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Here’s what you need to know today:
- Landlords Try To Refill Abandoned Coworking Spaces
- Brokerages Are Tapping Into The Coworking Industry
- Employers Need To Adjust Sustainability Goals Post-pandemic
- Caribbean Island Jumps On Digital Nomad Visa Trend
- WeWork And D.C. Team Up To Bring Workers Back To The Office
- Companies Need To Adapt To The Hybrid Future
Landlords Try To Refill Abandoned Coworking Spaces
A recent report from coworking listing website Upsuite found that one in five North American coworking spaces had to close down or change leadership last year during the midst of the pandemic. This left landlords with around a 25 million square feet fallout.
For many coworking and flex office firms, build-outs can cost upwards of 25% more than traditional offices to construct.
“Truly the build-out, in my opinion, is a complete loss unless you’re able to find that one in a million tenant who wants to sort of take over the existing design and make it their own,” said Jeff Garrison, partner at commercial real estate developer S.J. Collins Enterprises. “That’s very difficult to do because [each company’s offices] have their own personalities that they try to reveal through their design.”
The typical model for office buildings involves landlords building out space for tenants, then making the money back of those costs from long-term leases.
However, coworking operators have had to give back huge amounts of space over the past year. For instance, WeWork and Regus gave back a total of 165,000 square feet in Atlanta alone according to Colliers research. This, along with the numerous closures of flexible offices across the country, has been damaging to both landlords and the industry.
Business models of coworking spaces aren’t the only challenge for landlords to overcome, but the design of these offices are also an obstacle.
Because coworking is a shared space among different professionals and companies, the layouts typically don’t jive with traditional office tenants who want a lot of private space and cubicles.
Brokerages Are Tapping Into The Coworking Industry
Corporations have finally realized the benefit of coworking spaces as many are faced with the challenge of accommodating their now distributed workforce.
Now, brokerages are looking for ways to acquire these operators in order to tap into this flourishing industry.
One of the biggest deals of the year came from CBRE, who announced that it was acquiring a 35% stake in Industrious for $200 million in cash.
This makes CBRE the largest shareholder into the coworking company, allowing the brokerage to merge its own flex space brand Hana into Industrious.
Now, CBRE will be able to expand the Hana brand into over 100 locations where Industrious operates.
“Our investment in Industrious is consistent with our view that flexible office space is playing an increasingly central role in companies’ occupancy strategies and aligns us with an exceptional operator and an outstanding leadership team that is executing a great strategy,” said Bob Sulentic, CEO of CBRE. “We have been building our Hana flex-space business expressly to meet the flex-space opportunity and Industrious now enables us to capitalize on it at scale with a portfolio of well-situated units in key markets.”
Cushman & Wakefield has also dipped its toes into the coworking arena by launching INDEGO, a white label service for UK landlords and investors.
Emma Swinnerton, the brokerage’s head of flexible workspace, will guide the team to specialize in bespoke flexible workspaces.
Employers Need To Adjust Sustainability Goals Post-pandemic
Research from environmental charity Hubbub has indicated that workers want to double the amount of time they work from home from prior to the pandemic.
While this could mean great things for workplace wellness, the environmental impact it could have is cause for concern.
The research found that 68% of the 3,000 UK respondents noted an increase in electricity usage in their house compared to the same time last year, while 54% saw a growth in gas use.
However, only 15% of respondents said their employer was helping contribute towards these increased costs.
Even more, companies who have made commitments to decreasing their carbon footprint and becoming more sustainable have not adapted these initiatives to apply to the post-pandemic workplace.
“If businesses are to achieve the ambitious environmental targets they are setting, they need to adapt and update their environmental policies to reflect this new way of working, including how they calculate their carbon emissions,” said Natasha Gammell, project lead at Hubbub. “This may mean for example, reporting on energy and water use of employees whilst working from home.
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Hubbub suggested different actions employers can take in order to help their employees become more sustainable when working from home.
This includes supporting their workers to be more environmentally stable and educating them on how to do so. Additionally, the organization should be transparent about how they are tackling their sustainability goals and how workers can play a part in this.
Caribbean Island Jumps On Digital Nomad Visa Trend
The pandemic has led to the emergence of unique travel trends in an effort for the tourism industry to stay afloat during this uncertain time.
One of the most significant trends from this time has been long-term digital nomad visas that allows remote workers to temporarily reside in a certain country.
The latest country to jump on this trend is Dominica in the Caribbean. The nation’s Work in Nature (WIN) extended-stay visa allows visitors to live in Dominica for up to 18 months.
Individuals and families can apply for the visa, with the country offering a family bundle program that helps children attend school on the island.
Applicants have to have an annual salary of at least $50,000 or have alternative means to support themselves and anyone traveling with them.
The visa costs $800 for individuals and $1,200 for families. After the application is sent off, applicants will receive a response within seven days. If approved, they will have a three-month grace period to relocate to the island.
If the visa program becomes popular, officials say they want to create a WIN Village that features a remote working community with various amenities such as entertainment spaces, coworking offices, accommodations and more.
WeWork And D.C. Team Up To Bring Workers Back To The Office
WeWork is launching a new program in Washington D.C that aims to help the area’s economic recovery.
The program will offer free or discounted office space for individuals and businesses who are either relocating, returning or expanding into the market.
The coworking firm is working with D.C. Mayor Muriel Bowser to bring awareness to the D.C. x WeWork program and hoping that it will help bring employees back into the office.
“It’s just a natural role for us to play given our focus on the office and the opportunities that exist right now with flexible office space,” said Errol Williams, territory vice president for WeWork. “Many companies are now returning to work, and WeWork is obviously embedded in so many of these cities and communities, and we see an opportunity for us to play a role in supporting the economic growth and recovery in these cities.”
The company will offer two months of free private office space at some of its locations in the area with a six-month commitment, or three months free with a 12-month commitment. It is also offering a 15% discount to its membership program, WeWork All Access.
Over the past year, WeWork has had to close at least seven locations in the D.C. due to the fallout of the pandemic and the operator attempting to remedy its reputation after its failed IPO in 2019.
While the District is not subsidizing this initiative, it is supporting it through its own networks.
Companies Need To Adapt To The Hybrid Future
While working from home has been a dream come true for many professionals, it has also proven to not be a one-size-fits-all approach.
Cities in particular are having to reconsider what their infrastructure will look like as companies move forward with more remote arrangements. Now, changes in housing, employment and overall architecture will have to be addressed.
“The effects of the remote-work revolution are already being felt,” said Richard Florida and Adam Ozimek, writers for WSJ Saturday Essay. “Over time, the competition for talent could shift to places that offer the best combination of quality of life, affordability, and state-of-the-art ecosystems to support remote work.”
The growth of remote working has expanded employment options, so finding a balance between remote and in-person accommodations will be crucial. While geographic location is no longer an obstacle for remote workers, the lack of company-provided resources could be.
Companies that are looking towards hybrid work arrangements are reconfiguring their workspaces to serve more as a collaborative hub rather than an environment for all-things workers. Some have even adopted satellite offices in suburban areas for workers who still want a well-equipped workspace without the lengthy commutes.
This is already leading to a huge uptick in office takeup in suburban areas and secondary cities.Share this article