Co-working is here to stay. Beyond the sleek minimalist office aesthetics and controversial Wall Street valuations, real estate vendors cannot ignore community within co-working spaces if they want to see their co-working establishments flourish. The co-working scene has ballooned into a lucrative global industry, with an estimated 35,000 co-working spaces worldwide. It’s no longer viewed as a fad. Commercial real estate providers are in a prime position to expand in this space. However, a new perspective is required. One that combines a community-driven focus.
For real estate operators with co-working ambitions, it’s important to recognise community as the heart of a co-working space. In the 2017 Global Co-working Survey, the top three reasons for members joining a co-working space was the social and enjoyable atmosphere, social interaction and community. Coming together through shared location and interest is nothing new, but in co-working spaces, opportunities to connect and network with other members are advertised as a benefit of joining. Co-working members have more transient workplace arrangements than a traditional corporate tenant. As more co-working spaces spring up, it will create member’s market because they will have a plethora of choices and community will likely be the deciding factor.
“Copying what’s tangible is absolutely easy,” says Marc Navarro, a co-working consultant based in Barcelona, Spain. “If a space is copying yours, and we’re only 100 metres away, what’s the only difference we have?” A workspace interior can be replicated, but community cannot.
This new co-working landscape requires real estate owners to take a customer driven approach that puts community first, in order to succeed. The current paradigm of co-working spaces is to find a location first, then facilitate community around it which is one reason why community is not usually a top priority for real estate owners. It’s the opposite of how co-working communities first evolved.
“Some of them actually started as a community of practice before there was even a space,” says University of Michigan business professor, Gretchen Spreitzer.
However, according to Liz Elam, an early co-working space owner and founder of the Global co-working Unconference Conference, the real estate industry is a “sleeping giant” that has an important role to play in the future of co-working.
She says, “The real estate industry has an opportunity to become part of this huge global phenomenon, but the thing they’re going to have to learn, which is difficult for the real-estate industry, is that community is a vital part of co-working and if you don’t have community people won’t thrive, and your co-working space won’t thrive.”
The intangible nature of community is challenging for real estate owners to quantify. It requires a specialist combination of knowledge and nuance to navigate. “It’s hard to put a number on community. Community is something you have to build. You can’t buy it,” says Elam. Fortunately, technology is revealing insights into building co-working communities. A growing number of proptech companies have built community-driven technology to empower co-working vendors and real-estate owners with insights to cultivate and manage communities.
Equiem is a tenant management platform that engages co-working members. Its CEO, Gabrielle McMillan agrees that technology is necessary for building community. “Technology: it’s not the community itself, but it certainly plays a huge role in facilitating and activating a community and making it possible for real estate owners to provide community within their building,” she said.
Equiem helps real estate owners and community managers build a sense of community through customer insights, which is used to coordinate activities. For example, through the platform members will be able to see community events and connect with like-minded peers in the same space. Community managers can view whether these events are well attended, and build community engagement strategies based on the behaviours and patterns of members. OfficeDnD is another tech company that provides a co-working directory so members can find each other and forge connections.
Technology also plugs members into the wider community that exists outside the walls of their co-working space. Chase Garbarino, CEO of proptech company HqO, wants to enable co-working members to explore their local area too. “Often tenants don’t realize the full value and potential of the building and nearby community. One really tangible example is that when people walk out of WeWork at lunch time, they turn to Google or Yelp to find a great place to eat. There’s an opportunity for the landlord to make that recommendation.”
Despite the access and insights from these tech tools, technology is not a silver bullet for bridging the gap between owners and the demands of the co-working market.
Commercial real estate owners should embrace collaboration with experts across different co-working fields because it drives focus and effectiveness. Garbarino believes WeWork serves as a cautionary tale. “We don’t believe that co-working companies will be able to build the technology needed to connect a community digitally. This is because building the technology layer that connects people to places requires 100% focus and there will be companies that provide this product for the folks servicing the space.”
Elam agrees. “Don’t do this yourself. Hire a consultant or partner with somebody. Stay in your lane. You’re real estate. You buy buildings, you put people in your buildings. You don’t start co-working spaces. Unless you’re really willing to go all-in and really learn this, and really become part of it. If you’re not willing to do that, then you need to outsource it…It’s going to decrease their time to market and help ensure their success.”
Even still, plenty of real estate owners and operators have decided not to stay in their lane. While many have not done pure-play hotdesking companies like CBRE, Tishman Speyer, and Boston Properties have all pushed into flex space. These big companies will likely have no problem with the space management but they will have to adopt a different mentality. Communities form around brand identities, as was undeniably the case with WeWork. But property companies have never had a reason to create a closeness with their client. This might need to change. “Building owners and landlord, whether you’re a co-working landlord or a large global landlord, you really need to be thinking about how you make your place sticky,” says Equiem’s McMillan. ”How do you drive loyalty to your customers so they come back time and time again?”
The emergence of niche co-working spaces (e.g. co-working for lawyers and creatives) is a good example of how spaces are able to connect on a deeper level with tenants. In niche spaces, contextual community is prized above all else. This might limit the total market for spaces (not everyone can be a creative or a lawyer) but it can create a unique, valuable offering for a subsection.
Smaller landlords and managers might see this need for community cultivation as a bridge too far. Community management just isn’t in some real estate firms’ core competencies. But, that is where a host of technologies is stepping in. “Technology is key for simplifying an otherwise very complex operation. In coworking you have so many moving parts like multiple tenants, offices, space offerings, memberships, conference rooms, guest services and amenities, just to name a few,” said Mark Furness, CEO of essensys, a co-working management software. He points to the growing use of process automation in software that has eliminated previously time consuming processes like invoicing and vendor management.
If there was one takeaway from my research was that, even though it is hard to quantify, community matters. As co-working spaces become more readily available we will see the drop in price that goes with the increase in supply that we all learned about in economics. The co-working spaces that will succeed in a more mature category will be the once that have created something bigger than just a space to work. They will need a sticky product, a relatable brand, and enough technology to be able to provide a world class experience.