October 9, 2018
The concept of coworking has only been with us for a short time, but there are already signs that it is evolving into something rather different. The most common misperception about the way evolution works is that it is based on some steady progression, driven by the merciless principle of survival of the fittest, with the best adapted climbing towards the top of an evolutionary tree. This gives rise to one of the most common questions posed by sceptics: if we evolved from apes, why are there still apes?
This misses the key point that animals evolve to fill an environmental niche. So, if they’re well adapted to it, then they’re already at the top of their own branch, for a while at least. They adapt or die out only when the environment changes. We’re also prone to assume that we humans are at the top of the tree, when the truth is that there is no top, just more branches. We’re all transitional forms, missing links.
Similarly fallacious thinking is also prevalent in other domains, and the working environment gives us a perfect example right now. There’s no question that the workplace has adopted an entirely new morphology over the past 25 years. The main environmental driver of this has been the adoption of new technologies that allow people to work in new ways, with more collaborative and shared space and an ability to work anywhere and at any time.
The beasts at the top of the food chain in the commercial property sector – developers, agents and landlords amongst them- have sometimes struggled to keep pace with this change. Their business model has traditionally been based on long leases, even longer-lived buildings and often on the idea of space occupancy standards and service provisions that lagged behind the new world of agile work, as they inevitably had to. But these tensions could always be resolved with well designed spaces, new working cultures, a bit of adaptability and the odd lease break.
New forms emerge
The property firms found themselves in a new environmental niche, but this still wasn’t too far removed from what they’d been used to. The workplaces had changed and their clients had shifted their focus, but many of the old parameters still help, not least the commitment to occupy space on long(ish) leases and on similar terms to the way business had always been done.
A few years ago this all began to shift. As Charles Handy and the other prophets of changing workplaces foresaw in the 1980s and 1990s, organisations were making much greater use of freelance and casual staff, even for relatively important roles. Handy had compared this relationship to that between elephants and fleas, and its most perfect manifestation was to be found in the new tech and research hothouses, in which large organisations would cluster themselves and attract an accompanying army of freelance and self-employed contractors.
These small firms and individuals had no need for long term commitments to property. Even if they had, the prohibitive costs of committing to space in cities like London would deter them from taking it on. Market gaps like this don’t go unrecognised for long and so it was that the idea of coworking started to gain traction, in which people and small firms would pay for space as a member rather than an occupier, which had the parallel advantage of putting them into a network of like-minded people.
Although the word itself has been attributed to games theorist Bernard de Koven in 1999, the idea had been around for decades. In Clerkenwell in the 1970s, the architect Mike Franks had built on the craft and entrepreneurial associations of the area to create hothouses of talent long before anybody had coined the term coworking. Franks was able to take advantage of the largesse of the then Greater London Council who in the mid 1970s leased him and the Urban Small Space collective a redundant book depository from which was created the Clerkenwell Workshops. The space provided basic but cheap and short-term facilities to foster the establishment of new creative businesses, especially those in the arts and crafts sector. It still exists.
Much has been talked about the explosive growth of WeWork and other coworking providers, but even while these firms began to flourish in the recent past, it was easy for the big beasts in the property market to dismiss them as niche players. This ignored the signs of a far more profound change. Just as the apex predators of the Cretaceous could overlook the small mammals scurrying around their feet while also ignoring the incoming meteor in the corner of the sky.
In the case of the property market, there appear to be two events that will change the climate in which they operate. One is the sheer number of freelance and ‘gig economy’ workers, who now outnumber those employed in the public sector in the UK. The other, more significantly, is the increased use of space as a service by larger organisations who are also attracted by the agility of coworking space. As Dror Poleg points out in this excellent piece, there is reason to suppose that the original concept of coworking is already evolving into something rather different.
I attended the Corenet Global Summit in Madrid two weeks ago, and confirmed a suspicion that the property market is still coming to terms with the shift in focus away from buildings and towards people. Coworking is just one manifestation of this shift and it seems that occupiers are one step ahead.
One of the first major firms to have taken out a large amount of coworking space for its staff is IBM whose commercial turnaround in the 1990s was chronicled by then CEO Louis Gerstner in his 2003 memoir Who Says Elephants Can’t Dance? It’s the sort of question to which the coworking providers would like to provide an answer.
Last year, IBM agreed a deal with coworking giant WeWork to take on all the space at its 88 University Place office in New York. Blue chip firms like this already make up over a fifth of WeWork’s membership worldwide and the momentum is with them.
This is likely to be only the beginning of a new ecosystem for workplace occupiers and the property sector, with a shift in focus if not an extinction event. What will be intriguing will be to see who will thrive in the wake of the meteor’s strike.