- 2019 was without a doubt an eventful year for the flexible workspace industry.
- Failed IPOs, consolidations, wellness, and expansions dominated the headlines of coworking stories this year.
- Check out Allwork.Space’s 5-minute wrap of 2019’s most notable, and memorable, industry events.
Well, that was eventful! 2019 marked another year of huge changes in the coworking and flexible space industry. From consolidations, IPOs and big name implosions, to greater focus on wellbeing and sustainability, the past 12 months have been action-packed.
In case you blinked, here’s a 5-minute wrap of 2019’s most notable, and memorable, industry events.
1. It was the year that WeWork imploded.
2019 produced a very public crash for The We Company. So much happened in the space of just a few months that WeWork (almost) deserves a timeline of its own. Here’s a condensed version of what happened to WeWork in 2019:
- January: Amid early speculation of an IPO, the company rebranded from WeWork to The We Company. In the same month, its biggest backer Softbank cut its investment from $16 billion to $2 billion.
- March: Worrying news emerged that the company’s losses had more than doubled in the previous year.
- April: The company ended speculation by filing for an IPO with a huge $47 billion valuation.
- July: Then-CEO, Adam Neumann, cashed out more than $700 million from the company.
- August: The We Company officially filed to raise $1 billion in an initial public offering on August 14. But the publication of its prospectus instantly set alarm bells ringing.
- September: The month it all came crashing down. WeWork withdrew its IPO after details of the company’s major financial losses came to light. Billions of dollars were shaved off its valuation. Co-founder Adam Neumann stepped down as CEO. Drastic measures were put into action – including thousands of staff redundancies.
- October: Adam Neumann received a $1.7 billion ‘golden handshake’ to walk away from the company he co-founded. And as if the brand’s fall from grace wasn’t public enough, it emerged that the WeWork saga will be made into a documentary.
What now for The We Company? Its credibility is in poor state; landlords are backing away from leases and an investigation into alleged ‘self-dealing’ is underway. But with SoftBank in control and two CEOs at the helm, can the company repair itself and start afresh? Plenty of other flexible workspace operators are running profitable, sustainable businesses. Will WeWork finally balance the books in 2020? With a new decade looming, there’s no time like the present to wipe the slate clean and start a new – and profitable – journey.
2. Boundaries continued to blur between coworking and coliving.
Onto happier things, and 2019 saw much more activity from the coliving sector. What’s the link with coworking? Think about it: Hospitality – Service – Space – Amenities – Flexibility. You’ll find all of these elements in a coworking space, but you’ll also find them in hotels and coliving spaces. Our industries are remarkably similar, and it follows that the boundaries are blurring between them.
One rising star is Common, which announced multiple new coliving locations in 2019. “It’s an indicator of our growth and the maturation of the space,” said Brad Hargreaves, founder and CEO of Common. “You’re going to see people approach this from a few directions. We’re the first to reach this scale, but we won’t be the last.”
3. Human experience took centre stage.
Using a workplace is an experience. So if you want members and clients to keep coming back to your space, that experience must be a positive one.
In 2019 we saw greater focus on the workplace experience, including how to use design to drive positivity at work, and how technology can help improve the usability of a space.
We also saw the development of the ‘destination workplace’ and human-centric design to create an inspiring, comfortable space that meets its end-users’ needs, complete with aesthetic appeal and user-friendliness.
4. There were expansions. Lots of them.
WeWork wasn’t the only one stealing headlines in 2019. Knotel took massive strides throughout the year, and over the past 12 months we’ve seen expansions and growth from dozens of other operators around the world.
Here are just a few of them (in no particular order): Breather, Venture X, Serendipity Labs, Industrious, CommonGrounds, The Commons, Huckletree, OYO, Impact Hub, Spaces, The Office Group, Premier Workspaces, Office Evolution, The Wing, JustCo, KMC, Hub Australia, and BE.Spoke.
We also saw more IPO news. Chinese brand Ucommune, which has been expanding aggressively across the Asia Pacific region since its inception in 2015, revealed its intention to file for an IPO in 2020 – although skeptics are already comparing it unfavourably with WeWork’s failed attempt to go public.
On a more positive note, essensys – a tech supplier to the flexible workspace sector – successfully completed its IPO in May 2019 and has since released its first pre-close trading update.
