Why it matters:
- After a slowdown in 2020 during the pandemic, the global market for coworking spaces is expected to reach over $16 billion this year, up 18.9% from 2021, according to The Business Research Co.
- Companies that provide coworking space seek to appeal both to workers seeking a break from their office routine, as well as to companies seeking to accommodate those workers.
- Flexibility and community are key drivers of membership at coworking spaces such as Workbar, The Yard, and Hera Hub, with perks like suburban satellite offices close to employees’ homes and events — from peer-led discussions on budgeting to branding to monthly lunches and happy hours.
Companies that offer coworking office space, whether for entrepreneurs, hybrid office workers, or established companies seeking overflow desks, are evolving their business models to meet the demands of the post-pandemic work environment.
A recent Gallup survey found that 59% of workers with remote-capable jobs said they would prefer a hybrid office structure in which they split time between an office and a remote work environment. Many businesses, pressured by a tight labor market, have been eager to accommodate them.
“Failing to offer flexible work arrangements is a significant risk to an organization's hiring, employee engagement, performance, wellbeing, and retention strategies,” the Gallup report concluded.
Although the pandemic in 2020 slammed the brakes on the expansion of the coworking space market, which had previously been on a decade-long growth tear, according to real estate firm JLL, it is expected to roar back this year and continue on an upward trajectory. The global market for coworking spaces is expected to reach $16.17 billion this year, up 18.9% over 2021 levels, and to reach $30.36 billion by 2026, according to The Business Research Co.
Regional coworking startups lean into employees’ post-pandemic lifestyle needs
The market has long been dominated by companies including WeWork and Industrious, but dozens of smaller, regional players have claimed a stake in the coworking industry and are evolving in ways that reflect overall trends in coworking demands.
Boston-based Workbar, for example, has implemented new membership opportunities that reflect dynamic work routines that are split between the office, home, and shared coworking spaces.
“The pandemic has certainly changed a lot about how we model our business,” Sarah Travers, CEO of Workbar, told CO—. “I think it's all for the better for the people using our space.”
The company, which currently operates nine coworking spaces in the Boston area, has added a new part-time membership plan that allows members to use Workbar facilities for 10 days each month. It also offers a new corporate plan through which companies can lease Workbar space in the suburbs for their employees who don’t want to commute to the main office.
Athletic shoe company Reebok, which has a headquarters in Boston, is among the companies that are taking advantage of this plan.
“It benefits employers because they're getting their employees out of their house where they might be multitasking and distracted, taking the dog for walks, and that kind of stuff,” said Travers.
At the same time, it allows companies to show empathy for their workers who no longer want to spend two hours every day commuting back and forth to the office.
Meanwhile, the new part-time membership that allows workers to use the space 10 days per month—previously Workbar offered only five-day or full-time passes—has become its most popular membership offering, Travers said.
Workbar’s relaxed, open layouts, which encourage community, have never really been designed for the typical 40-hour work week, she said, but instead were created for people to work “for 40 hours a month.”
“Coming out of the pandemic, most employees’ days are more nuanced,” said Travers. “They work from home one day, then they work from Starbucks, then they work from a coworking space, and then they go into their corporate headquarters a couple of times a week, as well.”
She said Workbar plans to continue developing locations in the suburbs of Boston, with about four more locations expected in the next 18 months.
[Read: Investing in the Remote Revolution: Startups Capitalize on a Work-From-Home Future]
Changes at The Yard: Offering employees workday passes in bulk, while occupying a former Marriott location
Adrian Simpson, director of operations at The Yard, which operates shared coworking spaces in New York, Philadelphia, and Washington, D.C., said the hybrid office/remote work trend is also impacting his company’s membership plan structure.
Companies are seeking more flexible models in which they reserve a 10-person office space that will be used at various times for 20 different people, for example, because many of those people will also be working from home part of the time.
“We definitely have been coming up with some interesting membership models for people wanting to do special pricing for situations like that,” said Simpson. “That’s not something that we really did before.”
The Yard has also seen an increased interest in day passes and has created new programs that allow members to buy day passes in bulk. In addition, the company has seen more interest from companies in leasing an office space for a day at a time, and in reserving space for external conference rooms.
Companies have become less comfortable with long-term lease commitments, Simpson said, and instead are looking for month-to-month or other more flexible options, which benefits companies like The Yard.
“The pandemic has shown that you kind of really can't predict the future, and it doesn't make sense for a lot of companies to sign five-, 10- or 15-year leases,” he said.
Companies abandoning their office spaces has opened up more opportunities for The Yard to expand, Simpson said.
Last year, The Yard began operating in a former Marriott hotel in Manhattan, allowing members to reserve private rooms that The Yard has converted into offices. The project is still in a testing phase, Simpson explained.
“I think there could be other opportunities, because there are different types of spaces that are available,” he said. “We definitely are open to other ways of pivoting in the market.”
[Read: Work-From-Anywhere Isn’t Going Away: 5 Ways the Hospitality Sector Is Monetizing the Trend]
Hera Hub: Supporting female entrepreneurs by spreading its content-meets-community model to other coworking spaces
Hera Hub, which operates coworking spaces geared toward supporting female entrepreneurs, is transitioning to a new business model in which it is focusing on providing content and community for business owners rather than adding more physical space for them to work.
The company, which describes itself as offering spa-inspired services, is seeking to co-locate within other coworking spaces, providing its programming as an added service for members of other remote work environments.
“What separates us from most other coworking spaces is we offer 15 to 20 hours a week of live virtual programming,” said Felena Hanson, founder of San Diego-based Hera Hub. “Members from all six of our locations can hop on Zoom several times a day and get support, advice, mentoring, education... We do a lot to make sure community is supported and connected.”
Hera Hub hasn’t opened any such co-located space yet, but it has been in discussions with other operators of coworking spaces to do so, she said.
“Think of it like a juice bar at a gym, where we take a smaller footprint within a larger space and run all of our mentoring, and support, and networking, and really serve this niche market of female entrepreneurs under the umbrella of a larger company,” she explained.
Hera Hub’s programing includes several series geared to help members with their business and personal development, such as its Business Booster events, which are peer-led discussions about topics such as budgeting, branding, filing trademarks, technology, legal issues and other topics. There are also monthly happy hours and lunches, as well as a Mindful Monday series that seeks to help participants mentally prepare for the week ahead.
Hanson said Hera Hub has conducted the programs in partnership with several large companies and organizations, including Bank of America, the Small Business Development Center Network, and the Small Business Administration’s Women's Business Center. Hera Hub also recently formed a new partnership with the national Community Development Financial Institutions Fund.
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