It feels like There is a WeWork on every street today. Take a walk through downtown Manhattan (please don’t) and it might even seem like there are more WeWorks than office buildings.
Consider this an ongoing discussion on Urban Tech, its intersection with regulation, public service issues, and other complexities where people have a full PHD. I’m just a sour, born and raised New Yorker trying to understand why I’ve been stuck between subway stops for the past 15 minutes, so reach out with any of these thoughts: @[email protected].
The joint work has permeated cities around the world at an astronomical rate. The rise has been so remarkable that even SoftBank, which dominates the headlines, appears to be willing to bet on the success of its colossal Vision Fund on continuous change, having poured billions into WeWork, including a recent $ 4.4 top-up. billion which saw the valuation rise to $ 45 billion.
And there are no signs of a slowdown in the trend. With increasing frequency, new startups are popping up in cities looking to convert underused brick or commercial space into low-cost co-working options.
It’s a strategy that spans across all types of businesses from retailers (where companies like Workbar have helped retailers offer portions of their stores) to more vertical niches like parking garages, where companies like Campsyte are transforming empty lots into spaces for joint work outdoors and corporate off-sites. Restaurants and bars may even be the most popular for co-working, as companies like Spacious and KettleSpace turn restaurants that are closed during the day into a private co-working space during their off hours.
Before you know it, a startup will be tying an Aeron chair to the top of a telephone pole and calling it “WirelessWorking.”
But is there a limit to how far joint work can go? Will all the shops, restaurants, and open spaces that line city streets be filled with MacBooks, Cappuccinos, and Moleskine notebooks? That could be too difficult a task, even for the movement taking over the skyscrapers.
So why is everyone trying to turn their favorite neighborhood dinner spot into a part-time WeWork in the first place? Working together offers a particularly attractive use case for underutilized space.
First, I co-work falls under the same General business zoning categories such as most freelance businesses and very little additional infrastructure aside from a few extra outlets and some decent WiFi are required to make a space an effective replacement for often crowded coffee shops and distracted using sensible pricing. Poor, remote, or nomadic workers who make up a growing portion of the workforce.
Therefore, businesses can list their space at little or no cost, without having to deal with structural changes to the design that are more likely to emerge when it comes to emerging solutions or event rentals.
On the supply side, these co-working networks don’t have to buy leases or make capital improvements to convert each space, so they can offer more square footage per member at a much lower rate than traditional co-working spaces. . . Spacious, for example, charges a monthly membership fee of $ 99- $ 129 for access to its network of reviewed restaurants, which is cheap compared to a WeWork counter, which can cost between $ 300 and $ 800 per month. in New York City.
Clients are realizing more affordable job-sharing alternatives, while low-margin businesses facing rising rents from underutilized properties can pool resources in a network and access a whole new revenue stream at a very low cost. The value proposition is proving to be seriously convincing in early cities – Spacious They told the New York Times that so many restaurants were voluntarily applying to join the network that only five percent of all applicants were eventually accepted.
Basically, the business model here checks many of the boxes for successful markets: acquisition and transaction friction is low for both customers and suppliers, and both see real value that did not previously exist. The unit economy looks strong, and looking at both sides of the market builds trust and community. Finally, there is an observable network effect whereby providers benefit from higher occupancy as more customers join the network, while customers benefit from greater flexibility as more locations join the network. .
So is this the way of the future? The strategy is truly compelling, with a creative solution that offers great value to companies and workers in major cities. But concerns around demand scalability make it hard to imagine this phenomenon becoming ubiquitous in cities or something that reaches the scale of WeWork or a big mainstream job player.
All of these companies seem to be competing for a similar demographic, not just with each other, but with coffee shops, free workplaces, and other flexible co-working options like Croissant, which gives members access to unused desks and offices in business. traditional. -Work spaces. Like Spacious and KettleSpace, the spaces in Croissant owns the property leases and they are already designed to work together, so Croissant can still offer comparatively attractive rates.
The offer seems more compelling for someone who can work without a stable location and without the services offered in traditional work or office spaces, and it is also price sensitive enough, where they would trade those benefits for a lower price. Yet at the same time, they can’t be overly price-sensitive, where they’d rather work outside of free or near-free coffee shops rather than pay a monthly membership fee to avoid the frictions that come with them.
And it seems unclear whether the problem or solution is so overwhelming outside of high-density cities, let alone outside of high-density areas of high-density cities.
Without density, is the competition for space or traffic in coffee shops and free workspaces high enough that it is worth paying a membership fee? Would the desire for a private work environment, or a community of work, suffice to incentivize membership alone? And in less dense and more expansion-oriented cities, members could also risk having to travel significant distances if space is not available in nearby locations.
While the emerging workforce tends to target more remote, agile, and nomadic workers who can do more with less, many are less likely to fit the profile of more costly but stable, as well as potentially frustrating, traditional workspaces. but free. alternatives. And if lack of density turns out to be a problem, how many of those workers will live in hyper-dense areas, especially if they are price sensitive and can work and live anywhere?
To be clear, I’m not saying that companies don’t see significant growth – in fact, I think they will. But will the trend of monetizing unused space through joint work come to permeate cities everywhere and with meaningful occupation? Maybe not. With that said, there is still a sizable and growing demographic in need of these solutions and the value proposition is important in many major urban areas.
Businesses are creating real value, creating more efficient use of wasted space, and solving a supply and demand problem. And the cultural value of even modestly helping freelance businesses keep the lights on seems to outweigh the cultural “damage” some fear by turning them into part-time workspaces.