The Changing Value Proposition Of Coworking: A Q&A With Steve King

Changing Value Proposition Of Coworking
Coworking’s new value proposition is its ability to reduce loneliness while working
  • Reducing loneliness is now a core value proposition of coworking spaces
  • Coworking has become mainstream, and the rest of the world is becoming smarter about it
  • For the independent worker, the value of networks continues to increase, and they are now teaming up to deliver finished products instead of services

Steve King has a unique perspective on shared workspace trends. Partner at Emergent Research, King focuses on the future of work, the workplace, small and micro businesses and independent workers. By pulling these all together, King and his team provide valuable insight into the growth and evolution of the coworking industry.

The 2018 Coworking Forecast, created by Emergent Research and the Global Coworking Unconference Conference (GCUC), recently forecasted that over five million people will be coworking in 30,432 spaces around the world by 2022.

We spoke with King about coworking going mainstream, the growing value of professional networks and how reducing loneliness is emerging as a core value proposition of coworking.

Allwork.Space: With regards to the shared workspace industry, are there trends you’re following that other people may not be tuned into?

Steve King: That used to be very much the case with coworking. Most people were just not seeing what we were seeing. That’s why we were early to the coworking space and why a lot of our forecasts have been relatively correct, though we’ve tended to consistently underestimate.

The world has caught up…I think we still have a deeper understanding of what’s going on with the independent workforce relative to most of these firms that are looking at it now, but a lot of people following coworking and involved in coworking at least now understand that the trend is there.

The traditional real estate analysts have always had a pretty good grip around corporate, which is one of the big growth markets going forward, and probably understand the corporate market better than we do.

In our work, we’re often looking at edge trends becoming mainstream. The closer they move to the mainstream, the better known they become. One of the ways you measure if something has moved to the mainstream is how smart the rest of the world is about it. The fact that I no longer consider us to have truly unique insights is because coworking has become mainstream and a lot of smart people are now looking at it. That’s attributable to the success of coworking.

Allwork.Space: You mentioned your insights about the independent workforce. What can you share about that?

The thing that’s going on in the independent workforce that I don’t think is widely known even by coworking space owners themselves is that the value of networks just continues to increase. The other thing that’s going on is that companies are starting to say to themselves that they don’t want to hire individuals, they want to hire tasks to get done.

What that means is that companies are more and more looking to teams. For example, a marketing manager who’s rolling out a new product hires an independent contractor to help with the website, another to help with communications, another to help with translations, and then they manage that. But these people don’t have time for all that and they are looking for someone to do the product management and just deliver it all. That’s starting to happen. We’re seeing independent workers team up more and more. Instead of delivering services, they’re increasingly delivering finished products that require more than one person.

We’ve had a long trend of turning products into services. Interestingly enough, this is turning services into products. Instead of selling my service as a web designer, I tell people I’ll put together a team that will deliver your website. It will be mobile enabled and will include international access, etc.

With this teaming, your reliance on your network as an independent worker is going to be even greater. Therefore, the value of being in a coworking facility to build your network better is going to increase.

We’re just starting to see examples of the teaming. We’ve seen examples of teaming over the years, but not a lot of consistent ones to this degree in coworking spaces. Where we’re really seeing it is online, at sites like Upwork and Fiverr, but that’s spreading. Those two worlds are merging fairly quickly. With the value of a network increasing, the value of a coworking space has increased.

Allwork.Space: That definitely happens organically in coworking spaces. At NextSpace Santa Cruz, my home space, I know who the designers are, who the photographers are, who the event planners are, who the copywriters are, and I collaborate with them as projects come up. This is happening every day in coworking spaces.

We think that’s a trend that will continue to grow and it leads to interesting possibilities. It leads to more niche spaces, where people are focused on specific industries or specific capabilities because that will better allow those types of teams to grow. We’re definitely seeing niche spaces growing while at the same time you have these giant WeWork, Industrious-type spaces that are more general. We see both happening at the same time, with different things driving them.

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    Allwork.Space: So your barbell model for coworking, where there are industry giants on one side, and small companies and independents on the other side, with few mid-size companies in-between, is holding up.

    It is. Very much so. Coworking is becoming a barbell industry, which is no surprise. Almost all industries are becoming a barbell. We’ll continue to see niche spaces grow in numbers, but at the same time, these big old spaces will continue to happen because there’s a segment of the population that would rather be in giant spaces.

    Allwork.Space: What industry questions still need to be answered? What are the biggest variables?

    The big question for the industry goes back to large corporations. The independent workforce piece is pretty straightforward; it will continue to grow. The challenge there will always be proving to the independent worker the value proposition. An independent worker can work for free at home, or can work for free at a coffee shop, why pay $300 per month? That value proposition has always been the industry’s biggest challenge and, for that segment, will continue to be. More people in that segment are recognizing the value proposition.

    The startup segment is fully convinced. It’s hard to find a startup that doesn’t believe they should start in a coworking space. That segment’s very well-established and will go the way startups go.

    The wild card here continues to be corporations: how they move forward and how quickly they move forward. Do they choose to send more and more of their people into traditional coworking spaces or do they choose to effectively build their own internal coworking spaces that would be native to them.

    We believe corporations will embrace coworking and, compared to the current size of the industry, be one of the major growth drivers because the industry is still really small compared to corporate real estate, in particular. What’s unclear is how quickly that will happen.

    Allwork.Space: You recently forecast that 5 million people will be coworking by 2022. How has your forecast changed this year?

    Our forecast is roughly the same as last year’s in terms of growth rate. We haven’t seen any big change one way or another. But on a global basis, Asia Pacific, which in our definition included India, is just booming.

    It makes sense because over half the world’s population is in Asia Pacific the way we’ve defined it and it has historically been underdeveloped from a coworking standpoint. That’s become the largest region from our point of view; it is driving a big chunk of global growth. China first, then, to a much lesser degree India, are both big growth markets. Those are the ones we’re projecting having by far the fastest rate of growth.

    We see the U.S. growth rate slowing quite a bit. A lot of the cities are pretty well penetrated at this point. But there is still growth out there and we still see it growing at a pretty healthy clip.

    The other trend that’s hard to figure out is the impact of all these hybrid spaces, by which I mean libraries, hotels, restaurants, community centers. We’re seeing a lot of space owners and spaces that are trying to figure out how to take advantage of coworking.

    With libraries, we don’t really know how many people go to work at a library on a regular basis, but it’s a lot. And you always have to keep one eye on what the coffee shop industry is doing. Starbucks continues to have a love/hate relationship with people working there. They don’t appear to be moving beyond where they are, but you never know.

    Allwork.Space: Thanks, Steve. Anything you’d like to add?

    We’ve done a lot of work on coworking and loneliness and happiness. As people become more aware of the loneliness epidemic that people talk about, especially in regards to independent workers, it gets back into the value proposition of coworking.

    Most independent workers know they’re lonely but they don’t know what the solution is. It’s part of wellness, which has become more popular in general, but people have a hard time linking wellness to coworking. I think people will be able to better link being less lonely in a social environment like coworking space. That’s going to become a big part of the value proposition. It always has been, but it will become a more overt part of the value proposition and drive some of the growth.

    Allwork.Space: There’s a lot of focus right now on coworking and shared workspaces as increasing wellness in our lives.

    I find overall wellness a tougher value proposition for a coworking space than reducing loneliness. Reducing loneliness is an easier value proposition because it’s so obvious. Walk in the door and you’ll know that you’re not working alone anymore. It’s hard to walk in the door and think you’re going to be necessarily healthier for it—even though you probably will be.

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