Is Industry Consolidation An Opportunity or A Threat To Small Workspace Operators?

Published on November 23, 2016 - By Cecilia Amador de San José

“We are an industry of perceivers that knows how to react to our customer base and its needs. This has fueled the industry’s growth throughout the years.”

Frank Cottle has been involved in the industry for 35+ years now, and he remains as involved in the industry as ever.

We don’t blame him. With coworking, the workspace-as-a-service industry has grown exponentially in the last few years, attracting the attention of global markets, large companies, and (more importantly) investors.

It is Cottle’s belief  that if there’s anything in the future for flexible workspaces, it is absolute growth.

“I think our entire industry will grow about 12-15% each year. Its growth pattern will be similar to how the PC industry grew during the dotcom era.”

And with this growth, industry experts believe we will begin to see more consolidation within the industry.

In a recent interview, Jamie Hodari said that  “there is going to be a coming wave of consolidation in the industry. Like any rapidly growing and maturing industry, there are starting to be real winners and losers in the space.”

Hodari’s view aligns well with what Liz Elam had previously predicted as well: “There’s going to be more consolidation within the industry. You will see different operators coming together as more spaces are bought by larger brands.”

This is great news for the industry at large. But it means that small operators will need to adapt, recharge, and re-strategize.

Cottle is Chairman and Founder of the Alliance Business Centers Network (ABCN), a global network that prides itself in helping small operators compete on a level playing field with their larger rivals

“Our main focus and goal has always been to help level the playing field of the industry. Through the Alliance Network, we provide small and local operators the same industry information, best practices, and marketing advantages of larger players.”

“ABCN has historically brought education about the industry to the customer and to the industry at large. This has helped create new products and find new ways to service the customers more effectively. Our intention is to continue to provide these communication and information resources as the workspace-as-a-service industry continues to grow.”

But, if consolidation is in the cards of the industry’s playing field, where does this leave ABCN and its Network of small and local operators?

Any company that is able to be successful for over 20 years knows what it’s doing and is likely doing it right.

Cottle attributes part of the success of the Network and its members to their being global.

“We have the benefit of being global and of being in constant communication with our members and others on a daily basis. Because of this, we are often times able to perceive some of the changes that are taking place before others, which gives us and our members the ability to react faster to them, therefore staying relevant in a growing and evolving industry.”

The idea of consolidation doesn’t worry Cottle. Quite the contrary, when asked about consolidation, Cottle’s response was “we (ABCN) love it. Let it roll, baby.”

“In the 48 months that are coming, we will see a huge influx of available capital in the industry. We will see a change in structure, scale, type of offering, and penetration our industry can make on a global basis.”

“I believe consolidation is an opportunity both for the Network and for our members (and for all small and local operators). It’s not by any means a threat,” he says.

Think about it, if there are 2 or 3 consolidators looking at the same time, this drives the small or independent operator’s value significantly.  “It’s these centers that will get the best deals in the market.”

Small operators that want to get noticed and get bought need to stay atop of industry standards and  offerings. This is why Cottle isn’t worried about the Network losing it’s members to consolidation.

“Alliance loves growing companies. In fact, many ABCN members themselves are part of the consolidation process. Even as our members grow and they don’t necessarily need much of our marketing and advertising support, they do need us to help identify upcoming workspace centers that they can buy. By being a part of the Network, we help them determine when there’s a good opportunity to buy.”

“We help them grow and continue to grow their business; which is, after all, our main mission.”

The good news is, the workspace as a service industry will continue to grow, more capital will be available, and consolidation means some companies will grow faster than others, but small and independent operators are by no means going to disappear.

“It’s not like there’s only large and franchised restaurants in the food industry, there’s local and smaller ones that people love. Same goes for workspace centers.”

*Disclaimer Allwork.Space is part of the Alliance Family of Brands.