There’s been a lot said about the coworking sector over the past two years. The industry has faced a mixed bag of challenges and opportunities since the UK first entered lockdown in March 2020, and big-name providers, such as global player WeWork, have faced some tough PR challenges.
WeWork has had some difficulties since its high-profile failed initial public offering (IPO) in 2019 – and the arrival of a global pandemic the following year certainly didn’t help.
But since then, coworking spaces have boomed as we returned to our offices last year, and hybrid working models became the post-Covid norm for small businesses.
So, what’s next for the coworking industry giants? How are they working to attract new members and support SMEs in the post-Covid recovery effort?
We spoke to Mathieu Proust, General Manager at WeWork UK Ireland and Emerging Markets, to hear about the impact Covid-19 has had on the business and the wider sector, as well as learn more about WeWork plans to move forward in 2022.
How has WeWork been affected by Covid-19?
WeWork, like the rest of the coworking industry, was hit hard by the early-stages of the coronavirus pandemic. Demand for communal working suddenly dropped as the public was told to stay at home and avoid social interactions.
As outlined in our full review of the coworking company, WeWork was still wounded from various other PR crises in early 2020 – including saying goodbye to its former CEO and controversial founder, Adam Neumann. Covid-19 sent the company’s growth plans into further chaos.
Like a lot of large-scale coworking providers, the national lockdown meant that the majority of WeWork’s office spaces went unused. Rent payments from WeWork to its landlords, as well as from its customers, slowed.
Some of the firm’s members (what WeWork calls its tenants) asked for rent breaks and were given short-term deferrals – but the company itself was losing money.
In a 2020 interview with CNBC, WeWork’s chief executive, Sandeep Mathrani, said the company had paid rent at 80% of locations in April and May but was still in discussions with landlords regarding the remaining amount owed.
The firm continued to collect 70% of rent payments from its members during the same period – including small businesses that were struggling from the economic downturn themselves.
But then, as suddenly as the demand for office space had dived, it rose again. Restrictions were lifted, and hundreds of small business owners that had previously been working from home suddenly found themselves in need of a premises.
Mathieu Proust, General Manager at WeWork UK Ireland and Emerging Markets
In fact, Instant Offices reported that in late 2020 – despite the impact of the pandemic – the UK’s flexible office space provision still grew by 4%.
Mathieu told us that, like all businesses, WeWork has navigated challenges during the course of the pandemic. The company has since strived to adapt its spaces and support members.
“People have been exposed to new ways of working, prompting companies of all sizes and sectors to completely rethink their workplace needs. People now want more choice in how, when and where they work and we can meet this demand due to our scale and offer.”
It seems to have worked. In January 2021, WeWork announced strong December sales results. Preliminary figures reveal that 66,000 desk spaces were sold in the final month of the year – that’s an increase of 11,000 compared to the previous month. Overall global memberships increased by 2.25% month-over-month.
The firm also celebrated becoming a publicly traded company in October 2021, via a merger with the special-purpose acquisition company BowX Acquisition.
There are still concerns about what further lockdowns or extensive restrictions could do to the WeWork business model – although the UK government’s recent announcement of the end of Plan-B coronavirus restrictions could help small businesses to feel more confident about purchasing office space.
So, how will WeWork support its members in the face of another potential lockdown?
Amongst the deals WeWork has in place to assist small businesses and those in early-stage growth, members can receive a discount on the first three months of their membership so you can test out your office before purchasing a longer-term contract.
The company also recently announced two new workplace solutions which give small businesses more flexibility.
“SMEs and startups have led the charge back to the office,” said Mathieu “[and] we will continue to support these members as they navigate their evolving workplace plans.”
These are:
- WeWork All Access, a monthly membership which gives members the ability to work from over 60 buildings in the UK, and access to any of WeWork’s global locations.
Price: £199 plus VAT for the first three months, per member, per month. After four months, this amount rises to £299 per member, per month (subject to commitment terms).
- WeWork On Demand, a pay-as-you-go solution where users can book workspace and meeting rooms by the hour.
Price: Access to shared workspaces starts at £45 a day, while meeting rooms are bookable for £15 per person, per hour.
“By digitising our real estate, we [can] bring solutions directly to the individual or company – with no long-term commitments, red-tape or unnecessary complexity”, explains Mathieu.
WeWork's largest UK office, 10 York Road
Marketing startup Goho began using WeWork in June 2021. Emily Rickets, PR and Marketing and communications executive at the company, said: “We always feel safe in WeWork offices, they have put several procedures in place to minimise the risk of Covid spreading. It's been a tough time for SMEs during Covid, so the flexibility they offer has been invaluable.
“We are able to bring our clients in as ‘guests' for meetings, use printing facilities, meeting rooms and not forgetting their amazing coffee! I personally enjoy being able to use different offices across London, having this flexibility during a time of such uncertainty has been great.”
