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Flexible Workspace In Europe “Has Plenty Of Room To Grow”

by Jo Meunier
June 14, 2021
in Coworking
Reading Time: 4 mins read
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Flexible Workspace In Europe “Has Plenty Of Room To Grow”

“Even without accounting for strong growth post Covid, there is plenty of room to grow for all European markets”. - Social Workplaces report.

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  • A new study from Social Workplaces shines a light on the evolution of flexible space in Europe.  
  • The UK is the most mature coworking market in Europe, with almost 50 different coworking chains in activity.  
  • The report identified five clear sources behind flexible workspace funding across Europe. 

A new study from Social Workplaces shines a light on the evolution of flexible space in Europe, and charts its rapid expansion over the past two decades. 

The European coworking scene, dominated by the UK, emerged as a collection of independent spaces in the late 2000’s. Its growth aligned with the mobile work movement, driven by faster and stronger wireless Internet, cheaper portable computing equipment, and the “entrepreneurial mood imported from Silicon Valley”, which inspired independent work. 

Coworking emerged, and enticed mobile workers away from coffee shops (who had simultaneously begun to tire of laptop users) with flexible monthly memberships. 

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As the trend caught on in the 2010’s, many spaces, according to the report, started to support other purposes such as startup incubation, innovation hubs, social entrepreneurship, art campuses, and so on. This triggered new coworking profiles and niche workspaces, and the money began to flow in. 

That’s when the larger players took notice. 

This included traditional business centres and serviced office companies – particularly IWG – which in some countries has as much as 40% market share, according to the report. 

Here are some highlights from the report: 

  • The UK is the most mature coworking market in Europe, with almost 50 different coworking chains in activity. The majority are national chains with 4+ locations, with 17% of market share attributed to small operators (under 4 locations). 
  • France is the second biggest market in Europe after the UK, based on the number of national chains. The market share of independent single-location operators is 49%, which represents a much higher proportion of the French flex workspace offering than the UK’s. 
  • However, looking at number of locations rather than number of operators, UK and Germany operates on average 60% more locations than their French counterparts. 
  • Overall, Italy and Poland have the lowest rate of national coworking brands within their borders. 

Where Does the Money Come From? 

The report asked the question, who owns the European coworking industry? 

It identified five clear sources behind flexible workspace funding across Europe: 

  • Financial investors – including professional investors, private equity (PE) funds and venture capital (VC) firms. They are not looking at this investment as a way to bring value to another asset class they are involved in. 
  • Synergy investors – this category includes all types of investors that see coworking as an addition to their traditional businesses, such as asset management funds with a focus on RE, hotels or real estate brokerage firms. 
  • Non-related industry groups – such as a conglomerate corporation venturing into the industry. 
  • Non-profit / public investors – investment comes from public entities, in order to achieve goals related to rural development, economic development, digital entrepreneurship or social impact. 
  • Founders – investment money from the founders or small private individual investors, including “family, friends and fools”. 

The UK flexible space industry has the highest penetration of financial investment. The report found that “26.83% of the UK based flex workspace brands are partly or totally funded via sources such as private equity or venture capital”. 

Other European locations have received much less private funding. “This is the case for France and Germany, with barely 12.5% of local coworking brands’ funding coming from professional investors”. 

Interestingly, of the 11 European countries studied, “founder-controlled operators represent a median 37.5% market share of all coworking chains”. 

The report claims that Austria and Germany represent “one of the biggest CRE investment opportunities in Europe”, given that 80% and 62.5% (respectively) of their coworking chains are still founder-owned, and with the seed investors as the main shareholders. 

The report concludes that “even without accounting for strong growth post Covid, there is plenty of room to grow for all European markets”. 

Dig deeper into the findings by downloading the free report, here. 

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Jo Meunier

Jo Meunier

Jo is Allwork.Space's Senior Editor for the UK and Europe. Jo has worked within business centre and coworking circles since 2009, researching and contributing written features for numerous industry publications. She reports on the latest market news and delves into local issues with one main objective: to champion the flexible workspace industry and its members.

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