THE MOBILE LIFESTYLE, MOBILE WORKFORCE, DOWNSIZING, AND COLLABORATION HAS STARTED A BOOM IN SHARED WORKSPACES

Long Popular With Tech Start-Ups, Shared Workspaces Grow in Popularity as Workers Seek Affordable Facilities

Forget privacy. Shared workspaces are the latest trend in office space.

The offices, set up in a variety of ways but emphasizing open space and the ability to rent a single desk, are also known as co-working spaces. Such offices have long been popular with technology start-ups in the San Francisco Bay Area looking for cheap space, but as the latest tech wave rises, shared workspaces are popping up in cities around the country.

Besides the cost advantages, entrepreneurs in technology and other fields say they like co-working spaces because their open floor plans boost collaboration, offer more flexibility on leases and can even help land investors.

Workers share deskspace at General Assembly, a New York co-working space that opened in January.

Saeed Amidi, founder and chief executive of Plug and Play Tech Center, a co-working space in Sunnyvale, Calif., with about 1,000 workers says. 

"Nowadays with the shared workspaces you don't need to buy furniture, you don't need to set up Internet, you don't need to sign a long-term lease.  You can just get started... within two hours of walking in."

Plug and Play is exploring expansion to Pittsburgh, Chicago, San Diego, Denver and Vancouver, said Mr. Amidi.

Meanwhile, reserved desks at General Assembly, a new 20,000 square foot co-working space and educational center that opened this past January in New York, are filled, according to the company.

Investors are also showing some interest. General Assembly said last month it raised $4.25 million from Yuri Milner of investment firm DST Global, and venture firms affiliated with Amazon.com Inc. founder Jeff Bezos and Starbucks Corp. founder Howard Schultz.

Loosecubes, a start-up that has created an online marketplace for office sharing, lists more than 2,300 spaces across almost 500 cities and 60 countries, and claims 7,000 registered users. Last year, it raised $1.23 million led by prominent venture capital firms Accel Partners and Battery Ventures.

Office spaces amenable to co-sharing are proving to be more popular and lucrative than traditional Dilbert-like offices both for established companies looking to change their atmospheres and companies hosting the spaces for start-ups. The total vacancy for a "creative" space with open floor plans ideal for co-working was 2.54% in San Francisco in July, and the asking rent ranged from $32 to $53 per square foot per year. Meanwhile, more "historical" spaces with closed-door offices that lack open space had a total vacancy of 10.55%, while the asking rent ranged from $21 to $36 per square foot per year, according to commercial listing broker The CAC Group.

Owners of stodgier office spaces are tearing up their floor plans to chase the market. Earlier this year, a building at 115 Sansome St., in downtown San Francisco, started remodeling for a more flexible layout to appeal to high-tech start-ups.

John Winther, founder and managing partner of Emeryville, Calif.-based Harvest Properties, which is leasing the building says.

"We are transforming this project because we think we will achieve greater demand for the space as well as higher rents than could be attained by maintaining the traditional office space." 

Other spaces, like the roughly 12,000 square-foot Launchpad in New Orleans, help entrepreneurs by housing service providers that can help expand their business. Launchpad, which is popular with "techies" and creative types such as filmmakers, has expanded twice since its June 2009 opening.

Workers pay $650 to $1,600 per month for a closed-door office, $450 per month for a permanent desk, file cabinet and personal landline and $275 per month for any available desk. The space can handle 70 companies and up to 170 people.

Co-founder Barre Tanguis says.

"If you need your LLC started, there's a lawyer upstairs; if you want to get your books down, there's an accountant right there; if you want a commercial start on the Web, there's a filmmaker in house. We've done a lot to nurture that and deliberately curate so we have the right people around and the right dynamic."

Collaboration is another part of the appeal of sharing space. Software firm Atlassian lets start-up Odiago use its space for free. In return, Odiago engineers offer Atlassian their expertise in open source software.  Jay Simons, Atlassian's president says.

"It's a full on win-win. We take our people and basically embed them in [Odiago's] team.... the best way to learn is to sit next to each other."

 

Common workspaces are spurring innovation and providing start-ups with the collaborative atmosphere one might find in academic settings, but with more opportunity for venture capital. WSJ's Andy Jordan reports from New York's "General Assembly".

The emphasis on learning has been such a draw at some workspaces that they organize workshops or demonstrations of the latest technologies. General Assembly hosts lectures regularly in addition to events such as a recent start-up demo night. Its layout includes a communal area with large, cushioned couches and industrial wooden tables in addition to breakout rooms, small phone booths or even cocoon-type seating for privacy.

Since the action is growing at co-working spaces, investors are also hanging out there more. At Plug and Play, angel investors, including Sand Hill Angels, Band of Angels and The Angels' Forum, typically visit every Monday afternoon to review the business plans of start-ups. More established venture capitalists including Sequoia, Menlo Ventures and Bessemer Venture Partners, typically drop by every other month for deal reviews, Plug And Play's Mr. Amidi said.

COMMENTARY:   There are three key forces at work that are responsible for the popularity of shared workspaces today:

• The Mobile Lifestyle - The revolution and variety of mobile devices and connectivity software that are available today: laptops, smartphones, tablets, digital cameras, digicams, mobile apps, the internet, teleconferencing and cloud computing, etc. 
• Collaboration and Social Networking - Social networking has become mainstream.  Social networking site like Facebook, LinkedIn and Twitter now allow us to connect, engage, share and collaborate with others like never before.  Social networking sites also allow us to play games, watch videos, listen to music, and watch out favorite TV programs and films. 
• Corporate Downsizing and the Mobile Workforce - The Great Recession has changed everything. Businesses have downsized, reduced or even eliminated office space, preferring employees to telecommute or come into the office less frequently.  This trend has created a growing mobile workforce. Social networking and the Mobile Lifestyle have redefined the workspace.  Temporary offices, virtual offices and shared office spaces are now more popular than ever.  The advent of WIFI and 3G/4G connectivity allow us to work virtually from anywhere, even the local Starbucks, fast food restaurant or public library.  

Renting a desk for $275 per month in a shared workspace facility like General Facility makes a lot more sense than renting a private office space and incurring all the related expenses associated with it: hosted services, computers, network servers, telephones, office furniture, office supplies, utilities, insurance, janitorial, maintenance, security, etc.

Some workspace experts have predicted that as many as 40% of workers will work outside the office or have no need for an office.  Instead, workers will meet infrequently at shared workspace facilities, rent a conference room and conduct their face-to-face business, and you will see more of this, as more companies, seek ways to reduce their corporate overhead.

Courtesy of an article dated October 4, 2011 appearing in The Wall Street Journal

 

Comments

[Melbourne Office Space]

The concept of virtual office and workplace sharing sounds very dynamic and good change in the business strategies. It is a very good option for starting online business. Thanks for sharing.

[Tommy]

Steve,

Thank you for your comments. shared offices are definitely a sign of the times. Mobility and corporate downsizing are two key forces driving this trend. Even the furniture companies are getting in on the social and collaboration angle with products that will blow your mind. Check out my posts under furniture. Hope you will continue to visit my blog regularly. Tommy

[Steve - Serviced Offices Derby]

What a brilliant solution! In this time of recession, anyone will cut corners whenever they can. And such a way to save money on office rental is definitely a big relief.