20 . Apr . 2020
Originally, coworking was seen as a place for freelancers, startups and small businesses. This is still very much the case, but in recent years we see corporates also operating within coworking spaces and sometimes in very big numbers. Let’s discuss why this is the case and what it means for modern coworking spaces.
Coworking has that perception of being filled by Macbook-using, headphone-wearing, coffee-drinking millennials. The millenial part is true, at least—we do see coworking spaces being used by millennial entrepreneurs and freelancers who found that a coworking space serves their working life and general well-being. However, these individuals only make up a small portion of many coworking spaces. The truth is, some coworking spaces, especially those in Asia, are now being filled by corporates and other larger entities.
The prominence and success of coworking makes it hard to ignore for corporations. Even if the majority of a corporate company uses a traditional office space, they find new opportunities by sending employees into coworking spaces and paying for their memberships. Where else can a corporate entity find freelancers, startups and other small businesses to recruit, partner with or bounce ideas off ? Furthermore, many larger companies don’t necessarily want to fork out a large sum of money to purchase new office space.
An increase in demand from corporations has meant that many coworking spaces have now expanded to accommodate larger demands for seating. Recently we saw JustCo occupy 60,000 square feet in Marina One East, Singapore. Making their coworking space far bigger than what we typically think when imagining coworking, we can expect such spaces to become more common as coworking becomes more prevalent.
Larger operators want to get as many seats as they can and would rather have their employees working in the same coworking space for two reasons; one, so employees can better communicate together and two, larger transactions with the same coworking space may come with extra perks or discounts.
There are of course general benefits that corporate members also enjoy, like free coffee, maintenance and a more social atmosphere. Business owners get to skip the burden of owning a lease. With every new property a business owns they also gain a range of new liabilities, administrative responsibility and in the event they want to downscale, it can be months before finding someone new to take the office.
Coworking is extremely flexible. This is great for modern entrepreneurs, but does have a downside in being that it can be difficult to maintain a steady profit from smaller clients. Coworking spaces that are removed from a central business district are more affordable and are usually full of members who have a lower weekly income. Although it’s important cost-effective coworking spaces are available to everyone, the most affordable spaces are often left with little financial security.
Corporations fill up seats and usually have a plan regarding how long they will be members at a coworking space. Such clients are great for coworking spaces who want financial security and for those that are already very popular; corporations represent the potential to expand their space.
A corporate presence can also be very attractive to other members. They represent new career opportunities and well-established business ideas. Corporate members are likely to be experienced and are valuable to network with.
Coworking spaces and their ability to break even or make a profit is interesting. If we look at these statistics given by Deskmag. Only 40% of coworking spaces are profitable, we have to consider that not all coworking spaces are for profit and that coworking is still relatively new. Three out of four coworking spaces with over 200 members break even. Coworking spaces situated in big cities find it easier to make a profit, but when there are 50 or more competitors, profitability drops off.
To put things simply, the larger percentage of seats you fill, the more likely a space is to make a profit. Currently, coworking spaces are looking to expand, but the decision can cause big losses if the new capacity is not filled.
The good news is, the amount of coworking spaces that are reporting a loss is lessening every year and the increase in corporate members is likely to cause this trend to continue!
Coworking is being picked up all over the world, and Zioks itself is proof of that. More and more individuals and organizations are choosing coworking. The presence of multinational corporations makes coworking spaces a lot more attractive for startups, which brings more opportunities for experienced knowledge sharing. Startups want their ideas to be actualized while corporations are seeking the latest in innovation—it’s win-win!
What we currently know as “going to work” is changing. The phrase used to imply that you’re working at an office, now the phrase can mean a range of things—one growing definition being coworking. If you think switching to a coworking space is the right move for you, consider checking out our amazing shared office space in Kolkata.