Core & Flex: Space as a Service (SaaS)

Founded on social connection and collaboration, the coworking business model will, like almost every facet of our lives, be impacted in some way by the global pandemic.

However, working from home during enforced lockdown has seen the walls of our homes encroach upon us, and the idea of having an actual office environment to work from has never been more appealing for many deskbound workers.

Bayleys Auckland Commercial and Industrial Director Lloyd Budd says coworking will play an important role as office businesses snap back from the current crisis.

“We are expecting all office-based businesses from large corporates to SMEs to be reassessing their space requirements in the changed environment we find ourselves in,” he says.

“Despite more restrictive levels of social distancing we may see going forward post-COVID-19, the coworking model could help meet the needs of a changed workforce, as it provides flexibility and options for those businesses re-evaluating their fixed costs.

“Coworking facilities – even in a more controlled or prescriptive form – will provide social contact, help people reconnect, and allow them to re-establish or build new business networks.”

The past decade has seen the coworking business model challenge – and alter/disrupt – the conventional office narrative globally.

Coworking has allowed the rapid scaling (up and down) of business activity, facilitated increased levels of collaboration within and between organisations, and enhanced the ability for businesses to respond to commercial opportunity by offering ready-to-operate space quickly and in the amount needed.

In 2019, there was 39,500sqm of coworking footprint identified in the Auckland market alone – up 10,000sqm from 2018 – and taking up around two percent of the total office market in Auckland’s CBD.

Meanwhile in London, 1,400 coworking centres were operating by the end of 2019 – almost three times as many as the next largest market, New York.

Research out of the UK from Bayleys’ global partner, Knight Frank, says the combination of greater flexibility and a greater recognition of the customer has, in just 10 years, transformed real estate from a fixed physical product to a flexible business service and coworking has been a rising star.

Knight Frank says the number of people globally using coworking facilities as their principal place of work is astounding – growing by more than 10,000 percent since 2010 with more than 2.1 million people now operating primarily from coworking space.

And it's no surprise that 44 percent of 120 global companies surveyed by Knight Frank believe flexible office space will make up a fifth of their office space requirements in the next three years.

The Power in Partnership report says increasing demand for shorter and more flexible leases has fuelled the coworking sector’s growth and as the business community emerges from the COVID-19 bubble, it is expected that the model will have real value.

Originally geared towards start-ups, creatives and entrepreneurs, coworking operators have extended their reach beyond SMEs and created enterprising solutions aimed at corporate occupiers, as an alternative to conventional landlord-tenant leasing arrangements.

The report says with greater acceptance and uptake of the coworking model, we’re now seeing the emergence of a partnership structure which is solidifying and bringing new products and best practice to the market.

These products – known broadly as managed solutions - sit in the middle ground between conventionally leased office space and serviced or coworking spaces.

Through a range of options and services these products provide the customer with an even greater opportunity to create bespoke environments that are more in-keeping with their objectives and aspirations.

Lloyd Budd concurs with the report’s claim that customer-centricity is arguably of greater importance than the inherent flexibility that the coworking model presents.

“Coworking hub operators have proactively taken a real interest in curating spaces that give clients a truly unique workplace with a balance of collaborative, private, communal and even recreational spaces,” he says.

“It’s been about creating a culture and creating experiences underpinned and sustained by technology and a high level of care.”

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