5. Asia is booming. Still.
It seems there’s no stopping the growth of flexible workspace in Asia. It’s the fastest-growing market in the industry, with high-growth cities including Hong Kong, Bangalore, Singapore, and Melbourne.
Research predicts that coworking spaces in the Asia Pacific region will account for 38% of global coworking spaces, and overtake EMEA and the Americas, by 2021.
6. It was a year of acquisitions, mergers, partnerships, and sales.
It has been another year of consolidation, acquisitions and partnerships within the flexible workspace industry.
To name just a few, SquareFoot bought PivotDesk from Industrious; IWG sold its Japanese business for £320 million; and Industrious acquired TechSpace.
Also, WeWork acquired Spacious, a startup that transforms empty restaurant space into popup coworking. However, following its failed IPO, WeWork shut down Spacious just four months after buying it.
7. Plants and greenery in the workspace improve wellness.
We’ve said it before and we’ll say it again: you simply can’t have enough plants in the office. When we surround ourselves with plantlife, greenery and views of nature, we feel better. It’s good for the soul. And when we feel better, we’re more productive at work. Philip Vanhoutte, co-founder of Ozadi, a movement to integrate nature into our work lives, explains the science behind it.
8. Coworking showed its true colours as community made a comeback.
Community is the beating heart of the coworking movement. But as real estate giants and corporations wade deeper into the coworking industry, with headline-grabbing takeovers and big-dollar valuations, it has a tendency to bury the real treasure of coworking: the communities that thrive inside its spaces.
This year, coworking once again found its voice. We’ve seen numerous examples of how workplace communities have come together to support one another, perhaps none more so than for the social impact sector. This time last year, the All Good Work Foundation expanded to Silicon Valley, and now it has launched a new fundraising drive to provide workspace to another 125 social impact organizations in 2020.
All Good Work isn’t the only organization that’s active in the social impact sector. In Athens, Impact Hub acting as a catalyst for startups with a social conscience, and in the US, Hera Hub is making good on its mission to help over 20,000 women launch and grow their businesses by the end of 2020.
9. 2019 saw its fair share of challenges…
Sadly it’s not all good news. 2019 saw plenty of challenges, and some workspaces suffered heavily as a result. Central Working, which had 11 sites across the UK, collapsed into administration, as did The Clubhouse in London. IWG is reportedly in talks to take over both brands.
Another casualty was female-oriented Austin workspace, The Refinery, which closed its doors a little more than a year after opening. Founder Hayley Swindell-Wakefield said that, with Austin rents skyrocketing, operating a sustainable business became unattainable.
Another challenge currently facing all flexible workspace operators is the much-publicised WeWork saga. The business model of coworking is now under greater scrutiny. Spooked by WeWork’s massive losses, would-be partners, investors and landlords are digging deeper into the long-term profitability and viability of flexible spaces.
And as for the future, what happens in a downturn? Like any business, this would pose challenges for workspaces – particularly those in competitive or saturated areas. However, at times of uncertainty, businesses tend to flock to flexible space and away from long-term leases in order to reduce risk and maintain greater control over their expenditure.
10. …but when one door closes, another one opens.
One thing we’ve learned this year is that flexible space isn’t bulletproof. There are chinks in the armour – but with each passing year, that armour gets a little stronger.
We’ve come to accept that coworking is the new normal, and we’re not alone. After all, it’s hard to argue with a sector that has over 35,000 flexible workspaces around the world and represents 521 million square feet of flexible space. What’s more, flexible space is continuing to grow, and is expected to represent 13% of total US office space by 2030.
Flexible Space: The Future of Work?
It has certainly been a year of highs and lows for the flexible workspace industry. At the close of the year and on the brink of a new decade, we can be sure of one thing: our sector has serious growth on the agenda, and it’s here to stay.
But with that mission comes a significant amount of change. Our industry is evolving, fast. And whatever form or shape coworking takes in the years to come, there is one common element that binds all of us together: flexibility.
The business landscape is increasingly shifting to become more agile, more mobile, and more flexible – and whatever challenges our industry faces, we have the opportunity to thrive by offering businesses what they need most: professional services, quality spaces and facilities, positive experiences, and flexibility.
In short, a place that helps people do their best work and be more productive.
Our industry’s future is bright, and we can’t wait to see what 2020 has in store. Happy New Year!