The Co-Working Climate

The Co-Working Climate

The original serviced office operators were successful in providing small professionally run office “units” for customers, from small self-employed entities to global corporations. A common thing in the 1980’s was its use by global entities needing a small branch office or beachhead in a particular market.

In those early days, the concept was sneered at by much of the commercial real estate industry, because it offered a great and flexible solution. For those not needing or wanting flexibility, the strata market was always a great alternative

IWG (formerly Regus) was the first of the real global players in this sector. They offered global reach and good product for the growing number of entrepreneurs and large corporates, seeing the benefit of flexibility rather than standard fixed-term leases.

That all changed when WeWork opened its first office in New York in 2011. At that time, the demand was pouring in from the thriving startup economy and flex space for larger corporates. It was a defining change that sparked a boom. Competitors sprung up every day and everywhere. At that time, technology was a key driver in so many different ways; social media, customers, data collection, connection, management efficiencies etc. The underlying concept of flex space never changed but technology changed so many facets of it. And IWG is still the largest operator today. But where is the market at today?

We caught up with Jim Groves, CEO of the flexible office broker, Rubberdesk. Jim’s background was technology (not real estate); his expertise has brought tenants fresh transparency in a fast-moving sector, providing real time availability and pricing across thousands of offices around Australia.

The current drivers of the sector are the need for flexibility of office space (elasticity), tenant engagement (quality) and cost (all-inclusive). The flex office market has responded to tenant demand in a variety of ways which has led to a diverse market and something for every tenant brief. With one year term license agreements the norm, flex space is an excellent alternative to long-term and fixed-capacity office leases for teams of all sizes.

The office market is tough, but the flex market has found its niche offering flexibility without compromising on quality and at a price that competes with a lease.

Like with all things real estate, coworking is not for everyone, but it is a true alternative to fixed office space.