Will the Shared Workspace Industry Survive the Effects of Covid-19?
Built on an ethos of sociability and community, shared workspaces have been particularly challenged in the face of Covid-19. Will the pandemic be their demise? Was the industry even sustainable to begin with?
The Shared Workspace Boom
With the rise of the cloud, WiFi, and collaboration software over the past decade, the realization dawned on many that they could be just as productive from a coffee shop, bookstore, or a beachside bar in another country as from a traditional office. This led to a level of workplace freedom that had never before existed and, in turn, to the development of a shared workspace industry valued at billions of dollars.
On the employer end, it allowed companies to have their workspaces easily and gradually expand in correlation with their own growth, making it particularly suitable for startups. While these spaces provided the essentials for an office, like internet and unlimited coffee, they allowed companies to focus on what really mattered most — their products. On the employee end, the model allowed workers to have a social and enjoyable atmosphere with just the right amount of interaction with others while still giving them individual space to concentrate on their work at relatively convenient locations. The shared workspaces provided a sense of community of people working on things important to them with all the infrastructure a regular office would offer.
How Shared Workspaces Flourished
The proliferation of shared workspaces was the consequence of a number of factors. Many companies began reducing the number of direct employees on their payrolls and expanding the use of freelancers and subcontracted workers. This was particularly encouraged by the growth of the digital and creative sectors in which there is a naturally greater amount of flexibility in terms of work locations and work hours.
Smaller companies, which were well suited for using shared workspaces, were also experiencing a lot of growth at a time when some larger companies and sectors overall were downsizing. As a result, a decent amount of real estate in cities was being freed up for new uses.
In addition, at some of the digital meccas in particular, the cost of living increased quite a bit in relation to average income. Many employees in the digital sphere were young people living in shared housing arrangements with roommates and thus did not necessarily have ideal workspaces at home. They were the perfect candidates for a shared workspace that was not as suffocating as a corporate office cubicle but not as restrictive as a room at home with just a bed and a desk. Furthermore, these same young people often approached work with a constant eye towards new opportunities. The “sense of community” that shared workspaces created helped them effectively network and exchange knowledge, which often gave them more work leads and ideas for professional growth.
Add WeWork into the mix and it took things to a whole other level. WeWork promoted itself as the cutting edge of productivity, informality, fun-at-work environment, and sociability. However, it was actually at WeWork where real issues began to appear in some of the ways the industry was being marketed. In other words, shared workspaces were being sold as something revolutionary and fresh. In reality, the business model was a simple one in which long-term rental contracts were signed for large spaces that were then essentially subletted for the short term at higher rates. Ostensibly, the business idea could be decent. But was it so groundbreaking and original? Not so much.
How Shared Workspaces Have Suffered Due to Covid-19
With the global economy suffering overall and a great deal of uncertainty prevailing due to the COVID-19 pandemic, the shared workspace industry has not been immune to the consequences of the world economic situation. It has been suffering as members have stopped joining or have been unable to make rent payments. That in and of itself exposed some of the business model’s shortcomings. Couple that with the uncertainty as things stand now of whether investors will be willing to bail out what is essentially a rental business, and you have quite an unstable situation on your hands.
Once again, WeWork might be an extreme example because of the nature of its marketing strategy and its former CEO, but it nonetheless laid bare some of the problems inherent in the shared workspace idea, if not managed correctly. In an effort to somehow salvage things, WeWork tried launching the “WeWork for Good” program in which it offered space and facilities to organizations working on the frontlines against COVID-19. In less than two months, WeWork’s valuation went down by half, a major investor called the idea foolish, and the company was asking for mercy from people from whom it rented space while it did not extend that same mercy to its own lessees.
As so much of the world has had to practice social distancing, sometimes in extreme forms, the whole idea of physically sharing workspaces when not completely necessary starts to make less sense. Many who can work remotely would rather just stay at home or may be required to do so. Other elements that may have originally made the idea of shared spaces attractive and potentially profitable have become less relevant as the pandemic continues.
Even if a vaccine is found tomorrow and the pandemic wanes in a month, there is a real question as to whether the shared workspace model will prove to be profitable and sustainable. While the demand to work remotely seems to be all the more on the rise in a COVID-19 world, it is uncertain whether shared workspaces, which were a sort of happy medium between the home and the cubicle, are really the solution. Even for young people with roommates, the solution for the foreseeable future may just be to stay home.
