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Why Coworking Is The Future of The Traditional Office Space Model




With an inrush of business setups during the decline of commercial spaces, companies are experiencing the paradigm shift in traditional business structure. 14% of corporate workers regularly use coworking spaces, proving that brands are shifting their business model and adjusting accordingly. It is apparent that the future of coworking space is brighter than ever before!


Coworking spaces benefit various business careers: startups, entrepreneurs, business travellers, digital nomads, freelancers and more. They are all working remotely, in places outside of the typical corporate office.


Financing an office during and after COVID-19


The commercial real estate industry will suffer in the coming months and perhaps years. However, one positive trend is appearing from the pandemic’s fray. Or more accurately, it is accelerating a trend reported for years now: companies are ditching longer-term traditional office leases for more flexible, more convenient coworking spaces. Australia, further along in reopening their economy, is experiencing a surge in shared office spaces.


Companies facing hard decisions often lay off personnel because they cannot break leases to save on their other significant fixed cost: office space. Traditional office leases typically bind companies for three or more years with parsed legal jargon that makes them inflexible to tenants. Brightline Strategies, a real estate research firm, found that more than half of commercial tenants are struggling to pay rent and that 45% would like to reduce their square footage as soon as possible.

But where pain points exist, innovation follows, and the innovative reaction to inflexible leases and suboptimal office spaces is coworking.


Coworking spaces, synonymous with shared workspaces, often include a variety of offerings:

  • Library-style, hot-desk coworking where members share space and claim desks on a daily, first-come, first-serve basis

  • Dedicated desks and multi-person tables in communal spaces

  • Private offices

  • Suites or entire floors for large teams, serviced by the larger coworking provider

These spaces are managed by the provider, allowing users of the space to come into work to do just that — work. Shared workspaces typically offer membership on much shorter terms than traditional leases. At 4split, for example, we offer memberships starting from just 1 week commitment. This flexibility is key to navigating a business successfully through fundings, through downturn, through once in a century pandemics.


Another upside of coworking spaces is outsourcing office management, often a costly aspect of traditional leases. This means cleaning, office supplies, waste management, kitchen supplies - all of that is normally provided and taken care of, so the stress of the traditional office lease model is taken out of the picture.


How startups use coworking for flexibility


To understand why coworking will flourish during and after the COVID-19 pandemic, imagine being the CEO of a five-person company looking for office space in January 2020 with a round of funding approaching in February. You don’t know this at the time, but that funding round will go much better than expected, and you will be able to hire five more people than originally anticipated. You don’t know this either, but shortly after you hire more employees, a global pandemic halves revenue and pushes your entire team virtual.


On a traditional, five-year lease in this scenario, the first thing you’d do is hire an office manager to set up your private office space and keep it running smoothly. You’d also have to forecast the company’s growth when you first get space, as this projection would impact how much room you anticipate needing and your budget. In this situation, you would likely pay for extra space before new hires fill it or have to be prepared to get a second lease.

Once the pandemic hits, though, your landlord, an ultra-wealthy national real estate conglomerate, does not budge on the lease and expects payments on time. Hands tied, you start by laying off your office manager, a cruel irony since you still pay for the office space.

At a coworking space, you forgo the office manager. If the company is housed at one of the more flexible providers, scaling up from a five-person to ten-person office after the funding is only a matter of one week’s notice. Then, when the pandemic hits, you weigh your human employees that have thus far emotionally invested in your company against the space you pay for on 30-day terms and won’t be using for likely the next 90 days. After briefly considering laying off the employee who always “replies all,” you instead notify your shared workspace provider of your departure, thankful you have the flexibility to do so.

Indeed, coworking spaces are great for startups, who run a higher risk of failure and are generally more volatile.


Corporate coworking on the rise


Shared workspace has also begun to attract clientele on the other end of the spectrum: corporations. Companies like Microsoft, Apple, and Amazon use coworking centers to base teams globally. Some providers are open to doing custom build-outs, especially for larger spaces that corporations tend to desire.

Beyond the flexibility and convenience, coworking spaces can support corporations’ recruitment and business development teams quickly target strategic geographical areas.

Many corporations are eager to join coworking spaces as a way to get facetime with disruptive startups and tap into local innovation networks.


But just as the virus has catalyzed entire industries to reimagine how they work, it has also demonstrated the value of in-person connection and spatial mobility. Many people enjoy changes of scenery, seeing familiar faces at the coffee machine, and lunch rituals with colleagues.


There are also practical upsides to working in a physical office. To cite a few:

  • That change of scenery many of us are craving? It’s actually shown to increase productivity and creative thinking. Many coworking centers provide greater variety of workspace options than traditional offices do with their emphasis on common areas that utilise different forms of seating, lighting, and creative design.

  • According to a study reported in Harvard Business Review, face-to-face requests are 34 times more successful than those communicated by email.

  • By now, many virtual workers have become familiar with so-called “Zoom fatigue.” This particular phenomenon of zapped energies as a result of the increase in video calls occurs because of the additional level of attention required to communicate online.

Rather than committing to all-in-person or all-virtual structures, the new work normal will undoubtedly incorporate the merits of both: using digital tools to expand operational capacities and engage a broader workforce, while leaning on physical spaces strategically.

Shared workspaces, by nature, are especially adept at providing the built-in community and social resources that many sorely miss while working from home. This factor should not be discounted. It may be the reason folks return to the office sooner than expected.


Looking for flexible office space to support your operations during COVID-19?