Part 2. The rise of the co-working space: the new gold rush?
You know the co-working space in Australia is heating up when $13-billion companies start to get some skin in the game.
Towards the end of 2015, WeWork, a $US10 billion ($A13.06 billion) co-working company, started to make noises about entering the Australian market.
Fast forward to today and it has two locations in Sydney and a third on the way as part of a global expansion plan.
Meanwhile, operators such as Hub Australia and Gravity Co-working have set up spaces in multiple cities in Australia.
The play here from WeWork and others is to operate a chain model – much like your local gym.
One membership can get you access to spaces in cities all around the world – something that appeals to jetsetting corporates.
Why corporates love co-working
CBRE’s Nicole Fitzgerald said large companies were starting to come to CBRE when looking for their offices and placing proximity to co-working spaces high on their list of requirements.
“Employers want to give their employees or potential employees the chance to work in their office, but also point to other spaces and say ‘you can work there too’,” she said.
She said both employers and employees loved the idea of sending a small team to a co-working space for a day or a week to recharge the creative batteries.
Employees love it because it gets them out of the drudgeries of the office, and employers love it because enhanced creativity and collaboration leads to better efficiency.
Demand has grown beyond the traditional marketing/startup demographic, and big dollars are starting to flow into the space.
The WeWorks of the world are simply following the money, as are large traditional property developers such as AMP and Lendlease.
“People are now coming to us having done the research. They’ve been to some of these co-working spaces and want to get involved,” said Fitzgerald.
Room for everybody
According to Naomi Tosic, Director of The Office Space there’s room for all players in the game thanks to the ever-growing demand for co-working spaces in Australia.
“They [WeWork] definitely have massive economies of scale and can play off that – which means we think of ourselves more like a boutique hotel than a hotel chain,” she said.
“Now the offering in the marketplace has really matured – people are more discerning,” Tosic told The Pulse.
Research done by CBRE last year found that despite large international companies targeting Asia-Pacific, local and regional operators still had around 60 percent of the market.
It’s why existing players think that the entry of WeWork and real estate giants and others is an opportunity rather than a threat.
“We’re going to see more diverse organisations targeting different areas of the market,” Fitzgerald said.
“There’s room for all, and that’s what makes it so exciting.
“I don’t see one player coming in and monopolising the space. There are enough people who are entrepreneurs in that space who are interested in tapping into spaces full of creativity and energy.”
Tosic backed up the sentiment.
“Seeing big property developers come into this space is exciting – it’s going to shake up the market,” she said.
“I think franchises like WeWork are going to be successful here, so it’s important for us to be niche.”
It all sets up an interesting dynamic over the next couple of years. Co-working operators are going to have to find their point of difference in the market, and then market that point of difference.
READ: Part 1: The way we work
READ: Part 3: The new tourism