Tumbleweed is blowing through your coworking space right now, memberships have been put on hold, the coffee machine and the beer fridge are switched off and the greenery is limp.
So, will coworking survive in 2020?
Top line statistics are not encouraging. DeskMag reported in their Global Coworking Survey 2019 that only 43% of spaces were profitable, due to a strong growth rate in new spaces opening and profitability tending to be a year 2 aspiration. Without doubt, there will be casualties, even with supportive lenders. With so many tender businesses starved of cash flow, not all will survive.
However, the sector enjoyed 23% growth in 2019 according to Instant Office Group. Surely not all the underlying factors that stimulated that market growth will disappear.
The hunt for early profitability
There may be differences. Investors will want to see a business plan that shows profitability at an earlier stage. The stats tell us that this is usually year two and the following factors are key:
Larger spaces are more profitable with 76% of spaces with 200+ members providing a return, as compared to 33% of those with under 50 members. Recessions have traditionally seen the flexspace market enjoy growth as companies abandon their own offices to streamline cost and focus on core business. So, where operators have to review their portfolio, keeping the larger spaces may prove important.
Those offering a mix of coworking and private office space are more likely to be profitable, so now may be the time to rethink your offering and review your division of space.
Secondary markets enjoyed 6% more growth in desk numbers than London in 2019 with operators facing less competition than in the capital. With workers less likely to want to undertake long commutes post COVID, this trend is likely to continue.
A new dawn
In more practical terms, when the COVID-19 enforced stay home is over, there are many factors that will drive your customers back into the sunlight and it will be more than the smell of good coffee.
Home internet performance will frustrate
Sharing home quality bandwidth with Netflix watchers will make anyone yearn for the great WiFi offered by a coworking space (and if yours isn’t great, feel free to call us).
The need for human contact
7.7m people live alone in the UK and they will be very keen to share a conversation around the water cooler as soon as they can, however good MS Teams is.
Creativity and collaboration will be a necessity to drive the upswing in business and people will need to meet and work with others to drive this. This is central to the coworking ethos and together with the adaptability and ingenuity shown by so many during this period will propel recovery.
So, will coworking survive in 2020? Keep the plants watered, they will be back.
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