If you read the property press you can’t help but have seen the rash of news about WeWork in recent weeks. The co-working operator are reported to be in negotiations to open in Hammersmith, have announced a major pre-let at Two Southbank Place in London (the largest letting deal in the market this year at 280,000 sq ft), and also confirmed they are to open their first office outside London in Manchester. So who are they and what does this tell us about how office tenants are changing?
This time 18 years ago I had just taken my Sociology A-Level and a large part of our course looked at how the world of work was likely to change in our lifetime. Whilst the predictions of everyone ‘teleworking’ from home and the rush hour becoming a thing of the past haven’t materialised (a big disappointment for those of us who commute on the Pembury Road), there is a definite trend towards more flexible working, and this has had an impact on how office space is used.
The cost of renting or owning an office is high, and the concept of having a desk for every employee is becoming outdated. Research has shown that around 30% of desks in an average office are unoccupied each day, either through employee absence or because workers are out at meetings or working remotely elsewhere. The cost of having an office that can accommodate all your workers when they are rarely all in has lead businesses to implement hot desks (where no-one has a designated desk) or shared desks (where employees, particularly, part timers share the same space). One of the largest office furniture suppliers in the USA has recently developed technology to allow employers to monitor how each workspace is used via sensors in the desk and chair. A little Big-Brother-esque, these allow bosses to check how many hours a day the chair is actually sat on to determine whether an employee really requires a dedicated workstation. Or a job at all, one wonders.
For smaller companies, especially those starting out, the expense of having an office in a city location may be well out of their reach. This is where companies such as WeWork come in by taking leases of large office buildings and renting them out, either on a desk-by-desk basis or by breaking the space down in to smaller offices to rent. All the practicalities of running a business day to day, such as high speed internet, printers, and kitchen and toilet areas for staff are taken care of in the monthly fee, and meeting rooms and break out areas are provided. Space is rented by the month, allowing businesses to expand (or contract) with their markets and give a growing company a presence in an area they would otherwise be priced out of. For individuals or small businesses the networking opportunities with other occupiers are also a big plus.
With flexibility being a key concern for business in these uncertain economic times, it’s not hard to see why WeWork is such a success story. Even if it does mean we are stuck with the rush hour commute for a few more years.