Recently, FreeOfficeFinder released a comprehensive history of coworking. The article follows the rapid growth of coworking from humble beginnings in small, experimental workspaces to the big business of coworking today. Give that the first ‘official’ coworking space was opened only thirteen years ago, the fact that there are nearly two million coworkers today, plying their trade in thousands of spaces around the globe is quite astonishing. Coworking seems to be especially flourishing in London, with more coworking spaces than New York, San Francisco and Berlin, occupying over 10 million square feet of Central London office space.
But, is the market becoming saturated? Will coworking reach a tipping point? It seems that new coworking spaces are constantly cropping up, whether it is in London, other major cities or even more rural areas. Does this not spell oversaturation? Given the rapid rise of coworking, people have speculated whether the coworking bubble is on the brink of bursting.
Reports, however, would suggest that there is still enormous room for growth. As the ‘gig economy’ grows and more and more people turn to freelance work, coworking spaces will surely only be in higher demand. In fact, one study predicts that there will be 5 million people coworking worldwide by 2022. There are clearly not enough coworking spaces to accommodate so many people, so this would suggest that continued growth is, not only expected but required over the next four years.
One recent trend in coworking has been the rise of rural coworking. Coworking spaces have begun opening up outside of major city hubs, in more rural and small-town settings. As more and more people are able to work remotely and choose to do so out of the expensive and stressful cities, coworking spaces can take advantage of the fact workers are no longer tied to those areas and take up space in rural areas. Maybe coworkers and coworking spaces outside of the cities will be the main contributors to the growth of the phenomenon and there is still a chance coworking in the city will become oversaturated?
This might have been the case, were larger businesses and corporate occupiers not beginning to embrace a more flexible work culture, which coworking best caters to. Large companies are beginning to harness the advantages of coworking spaces and move team members to these flexible workspaces. This is especially so given uncertainty around Brexit. Larger companies are hesitant to find long-term space. This combination of recognising the benefits of coworking and avoiding risks around Britain leaving the EU, actually means that demand for flexible workspace nearly tripled from 2016 to 2017. Again, there may not be an oversaturation of coworking spaces but possibly even a shortage. Average coworking spaces in Central London have been running at 84% capacity in Central London in recent years. This is without the full influx of large businesses taking up coworking space, so more space will clearly be necessary.
Clearly, large businesses have faith that flexible working is worth investing in. British Land, founded in 1862 and one of the UK’s largest property development companies, last year launched its own flexible office brand, which accounts for 10 per cent of its office portfolio. This could be seen by some as a vote of confidence in coworking in the UK or a sign that independent, niche coworking spaces are being pushed out.
In fact, this is seen as a time where niche coworking spaces will go on to flourish in London and the UK. As larger corporations and businesses take up large swathes of coworking space, freelancers and digital nomads will likely migrate back to smaller and more affordable spaces. The corporate sector accounts for around a quarter of the demand for coworking space and this number is rising. They are also beginning to take longer contracts, seeing coworking as a more long-term solution. As these spaces are filled with corporate tenants, the smaller, more independent, more local, and more niche markets will be in high demand amongst the freelancers, digital nomads, entrepreneurs and startups. Essentially, those for whom coworking was created. Notably, more and more people are choosing self-employment, entrepreneurialism and freelance work year on year, which only signals a higher demand for independent, affordable coworking spaces.
Coworking seems safe and prosperous then. It’s unlikely the bubble will burst any time in the foreseeable future. As demand rises and larger companies begin to look like dominating the coworking sector, smaller independent providers will still thrive in a world with a growing number of freelancers and entrepreneurs.