Emma Critchley-Lloyd is founder of BIG little LDN, a PR & Marketing agency for start-ups, scale ups and established independent businesses. Critchley-Lloyd joined WeWork’s London office, The Monument, in July 2021, and told us: “By remaining open, WeWork allowed me to escape a difficult working from home environment. While most companies adopted a WFH policy to keep staff safe, it meant coming into WeWork for me was very safe, as hardly anyone else was here.
“I love the Community team here at Monument. I moved house in August and Kings Cross would be my closest office, but I continue to come to Monument because the vibe here is the best. The central community team allowed us to host an event in September where we got a space to tell fellow members about what we do at BIG little LDN. From that we got two new business enquiries.”
At the start of 2021 the company also launched its Growth Campus in the UK, a £15M investment in space and resources for UK entrepreneurs. Designed to help boost the startup ecosystem and offer subsidised workspace, the programme also gives small businesses access to training and mentoring.
Mathieu told us: “WeWork started from the idea that providing inspiring workplaces and creating a strong business community network is essential for businesses to thrive. That is why we launched Growth Campus specifically to support the startup sector and help to create that network.”
But the story was a little different when we spoke to one of WeWork’s members:
An anonymous small business owner, based in WeWork’s Manchester offices, told us: “Since signing up for our current office two months ago, we've received almost no communication from WeWork – even after the government’s recent announcement about working from home. I’m still choosing to go into the office but I’m not sure how much longer that will be permitted.
“In terms of the WeWork experience for small businesses, it’s been a good deal for us during the first three months, as you get a discounted rate and can trial the space to see if you’d like to continue with it. After that, there’s a significant cost increase.
“I’m not sure if we’ll stay. I like the trendy, central location but there’s only two or three of us in the team at the moment and if we hired more staff, I’m not sure it would be worth spending more for the extra memberships.”
We also asked this small business owner if they had heard anything from WeWork about the company’s Growth Campus. They said they had not.
How have coworking spaces adapted post-Covid?
Health and safety
Months of being told to wash our hands, stand two metres away from other people and wear face masks have thrown up some concerns amongst potential flexible office users.
Shared spaces and surfaces could potentially be a hotbed for the virus – so how are providers adapting their offices for safe use?
Mathieu told us that WeWork has invested significantly in health and safety measures, including enhanced air quality, more frequent cleaning schedules, and behavioural signage in communal spaces: “Health and safety is front and centre in any workplace plan, and as companies continue to prioritise this into the new year – it is important our members feel comfortable about coming to work.
“We've worked in partnership with world-leading health services and have been awarded a Global Certificate of Conformity by Bureau Veritas — an internationally recognised testing, inspection, and certification organisation.”
WeWork No.1 Poultry
Another coworking provider that’s striving to support tenant safety post-Covid is three time Startups 100-featured, Headspace Group.
On their website, Headspace said their aim is to keep Britain’s small businesses operational during the current turmoil of the pandemic: “Our cleaners are sanitising our spaces with intensive deep cleans. A fogging service sterilises the environment for 30 days and we display cleaning schedules. We focus on key touch-points, such as door handles, toilets, coffee machines and kitchen facilities, while lift-buttons have easy-wipe plastic coverings.”
Digital solutions
Technology has been a crucial component throughout the pandemic in helping to keep people connected. As the ‘coworking’ aspect of its business model became threatened, WeWork has also invested in several technology solutions to ensure SMEs can continue to network safely within its offices.
Outlining the new software that’s available to members, Mathieu told us the firm had also recently partnered with ARHT Media “to bring its holographic conferencing technology to WeWork locations around the world [and] bridge the need for expensive business travel while fully immersing remote participants in meetings.”
According to industry reports, this technology is currently only available in WeWork’s New York, Miami and Los Angeles offices. The company plans to roll holographic conferencing out to 16 select WeWork locations in the near future, but it’s unclear if any of these will be in the UK.
Commuter-friendly
At the moment, WeWork’s offices are still based in city centres – tricky for the large number of workers that moved into UK rural belts when Covid struck.
Spacemade, which featured as one of our top 50 Startups last year, is capitalising on the increasingly common hybrid work approach, by offering work spaces that bring individuality to their branding – in contrast to larger, multi-national shared offices.
Founded by Jonny Rosenblatt and Dan Silverman in 2019, the real estate company helps to develop buildings in suburban areas, termed ‘neighbourhood spaces’, as well as city centres. Owners can then provide more floor space to tenants at lower cost.
This innovative approach has met success. Spacemade has delivered four boutique coworking offices to building owners in just two years, and plans to open two more in early 2022.
