The comparatively recent growth of flexible offices, co-working spaces, serviced offices, whatever you like to call them, has puzzled me for some time. It's not a new industry at all but it is like someone fired a starting gun, just a few years back and the sector went skyward. Why didn't this happen years ago?
Way back
Regus, flexible workspace specialists, now part of the International Workplace Group, where the founder Mark Dixon is still the CEO, opened up in 1989/90 and after a few hiccups here and there built a serviced office empire spanning the globe. They remained almost unopposed for decades and those that did set up lesser flexible office empires, frequently ended up as part of the group.
So why has the herd instinct taken so long to join the party?
The stake money for getting into just one office block is quite high and to cover the main cities of just one country is a lot of money. While the recession killed the appetite for large investments for some years. It did cause a large amount of office property to come onto the market at knockdown prices.
When the recession went away, the banks were shot to pieces but "alternative" finance methods expanded, crowdfunding started to take off but they were unlikely to fund the sums needed to play seriously in the serviced office markets. Unicorns were starting to grow horns, sometimes from a zero start as in Uber and AirBnb and venture capitalists were able to throw huge war chests of money together for the right opportunity. This can be a risky business still as shareholders in WeWork, who entered the flexible workspace arena less than ten years ago, found out recently. A proposed share sale that valued the company at US$20 billion failed to get off the ground, indicating a ridiculously overpriced valuation based more on future prospects than past performance. Their current mode is one of survival rather than scaling up.
The fact interest rates were lowered to existing uninteresting deposit levels after the recession, to stimulate the world's bruised and battered economies, has encouraged investors and sovereign funds to back companies that had get rich quick Unicorn potential but they can go very wrong as in WeWork's case.
At the same time as this was happening, and the entrepreneur was becoming the new rock star, the internet and wifi became more reliable, available most everywhere, bandwith problems were receding and the cloud was maturing. Phones were busy getting smart. PCs were trying to hang on and laptops became more central to business on the move. Because of this availability, the software that companies could use in all aspects of business evolved, accessible whenever and wherever you were online.
In addition, HR areas were obeying new rules and regs that allowed greater flexibility for workers, if they asked for it and the concept of hotdesking was expanding beyond silicon valleys globally.
All of these things resulted in a much more mobile and agile workforce, and what did employers and employees need? flexible working conditions.
Flexibility was possible pre-recession but back then you were still looking at cabling, telecoms and broadband issues, where to put the PCs and an office move was not considered lightly.
Fast Forward
Wrap all these circumstances up and you can see why new players are flocking to this high growth area with their own take on what the modern office should look like.
So what does it look like?
Initially flexible workspace was just like the office you were already occupying and the flexibility aspect was more the number of desks and period you wanted it for, which included all amenities, reception, mail and communications. To get a foothold in this market now however, new entrants into this space, offering their space, need to show some imagination.
Some would look more like a coffee bar than an office, no bad thing and the availability of coffee and a much less structured regime in general is a recurring theme. The co-working space allows a small company, or an individual working on his own, to network with others, exchange ideas and maybe attend informative events on the premises about business aspects, presented by a high profile entrepreneur. Meeting rooms and break out spaces would almost certainly be available, with video conferencing facilities increasingly expected by the larger company. While this type of flexible space is ideal for a start-up or small business, it also works for corporations that might have a six-month project that needs extra brains thrown at it but once done that space is no longer required.
Derivatives
No matter what the product these days there are always entrepreneurs looking for another way and with the UK leading the way globally as far as serviced workspace goes, that is sure happening. Most pubs for example have rooms attached to them for weddings or special occasions that remain unused during the week, so do restaurants, football and golf clubs, you name it, the space is being rounded up and used as workspace. This is also spawning an industry of companies able to convert unwanted spaces into working areas or even supplying pods on roofs to use as weatherproof relaxation or meeting places.
Virtual
You might be a home based guy/gal, with a cat...or dog for company during the day but that doesn't stop you from having a virtual office. It might be just a space for mail forwarding and as a small company you could have an address round the corner from Buck House in London.
Our view
It might cost you a little more to move into a fully serviced office but in our opinion and we go back over twenty years, as far as New Business and offices are concerned, the cost is worth every penny. One bill, everything on tap, scale up, or down to suit. Agile working that's in tune with the innovative times and for the really small business, maybe choose an option that gives you exposure to a wider business community, while working on your own project. The options are there to suit every budget and locale.
By Chris Westcott Director New Business
