How’s the coworking industry across the globe doing after two years of disruption of COVID-19?
Let’s see what numbers have to say:
- The Coworking Space Global Market Report 2021 says that the growth of the global coworking space market from $8.14 billion in 2021 to $13.03 billion in 2025 at a CAGR of 12% is on the cards, which is quite a steep rise compared to the expected CAGR of 2.1% in 2021.
- JLL speculates that the flexible space demand will continue to increase post-pandemic, although slightly different, to the extent that 30% of all office spaces will be consumed flexibly by 2030.
Thus, contrary to what everyone expected, after a brief halt, coworking spaces emerged from the fog of unfavorable circumstances of the pandemic.
In fact, most coworking spaces are witnessing a good resurgence and a supply boom. Moreover, thanks to the inherent flexibility, they are also innovating new solutions to cater to the changing work landscape.
In a nutshell, looking at how far coworking has come already, we know that it’s no longer an emerging market, nor it’s a fad.
But what’s driving the coworking space’s rapid ascent?
In this post, we’ve nailed down the major drivers behind the remarkable growth of coworking sectors.
Factors Charting The Course For Phenomenal Growth In The Coworking Industry
1. The Rising Trends Of Start-ups
Start-ups and coworking spaces are like a match made in heaven.
Start-ups account for the meaty share of coworking customer bases and are among the top drivers of accelerating demand for coworking spaces.
Why? Because start-ups are flourishing in coworking spaces.
Here’s what makes coworking spaces a perfect launchpad for start-ups to get off the ground:
- They don’t come with the high cost of office rent.
- There is greater ease in setting-up offices.
- It offers ample flexibility and room for expanding within the same place without spending a fortune on new furniture and equipment.
- Temporary setback? Simple, entrepreneurs can simply downsize their coworking space and stop paying for office space not being used.
- Strong networking environment for the best chance to flourish start-ups.
2. Enterprises Turning To Coworking
Undoubtedly, traditional office space is still a predominant choice, but there is a promising trend of enterprises taking advantage of coworking.
For SMEs, coworking is deemed an attractive alternative to the conventional office because of its ability to reduce cost and risk.
And how’s that?
Coworking enables companies to do away with long-term leases. It simplifies operational complexity and takes the burden off the shoulder of the organization. Enterprises feel alleviated from the liability of bringing their employees back into productive workspaces amidst the pandemic. Moreover, since employees aren’t tethered to select corporate locations, organizations can recruit from the global talent pool.
As it turns out, small enterprises are far from the only organizations moving their workforces to the coworking spaces. The trend of corporate biggies establishing distributed teams in coworking spaces far away from the HQ is gaining traction too.
- To get closer to start-ups and innovators with breakthrough ideas.
- To tap into their employees’ skills and boost their productivity.
- To expand their geographical footprints while staying scalable and cost-effective.
- To offer a convenient meeting place for their distributed workforce.
- When their employees appreciate freedom and autonomy but still prefer some “good” restrictions of a traditional office to maintain efficiency.
3. Escalating Gig Economy
The gig economy is becoming increasingly mainstream.
We’re witnessing a deeply impactful transition from full-time employment to freelancing. It’s not uncommon to see many youngsters choosing to make a living through freelancing while enjoying the independence and flexibility that comes along as perks of gig jobs. Meanwhile, as per Upwork, 51% of freelancers would not go back to traditional work for any amount of money.
And one of the many outcomes of the soaring on-demand economy is growing market share penetration by coworking space.
Here are some of the ways coworking spaces have spurred gig-based employment:
- Freelancers feel secure and less isolated when they work in coworking rather than in their homes.
- It makes it easy for businesses to hire contractors for short-term stints.
- Digitally enabled swanky yet affordable office spaces are within reach.
4. Technology As A Big Part Of The Coworking Revolution
A big chunk of coworking space members comprises the millennial generation who don’t know life without smartphones.
So naturally, technological advancements have a big part in helping coworking spaces reinvent themselves time and again and reach their fullest potential. There are unlimited possibilities for integrating several cutting-edge technologies by which flexible workspaces can metamorphose into immersive, dynamic, and interactive offices.
Hi-speed internet, on-the-go mobile apps, mobile-first technology, etc., are helping the operators to make workspace booking and payments an absolute cakewalk for the tenants.
Additionally, security-related automation, cloud computing, web conferences, company-wide dashboards, etc., automate and streamline countless day-to-day operations with the hassles of spreadsheets and calculators.
Lastly, coworking operators are also looking to incorporate AR/VR, wireless devices, synchronized calendars, IoT, brain-to-computer (BCI) and brain-to-machine interfaces (BMI), wearables, and even metaverse in their coworking amenities to create a fully immersive coworking experience.
5. Dedicated Specialization
The coworking market has grown to give birth to a separate sector for targeted coworking spaces. As the number of coworking spaces grows, the need to do something unique is becoming prominent.
These specialized workspaces dedicate their services to a niche or group of entrepreneurs and provide them with a platform to share ideas, collaborate, and develop revolutionary trends.
Hence, the market has reached a point where not only is specialization selling like hotcakes, but it also is the only way to stand out from the competitors.
Getting the hang of how key drivers are maneuvering the current coworking workspaces towards becoming the future of work is crucial for coworking players and enterprises alike.
It will help operators further diversify and reinforce their coworking initiatives. Moreover, as the coworking landscape evolves, businesses that integrate these new-age coworking strategies into their organizations will be better prepared to meet the needs of the future workforce.
The article was written by Aanya Rachel, the Content Manager at The Address coworking space in Vadodara, Gujarat. She is passionate about sharing her knowledge, experience, and extensive research in this field. She writes on a wide range of topics related to coworking, the growth of remote workers, startups, and real estate.