Will co-working overheat the property market?
24th May 2016
We're approaching 1,000 co-working spaces in London alone, and new ones are opening every week.
The modern office is changing.
Small companies, entrepreneurs and even some larger business groups no longer want their own office space.
Instead many are opting for so-called co-working space, with short-term or rolling monthly contracts, access to deskspace shared with other companies and the ability to grow or shrink your overheads with ease.
Today Santander, British Gas, Soundcloud, AOL and Skyscanner are all using co-working spaces across London.
At The Memo we’ve even spent time at Second Home and The Collective co-working spaces during our first year, enjoying the flexibility they provide for small fast-growing businesses.
The drivers of co-working’s explosive growth can be traced back to the financial crisis which led many larger businesses to realise that they were unable to quickly downsize as needed with their existing offices, and the demand from younger staff for offices that are more colourful, relaxed and fun than the grey offices of old.
But today co-working is really heating up.
Maybe even overheating.
That’s no exaggeration. These days I get an invite to the launch of a new co-working space roughly every week.
Last week co-working space Interchange launched its third office building in Camden, adding 600 more desks to a combined total of 84,000 sq ft of office space.
The previous week it was news that US workspace group RocketSpace will open its first workspace outside of San Francisco (where its alumni include Uber and Spotify) with a new London workspace in Angel with room for 1,500 members.
The flip side of the flexibility that co-working spaces like WeWork and TechHub provide is that they are priced per desk and often at a rate far higher than a traditional office would cost, think £400 or £500 a month for a dedicated desk.
According to a report from Cushman & Wakefield last year, London has 800 co-working spaces, three times as many as New York.
And they’re growing at a rate of 10% per year.
“Strict ‘co-working’ is contracting, but shared serviced offices are expanding and we’re seeing co-working [segments] with FinTech co-working spaces, retail co-working spaces, etc,” Juliette Morgan, partner at property services group Cushman & Wakefield, told The Memo.
Method in the madness?
That’s a crazy statistic, especially given New York is the home of modern co-working since WeWork’s founders opened their first workspace there.
For now the weekly arrival of new co-working spaces clearly isn’t a problem.
“Today we have corporate accelerators, high-growth companies, as well as traditional sole entrepreneurs and startups moving into co-working,” said Morgan.
Demand for more workspaces seems seems to have outstripped supply, even WeWork’s gigantic six-floor Moorgate offices which opened last year have been filled.
But there will be a natural limit to the number of adventurous, innovative businesses keen to adopt co-working.
And, as quickly as co-working has exploded onto the scene over the last six years, it could just as quickly see its popularity wane as businesses seek more long-term stability and lower fixed-desk prices.
Gryphon Property Partners offers advice on all aspects of your office space search from co-working spaces to traditional leased offices. Please call 0203 440 9800 or click on the following link for more information - Gryphon Property Partners