Why co-working is revolutionising real estate

A new era of co-workingAs the number of co-working spaces grows exponentially, businesses are embracing shared office space as a strategy to enhance collaboration and innovation, says JLL’s director of workplace strategy, Dinesh Acharya.While co-working has traditionally been favoured by self-employed professionals, consultants, start-ups and entrepreneurs as a flexible and affordable workplace solution, the practice is being adopted by big corporates – from McKinsey to HSBC – as a way to attract and inspire talent.According to JLL’s report A new era of co-workingthe number of people using shared office spaces globally is predicted to reach one million by 2018.US giant WeWork opened its first Australian office at 5 Martin Place, owned by DEXUS Property and Cbus Property, in December. A second location, at 100 Harris Street, soon followed.WeWork offers high-tech, flexible rooms that can be expanded or contracted depending on the occupants’ needs. The New York-based shared-office start-up, which was established in 2010 and was most recently valued at $21 billion, now has 143 locations in 35 cities.But a co-working space is more than just a hot desk and beer on tap. Acharya says the benefits of co-working include flexibility, collaboration and innovation, as well as “reducing costs by paying for space ‘just in time’, expanding social networks and increasing flexibility to manage headcount growth.”In London, the world’s largest market for serviced offices with an estimated $27 billion of space, co-working set-ups have taken up eight per cent of all newly occupied space for each of the last five years, says Cushman and Wakefield.The UK and US currently have more than 3,000 flexible offices apiece, but other markets are catching up. Hong Kong’s co-working landscape has grown rapidly to 174 offices over the last two years. In Amsterdam, mature companies such as Philips and IBM are using co-working to encourage innovation alongside start-ups. And NUMA, which opened France’s first co-working space in 2008, is now working with 30 large corporates.The demand for co-working space has been driven by the growth of creative and tech industries as well as the changing nature of work. While mobile technologies and personal devices have made working remotely from a variety of locations easier, people increasingly recognise the importance of social interaction. It’s those “thinking, talking and brainstorming” activities that create the most value for an organisation, JLL’s report finds.While cost reduction is not typically the primary driver of co-working, it can help companies reduce costs without compromising on the quality of workspace. JLL’s report finds that co-working hubs can even act as revenue generation opportunities.But Acharya cautions companies to “carefully consider if co-working is right for them and how to manage possible issues associated with cyber security, privacy and the potential dilution of organisational culture”. Nevertheless, Acharya says JLL expects the rise and rise of co-working to continue.”With one million people expected to be co-working by 2018 and a rising number of freelancers and contingent workers, co-working is becoming increasingly mainstream.”