- The GRI Offices conference took place in November, featuring a series of roundtable discussions.
- Key themes that emerged during one discussion included the impact of WeWork’s fallout, the long-term sustainability of the industry, and what happens if the market crashes?
- Experts believe that there remains a strong — and growing — opportunity for coworking operators and landlords to work together.
In November, Allwork.Space attended the GRI Offices 2019 conference to discover the latest ideas and perceptions surrounding flexible workspace, commercial real estate, and the future of work.
The format featured a series of roundtable discussions, which allowed participants to dive deep into specific topics and share market experiences. Among the discussions that took place, participants focused on landlord-operator partnerships, financial sustainability, and management strategies.
One discussion titled ‘From coworking hype to creating sustainable and transparent partnerships’ revealed a number of interesting points regarding the future of our industry. So what do GRI members think of the “coworking hype”?
The discussion frequently came back to these key themes:
- Will flexible space survive a market crash test?
- How will the WeWork fallout impact the industry?
- Is the industry sustainable?
Among the flexible space operators in attendance, it’s clear that many believe there is a need for sustainability and profitability among space operators.
Most speakers represented larger organizations with multiple locations, who stressed the need for independent spaces to consider their long-term future and look into growth opportunities, such as a landlord partnership.
That said, one large operator noted that while it has been “relatively easy” to access finance over the past 3 – 4 years — thanks partly to greater awareness of flexible space — we are now moving out of this phase.
The consensus is that “a shakeup” is on the way, with exits and consolidations expected.
“Now is the time for transparency to reassure landlords.” Demand is there, supply is growing, but operators and landlords need each other — and it’s important to build strong partnerships with landlords and reassure them that your flexible space offering is strong enough to generate revenue and withstand an economic downturn.
Landlords know they need the expertise of operators to successfully run a coworking space. Some are doing it themselves, but generally, landlords recognise that coworking is a full service provider, and it’s not easy for landlords to enter this market.
One panel member went so far as to say that being both a landlord and a coworking operator is a “schizophrenic” approach; coworking is not real estate, it is not tech. It is space-as-a-service, and it’s unviable for landlords to run a flexible space offering in the same way as they manage their building. Therefore, there remains a strong — and growing — opportunity for coworking operators and landlords to work together.
However, on the flip side, there was a strong suggestion from the panel that landlords are increasingly resisting the opportunity to lease space to coworking operators.
“Landlords with a strong location won’t give up their space to a young coworking operator,” said one panel member, who runs a large European coworking brand. This is because landlords increasingly want reassurance from their lessees — and unproven coworking brands will be passed over in favour of those with greater experience and proof of revenue, or of course, to a single corporate tenant.
This led to a wider discussion about joint ventures with landlords. How is it done? Which is the most successful approach?
Suggested Reading: “The Top 5 Ways CRE Is Crossing into the Coworking Industry”
One member, who operates a global flexible workspace company with multiple brands, claims that there is “varying appetite among landlords”, some of whom want fixed profitability, while others want to diversify and experiment with joint ventures and profit-sharing models.
“Don’t be a tenant, be a partner. Share risk, share reward — that’s the heart of sustainability.”
Ultimately, while numerous questions remained over the viability of coworking spaces — particularly those at the smaller end of the spectrum — the panel agreed that people want the flexible space product. So one way or another, risky or not, our industry continues to sit at the forefront of a huge opportunity to fulfil this demand.
Due to the private nature of the discussions, Allwork.Space is not permitted to reveal the identities of panel participants.