Coworking Spaces Offer a Post-Pandemic Office Alternative

The number of spaces available for coworking — a concept mostly unheard of just 10 years ago — has grown dramatically around the world in recent years. While only about 160 coworking spaces existed worldwide in 2008, there were close to 19,000 in 2018. Many of the world’s largest landlords have invested heavily in these spaces. As one of the few bright spots in the office-space market after the 2008 economic recession, coworking spaces represented “one of the few sources of growing demand.”

That is, until the COVID-19 pandemic hit. When your entire business model is based on people not working from home, the worst-case scenario is a global pandemic where almost everyone is working from home. The idea of working in one of these spaces, which bring large numbers of strangers together to use shared desks and communal areas, seemed almost laughable at the peak of the pandemic. Many predicted that coworking would permanently lose its appeal, under the assumption that people would no longer feel safe working in a shared space.

However, my research — which is based on a large, longitudinal survey, as well as over 60 interviews with members of coworking spaces — actually suggests the opposite conclusion: Coworking spaces will become even more important and more popular in the post-pandemic world, not just for entrepreneurs and freelancers (the stereotypical users of coworking spaces), but especially for large companies.

Helping to Solve the Remote Work Dilemma

Even after the pandemic passes, the world will never be the same. The work-from-home trend is here to stay, as evidenced by announcements from numerous companies — including Facebook, Twitter, Shopify, and Slack — stating that they will allow large swaths of their workforces to work from home indefinitely. Many more companies will likely follow suit, partly to save on costs, but also because many employees do not want to return to corporate offices. Once employees have experienced remote work, “they’re going to want to continue,” said Kate Lister, president of consulting company Global Workplace Analytics. She and her company predict a seismic shift in workplace culture over the next few years, with a much larger percentage of the population working from home on a permanent basis.

However, although many employees relish the freedom and flexibility of working from home, many others are tired of it and cannot imagine doing it indefinitely. Working from home can be full of distractions, especially for those dealing with small children, barking dogs, and temptingly short walks to the refrigerator. Even those with few distractions at home may become lonely and crave the face-to-face interactions they used to have at work. If returning to the office is not an option, many of these people will desperately seek out alternative workspaces.

Coworking spaces are uniquely positioned to fill this void. Even before the pandemic, many large companies, including Microsoft, IBM, Ford, KPMG, Verizon, AT&T, and Salesforce, sent large groups of their employees to work in coworking spaces. In 2019, the best-known coworking company, WeWork, reported that 40% of its members worked for companies with 500 or more employees, up from 30% in 2018, and that enterprise members represented its fastest-growing customer group. Other coworking spaces have reported similar trends and have suggested that they are ready to take in more corporate employees.

The Question of Coworking Stipends

Companies shifting permanently to remote work should consider offering employees a coworking stipend. That way, those who want to work from home can, but those who need another space to work can choose from a variety of coworking options. This idea is not without precedent: Automattic, the company behind WordPress, created a stir in 2017 when it shut down its San Francisco office because no one was showing up. Instead, it offered a $250 monthly coworking stipend to employees who preferred to not work from home. Other companies, such as Basecamp, Mozilla, and GitLab, have similar policies.

My research points to five benefits that both your company and your employees can gain from giving remote workers the option to use coworking spaces.

1. It gives employees the flexibility and autonomy to choose what is right for them. The office environment is one of the main factors contributing to employee satisfaction. People have vastly different preferences in where they work, and there is no one-size-fits-all approach that can make all of your employees happy. Giving employees the freedom to choose their own workspace can be a game changer in terms of employee satisfaction and retention.

Offering a coworking stipend allows remote employees to choose for themselves. Some individuals may prefer a smaller space with a tight-knit community; others, a larger space with a wider network of people. Some may choose a high-end, professional space that feels more like a traditional corporate office, while others may thrive in a more creative space with Ping-Pong tables, beanbag chairs, and a startup vibe. Depending on their backgrounds, some employees may gravitate toward a diverse space with people from all walks of life, while their counterparts may prefer an environment limited to people from a certain industry or group, such as a women-only space. Each individual can choose a space with perks that suit their specific priorities, such as onsite child care, pet-friendly policies, or free food or beverages.

2. It helps in recruiting talent. When most people walk into a coworking space, they immediately notice that it feels different from a regular office. The electric atmosphere, stemming from the energy and excitement of other occupants working there, is almost tangible. One employee I interviewed put it this way: “There is a contagious energy to being around other people. … Working where they are makes you work harder and gives you energy.” Other interviewees shared similar feelings.

Many of the managers I interviewed spoke at length about how much this energetic atmosphere helped in recruiting new employees. One employer explained that his coworking space “helped sell the opportunity for us” when recruiting job candidates. When he took them on a walk around the space, he’d hear comments like, “Wow, this is such a cool place. This is where things are happening.” My survey results suggest that this is especially true for millennial workers, who tend to crave this type of energy more than other workers.

3. It can help your company appear more professional. One challenge many employees face when working from home is that they have no suitable setting to host meetings with external parties, whether they’re potential clients, investors, partners, or auditors. Employees are often forced to take these meetings at a coffee shop or restaurant, which is seldom ideal; the employee has no control over the environment, and the professional perception of the business may diminish. Coworking spaces provide a solution, offering professional settings like conference rooms to hold such meetings.

A few of the companies I researched said they paid the monthly coworking fee for the sole purpose of using the conference rooms for client meetings — a choice that can have a significant business impact. One manager said, “Honestly, it would have really constrained our growth potential [otherwise], because we couldn’t have taken our client meetings at a home office or in a garage or at a coffee shop.”

4. It can help your employees be more innovative, well connected, and productive. Magic can happen when people work alongside others with different backgrounds and experiences. At least that’s the reason Microsoft gave when it offered nearly 30% of its New York employees WeWork memberships in 2016. Coworking communities can offer new ideas and new solutions that employees would otherwise not come across. In my research, many of the people I spoke with considered this one of the main draws of a coworking space. “We’ve spoken to other companies in the same industry and bounced ideas about how to handle certain regulations and all that,” one said. Another software developer shared, “It’s great, because if I have a development problem, I can go ask other developers, ‘Hey, can you look at this?’”

Being in physical proximity to other people from other companies also helps to expand employees’ networks. Spontaneous interactions in the hall or by the kitchen can lead to referrals, for example. In fact, winning new clients was one of the main reasons KPMG moved many of its employees to coworking spaces.

5. It can help your company save costs. The coronavirus era has forced many companies to prioritize cost cutting. Renting a commercial office is often one of an organization’s largest operating expenses (especially for knowledge-based service companies). Shifting employees to coworking spaces is one way to reduce that cost.

Part of the appeal is the modularity of coworking leases, which are generally month to month, in contrast with traditional fixed, five-year office leases. With a modular model, a company can start out by renting one or two desks and then add more desks or private offices as the team grows. This can work in the opposite direction as well; if a company’s head count shrinks, it can simply give up an extra office or desk.

Ready or not, the traditional office may be a thing of the past. The COVID-19 pandemic has forced many employers to change work policies and strategies. While some changes are temporary, others — such as remote work — may well stick. Companies that are considering going fully remote but are concerned about employee satisfaction and productivity may find an answer in coworking spaces. Experiment; offer employees a coworking stipend and see what happens. The results from my research suggest you won’t regret it.