Jonny Rosenblatt, co-founder of flexible workspace operator Spacemade, thinks the role of the workspace has changed dramatically. “People no longer want a cookie-cutter approach to design: they want individual workspaces tailored to them. At Spacemade, we design spaces to reflect the people that use them and the area surrounding them – and so each one looks and feels completely different. The amenities (cafes, Zoom rooms, etc) we offer will differ depending on the local market and what it needs.
“We also don’t believe in the traditional coworking model where operators lease space from landlords. Many building owners found during the pandemic that this left them with little/no transparency over their spaces. Instead, we partner with building owners and work with them to create workspaces that are flexible and meet the needs of the local community.”
Should you choose a coworking premises in 2022?
There are many perks to choosing a coworking workspace over traditional office rentals. Tenants can save on daily costs by accessing tonnes of business amenities including office equipment, WiFi, meeting rooms – and plentiful tea, coffee and biscuits.
It’s important to carry out research into the perks and incentives that are offered by different providers, so you can be sure it’s the right fit for your company.
WeWork rival Regus, for example, charges just £80 for membership to its global business lounge network, providing budget-conscious SMEs with a more accessible package. Meanwhile, more localised providers such as The Transfer in Birmingham, gives reduced rates to tenants based nearby, and those who commute using sustainable methods.
Here are some wider benefits that coworking memberships give scaling businesses over traditional offices.
Added flexibility
Coworking offices are particularly beneficial for small businesses in the new, post-Covid working world. WFH policies have given both business owners and employees a desire for more equal work-life balance, and greater control over when and how we work.
WeWork The Hewett
Mathieu was in agreement, telling us that coworking spaces provided members with greater choice – “whether [by] providing options closer to their homes or offering different types of environments designed for specific work tasks, such as team collaboration or more focused individual work.”
Ben B Tilley, managing partner at marketing startup Huzz Digital, said the company used WeWork’s flexible working provision to further its growth. “As the business was developed in Covid-19, it was great to find a flexible working space which allowed for multi location use and hot desking throughout the country. The ease of signing in guests and having on demand board rooms allowed us to grow at pace.
“Every WeWork is different and has a specific tone which different businesses would prefer. Overall, [we] turned from a digital only based business to an office-based business because of how well run and presented our WeWork space in Manchester was.”
Financial incentive
Coworking, typically, comes at a lower cost than purchasing traditional office space.
Thousands of UK SMEs have been hit hard by the past two years, and many are currently operating with reduced cash flow. Coworking is typically more economical than traditional office space, as it offers shorter contracts and gives tenants greater flexibility should you run into financial difficulty.
Plus, renting an office space with a large-scale provider such as WeWork means you won’t need to take on responsibility for common infrastructure, such as cleaning or security services.
Talent and recruitment
Employees have come to expect hybrid working as an option. In September 2021, the UK government introduced new legislation that gives any employee the right to make one flexible working request per year – but many say this isn’t enough, and it’s certainly not a competitive recruitment strategy.
In October 2021, we reported on the high number of SMEs that were adopting a hybrid approach to working, as a survey of 1,000 business owners revealed that 54% were planning to use hybrid offices by summer 2022.
According to Mathieu, businesses with flexible office space can more easily engage in talent attraction and retention, as “giving employees more choice of inspiring and convenient workspaces can be a top perk. We [also] have flexible membership options so that businesses can scale up and down with us as they need to.”
Conclusion
The Covid-19 pandemic rocked the coworking sector to its core – before breathing new life into its shiny, glass-walled properties.
Yes, while the future of our workspaces had previously been a source of much speculation, it’s now clear that UK small businesses want at least a part-time return to the office and are looking to coworking providers for the answer.
Matheiu told us: “As we see organisations adopt hybrid working models and workforces become more distributed and remote, in-person work has become more valuable and purpose-driven. The role of the office has been redefined as a hub for innovation and productivity.”
Because of this shift, Mathieu expects demand for coworking spaces will continue to rise. “The workplace is incredibly important and impactful on our attitudes to work and company culture,” he told us. “Our focus is to continue providing an exceptional member experience, plus the flexible solutions for companies as they explore what will work best for them.”
Some of the WeWork members we spoke to said they hadn’t received much communication from the company since joining. Given WeWork’s previous high-profile controversies, there are also still some concerns about the sustainability of its new growth and expansion plans.
That being said, the benefits of using a flexible workspace in 2022 massively outweigh those offered by traditional office rentals. High levels of entrepreneurship have emerged as an impact of the pandemic and WeWork’s new management is clearly rolling out the red carpet to accommodate new members.
The industry’s new line is one of united support and collaboration. That’s something which, in the current climate, we think small businesses would do well to get on board with.
via https://www.AiUpNow.com
January 27, 2022 at 07:11AM by Helena Young, Khareem Sudlow
