Why co-working spaces are on the rise

The kinds of places people want to spend time in, and how HR can integrate workers’ preferences for these environments

It’s July and, at 35° celsius, officially the UK’s hottest day of the year. But at 1 Fore Street Avenue, Moorgate you wouldn’t know. In the vast open-plan ground floor, adorned with loungers, benches, chill-out spaces and a coffee bar, the air is pleasantly cool, music plays mellifluously in the background and people are chatting or having mini meetings. There’s a real ‘vibe’.

It’s no coincidence. This is exactly the feeling WeWork, whose UK head office this is (and which also provides 140,000 square feet of co-working space at this location), wants to create.

This is one of 24 (and growing) WeWork locations in the UK alone. Originally launched as hot houses for start-ups, the company now has just as many corporate members thanks to a model that gives its users access to its entire global network, allowing them to decamp and work from whichever major conurbation they’re in.

To say it’s been successful is an understatement. WeWork only launched in 2010, but already it’s worth $20 billion and has 283 locations in 78 cities. Its biggest UK site (240,000 square feet) is set to open early next year in London’s South Bank.

In 2017 flexible office spaces jumped to a fifth of all office leases (according to real estate consultant Cushman & Wakefield) – up from 8.6% in 2016. While only 5% of all office stock might be co-working space (data from Instant Offices), investment management company JLL predicts that by 2030 this will jump to 30% of all commercial workspaces. Co-working is here to stay.

For those who embrace it (some 75% of FTSE 100 firms now have flexible space in their portfolio) there are many benefits. “Members want convenient, drop-in or permanent locations closer to their increasingly spread-out staff, but also a place that has a positive creative energy,” says Patrick Nelson, WeWork executive VP and real estate head of Europe.

“Citibank has located its entire innovation team here – 80 to 100 employees – specifically because it wants to be around other innovative people,” he says. “At first we worried about whether SMEs would welcome large corporates. But we’ve found they look up to these businesses, while large firms aspire to being around nimble innovators. Corporate staff say they work more effectively here than in any other environment.”

To ensure this happens nothing at WeWork is left to chance. Earlier this year it bought office fit-out firm LTB to ensure the look of locations stays consistent. The aim, says Nelson, is for the design to orchestrate ‘connections’. Proof of the pudding is that 70% of members collaborate and 50% do ‘real’ business with each other. He adds that this collaboration extends into the virtual world. “Our real innovation is our app – a sort of LinkedIn meets Facebook – where every member is connected to everyone else and can send requests or ask for advice. This is what’s really driving collaboration.”

Such is the vitality of the co-working sector that others are following suit, each with their own slightly different offering. In July Ministry of Sound (MoS) opened

‘The Ministry’ – a six-floor £10 million space for 800-plus desks near Elephant and Castle. It claims to have used its expertise as a creator of ‘experiences’ in nightclubs to create more stimulating workplaces. The centrepiece is a 70-foot bar with offshoot spaces that have eight different music zones, including an outdoor ‘forest-like’ sanctuary.

MoS chairman Lohan Presencer says employers are crying out for inspirational workplaces for their increasingly Millennial staff. “Most offices are dull,” he says. “Most employees also live in poor-quality rented accommodation. That’s why a plush place they can be energised by, and want to stay in, really appeals. When retention is everything employers can show they value their staff by giving them the chance to work somewhere different.”

Utilising co-working spaces also saves firms money. They offer access to meeting rooms, meaning firms don’t need to buy or rent their own space they hardly ever use. They are also fully serviced, eliminating a facilities management function.

“In London we recently discovered 20% of our staff are not in our office at any one time,” says Penny Newman, chief people officer at law firm Lewis Silkin. “So this year we’ve decided to compress our head office by a third because we simply weren’t using space efficiently. As existing office leases end I see us moving more into the co-working space because we don’t need to manage our own office portfolio.”

According to Richard Morris, CEO of flexible workspace provider IWG UK, co-working spaces are re-writing the rules about what HRDs need to provide. “Offices used to be about the employer brand proposition. But staff simply want functional places to get on,” he says. “When the basics are there – IT and temperature – as well as convenience, we believe branding is and will continue to be less relevant.”

The potential downside is lack of management oversight and valuable internal collaboration (Yahoo! famously banned home working in favour of havingstaff on site). “I think this will still be an issue for some time,” admits Newman. “We’re already thinking hard about this, by establishing regular dial-ins for mobile workers, but it’s not insurmountable. Lawyers need admin support from paralegals. But we’re already experimenting with providers like F-Flex and Lawyers on Demand, which are remote agencies that can do this just as well.”

But Rob Hingston, former HR business partner at Virgin Active and now head of Origin at Bristol-based Origin Workspace (which has 42,000 square feet of co-working space), believes HRDs need to accept they’re fighting a losing battle if they think they can control where staff work. “Agile working is here and the gig economy isn’t going away either,” he says. “We’re seeing more people move to freelance-style work who want a space where similar types congregate. As for the corporate side, HRDs need to realise their people want space that is convenient for them.”

For some businesses co-working spaces provide a semi-HR structure anyway. For instance Origin offers prospective occupiers a staff retention programme as part of the membership, and boasts a strong focus on wellbeing (arranging walks, jogs and runs, and ‘meeting workouts’ where people train and make connections with others in the space). At The Pavilion – described as a business members’ club – which has locations in the City and Kensington and will soon open in St James’ and Knightsbridge, concierge services are offered too. And digital marketing manager Claire Sinden says “corporates increasingly want overspill space they can hold client meetings in”.

Shoreditch-based 42 ACRES – an offshoot of the Somerset retreat of the same name – encourages guests to return to nature. The co-working space offers yoga and mindfulness. “Natural light is key to maintaining people’s energy levels,” says its MD Rebecca Collins. “We feel we help inspire people to work. Too many offices are like wearing a suit – you go into it and turn into someone else. Here people can be themselves.”

“HR needs to embrace this or they’ll lose staff,” argues Sinden. “At a time when home working is still a distraction, co-working locations provide a happy medium where people can productively work in a productive space.” The writing is on the (trendy) wall then: co-working spaces are here to stay; so HR should make room for them.