidiary Deskeo in France have made it a specialty. Wework also with its concept Wework hq (for headquarters) offers this kind of workspace "as a service". This is also the path taken by Sodexo with its concept of "Social Hub".
Coworking may also have allowed for a wider dissemination of the flex-office model in which positions are no longer assigned to each employee. More broadly, coworking has helped to provide companies with a new model of development and (co)design of workspaces, geared towards the uses of their communities.
What future for nomadic work?
Despite uncertainties about market developments, coworking is here to stay. On the demand side, coworking perfectly meets the needs of businesses , large and small - for greater real estate flexibility. One may wonder, however, what will remain of the ideals and founding values of coworking? Will industrial players be able to develop by preserving their DNA without falling into coworking-washing?
The integration of a new "flexibility operator" player between owners and end-users seems to correspond to a natural evolution of the market. In particular, it remains to be seen how the major players in the sector will realign and how everyone will find their place. The field of large companies,which are qualitatively demanding and need strong networks, remains largely unexplored. Another player still absent is the public authorities, which do not take sufficient account of the sector's potential in order to rebalance flows and relocate work to the territories. The future looks bright, but nothing is yet taken for granted!