With solid wooden stools dotted around the lobby, a bustling coffee bar and a receptionist who says “awesome” as an affirmative, the ground floor of 1 Fore Street in the City of London has all the tell-tale hallmarks of a modern tech company.
The seven-storey building is not home to one firm however but to multiple businesses - from individual freelancers to groups of 50 people - which have taken desks in one of the latest and most imposing examples of the growing trend for co-working spaces.
Fore Street is the largest of New York-based WeWork’s five London locations with 3,000 desks. Individuals and companies can rent out desks, offices and meetings rooms for variable periods and across locations in the company’s network. Buildings are carved up into sub-sections with common areas between them - along with obligatory ping pong tables - and services like printing and Wi-Fi are included in the price.
This new wave of companies that manage co-working spaces is seen as bringing that most established industry, real estate, into the internet era. Workers can book desks via their smartphone and do not have to commit to lengthy leases, by the end of which their company might not exist or have expanded beyond the size rented.
“They are the latest incarnation of serviced offices or office hotelling, selling fully fitted out and equipped space including receptionists, coffee and access to meeting rooms only for the duration over which they are needed. Expensive, inflexible and long leases for corporate offices are no longer essential and indeed seem increasingly questionable, particularly if the occupants in any case don’t like working there,” Alexi Marmot, professor of facility and environment management at University College London (UCL) said.
A report on serviced offices and “agile occupiers” by the City of London Corporation last year said that the rapidly growing sector had some 18,000 workers operating out of the common spaces, although this has since grown as companies such as WeWork take on more leases. Although the concept of a flexible office stretches back 35 years in the US, technology has given it fresh breath recently. As companies can store data in the cloud, the same infrastructure is not needed for an office space while the rise in start-up culture means young companies want to work in areas with their peers but without the long-term commitments of lengthy leases.
LiquidSpace operates a booking service - or “stands in the middle” - between individuals and companies looking for space and those who want to rent it across the US, Canada and Australia for periods from an hour to a year.
Mark Gilbreath, the firm’s founder and chief executive, said: “In the traditional real estate world I am starting out on a four to six month crusade with a broker in hand, if I can get one’s attention, and I am ultimately going to run into a long term lease for a fixed amount of space on inflexible terms. We have just stepped into that domain.”
The recent burst in activity in the area comes at a time when the millennial generation are entering the workforce, said Kia Rahmani, CEO of ShareDesk, which also provides a platform to link workers such as freelances and business travellers with serviced office space and companies which may have spare desks or meeting rooms.
“They are nomadic by nature. They enjoy moving from place to place. they are accustomed to mobile technologies and having laptops and smartphones and this is really pacing the way for this new model of work in the corporate environment,” he said.
This expansion into the sharing economy of office space has created at least one giant in WeWork which at five years old is now valued at $10bn (£6.6bn) following a round of financing in June. With five locations in London, the company places heavy emphasis on the community it attempts to create in between the offices and desks which take up the various sized slices of each building it takes leases on, usually for between 15 and 20 years.
In London, it has 5,000 desks across five locations and operates at full capacity on its early buildings, said Eugen Hiropolski, regional director for Europe.
“This is what these young entrepreneurs and start-ups are looking for, a lot of flexibility because these companies grow very fast. And you don’t want to overpay because if you go into a traditional office space with four people but you know you will be growing to 20 people, you know you will probably need an office space for 20 people and pay the whole [amount],” he said.
Beyond the needs of freelancers and start-ups, the concept of flexible space has become firmly entrenched in the corporate world, both for the short-term - when sales reps need meeting spaces for presentations and for longer projects.
Richard Morris, the boss of office rental stalwart Regus, said when Royal Dutch Shell was pursuing the acquisition of BG Group they needed somewhere private and so set up in short-term offices in The Hague and in London. Regus itself has doubled in size in the last five years, said Morris, describing the influence of the mobile working trend as a “key enabler”.
He said: “How do you attract talented people? You create working practices and working environments for those people that enable them to have work life balances, to improve employee engagement and that is another thing we can see driving the demand for flexible workspace.”
Rahmani puts the average cost of a desk in London at £256 a month while WeWork’s Fore Street office’s dedicated desks start at £425 a month, a figure which changes depending on the location of the office (there is another pricing structure for hot desks). “The model makes sense on both sides. We have seen that co-working spaces that are doing well are making more money per square foot than they would otherwise renting out the whole unit to one tenant and so it is a win win model,” he said.
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