By the end of 2017, nearly 1.2 million people worldwide will have worked in a co-working space. While 60% of all co-working spaces are not profitable, co-working has definitely been a huge trend in the last 10 years.
WeWork hasn’t invented co-working, however, with more than 130 locations and 100,000 members, it’s definitely leading this market. Now, WeWork is trying to extend its appeal beyond startups and freelancers into the lucrative market for corporate clients, as it recently announced that IBM has agreed to sign a membership deal for all desks in WeWork’s 88 University Place. It's the first reported case of a single corporation taking an entire WeWork space. But WeWork is not alone in the market. In fact, 14,000 co-working spaces will be in operation worldwide by the end of the year. It seems that what started as a niche product is now changing the way offices are designed and consumed, as offices become a service. In recent years, a few other highly innovative companies were established with a mission to shape the future of our working environments.
Knotel is a good example. Founded by serial entrepreneurs, Edward Shenderovich and Amol Sarva, the company provides modern businesses "headquarters as a service," giving medium-sized companies a scalable and adaptable office space solution that can grow (or shrink) on-demand based on their needs. Companies can get started right away, without big deposits or long lease commitments. Knotel residents get immediate access to service professionals who manage their space. Each location is culture-coded to each company's unique ethos to give them a place where their brand is tangible and evident in the design.
In less than 18 months, Knotel has raised a $25 million in series A funding, and it’s now in 15 locations around New York City (250,000 square feet). Within the past month, they've signed 93,000 square feet across five properties in Manhattan and Brooklyn. According to Jamie Hodari, co-founder and CEO ofIndustrious, this is a part of a bigger shift in the industry. “Commercial real estate overall is undergoing a massive shift right now, and traditional co-working is just the tip of the iceberg," he says. "Companies of all sizes are recognizing more and more that they need to create engaging workplaces where their teams can be happy and productive. But they’re struggling to do that, given rising uncertainty about future headcount in any one place and increasing pressure of long term leases on their P&Ls. The future of the office will be about high quality, yet flexible spaces that allow companies to create workplaces they’re proud of on a timeline that makes sense for their businesses.”
Backed by RiverWood Capital, Industrious recently acquired digital flexible workplace platform PivotDeskto make it easier for companies to match seats to headcount.
“Industrious is a better fit for customers that are a bit older and looking for a slightly more premium product that feels welcoming, inclusive, and comfortable whether you’re a nursing mother in your late thirties or if you’re a 65-year-old lawyer nearing retirement.” Industrious customers already include Spotify and Lyft, but also more entrenched corporations like Hyatt," says Hodari.
Industrious is focusing on the premium niche market that Australia based Servcorp has been catering for almost 40 years in more than 150 locations. The company has been providing small businesses and fledgling entrepreneurs with affordable access to executive suites and virtual offices in some of the largest metropolitan cities around the world since 1978.
In recent years, the company has invested more than $100 million in developing technology to scale its business and it’s currently working on rolling out beacon technology that will seamlessly allow their members to hot desk in an easy way.
As Servcorp is setting its eyes to grow in North America, Marcus Moufarrige, Servcop’s COO, recently relocated to NYC.“Next year, we hope to have built out our awareness in the U.S. as well as advance the tech aspects of our offerings, bringing members together and building out their needs as far as integrating personalization and automation into a more core offering in our business," Moufarrige says. "We believe that business in general will move towards a more hybrid business model approach – it won’t solely be just co-working or just executive suites, people will want a hybrid of all types of flexible workspace models for their business. Because of this, we are working to create solutions in our offerings and in our technology that allow our members to be more agile and nimble with what their offices need.”