Five Drivers of Change Still Relevant in 2024
– or How My Predictions Played Out.
Imagine a world where the coworking industry grew exponentially, only to face an existential threat followed by a spectacular public downfall of its poster child.
This is not the story of WeWork. Instead, it’s the story of the transformative potential of coworking, the industry’s diversity and resilience and its ability to reflect back to us the potential for a better future of work to exist.
In 2016 I wrote a series of articles describing 5 key drivers of the coworking industry expansion and related these to signposts on the road to a new future of work that leaders should take notice of. A future of work many predicted would accelerate after the dark years of the global pandemic, but that alas is still uncertain and emergent, as I’ll describe.
The original series was written on the cusp of the explosion of WeWork, when coworking was still a relatively new concept – mostly community-based and enormously varied and innovative in its manifestations around the world. In the previous two years to writing, the global coworking industry had doubled in size to over 1 million members in 2016. Exponential growth since then means global coworking spaces support almost 5 million members today.
Although there still remains an ‘indie vibe’ to much of the coworking industry, this is superficial rather than substantial – coworking has become big business. You can see this in the gradual replacement of community spaces and activities (down 43% since 2019) with what are probably more profitable private offices (increased by 46% since 2019). The integration of what used to be called serviced office providers into the coworking sphere has contributed to the dominance of the ‘big business’ model.
Which brings me to the reason for revisiting the transformative potential of coworking as we head into 2024.
The ignominious collapse of We Work last November after a few years of death throes would have surprised us all in 2016 – even if it seemed inevitable (and some would say well-deserved) by the time it happened.
So what changed in those 7 years, what does this say about the underlying business trends and evolving nature of ‘office’ work?
What insights and cautions does this offer regarding our collective inability to foresee alternative business scenarios, seduced as we tend to be by the dominant management narratives of the day?
Let’s start by revisiting the five key business and work trends I identified in 2016 as drivers of the exponential growth of the coworking industry, and examine their relevance to work today.
5 key drivers of coworking
Has anything meaningful really changed?
Do we now have the mindset and corporate cultures for a more productive and participatory future of work after our pandemic experience?
And what lessons and insights can help leaders improve their business resilience and value by improving ways of working?
In 2016 I identified five fundamental socio-economic and technology drivers that would transform business over the next 10 years, and explored why and how they powered the rise of the coworking industry. I wrote that the coworking movement was a potentially transformative force that
…will alter society’s understanding of work, so over the next several decades, we’ll associate it less with being compelled to commute to an office to work for someone else and more with going to a place of our choosing to do work of our choosing alongside people of our choosing.…
And then came covid.
Everything changed – but in many ways nothing meaningful really changed.
So how have the original 5 drivers of change the coworking industry epitomised played out in 2024?
Talent is Still Winning the War for Talent (despite recent layoffs and economic uncertainty)
In 2016 I wrote: The ‘democratisation’ of work will increasingly provide people with legitimate alternatives to full-time permanent employment in large corporations. As distinctions between employee and ‘not employee’ and between job types become less meaningful…companies that loosen up job roles, workstyles, and workplace choices will be more likely to attract and retain top talent.
In 2024 this is still an important force for change: The underlying casualisation, outsourcing and contractualisation of the workforce is set to continue through the ups and downs of employment cycles. There are 53 million freelancers in the US today, of which only 40% are independent contractors. The other 60% are moonlighters (professionals with a primary job who also freelance on the side), diversified workers who have multiple sources of income from employment and freelancing and temporary workers (usually on fixed term or project-based contracts)i.
This means that employers have a smaller and smaller ‘permanent’ workforce that is willing to be told where, how and when to work, even during the current cycle of restructuring and retrenchments. Workers are increasingly frustrated with leaders who resort to performance management (dis)incentives to force people to work from the corporate office more often.
Unfortunately, it seems evolution of corporate cultures based on mutual respect, trust and responsible autonomy appears to be slow to take hold in many large organisations, despite many paying lip-service to these values and taking advantage of the lower cost and outsourced risk of a more casualised labour force. This further encourages employees to take control of their career by becoming entrepreneurs and freelancers.
Advocates not Advertising Grow Brands
In 2016 I wrote: The coworking movement has tapped into the power of social networks as a way to build their brand more successfully than many organisations, recognising the importance of delivering a memorable experience to members in order to create advocates, retain and attract talent.
In 2024 this is an even more important driver of business competitiveness: The power of social networks continues to build and in fact they are the dominant platform for global online work communities to share experiences, frustrations and expectations. While social networks and memes wield soft influence rather than the direct bargaining power of unions, employers ignore trending grievances on Glassdoor or TikTok at their peril.
Research shows that a good experience of work usually leads to higher engagement which usually leads to improved retention (other things being equal), but what makes this experience desirable is shifting, as I anticipated in 2016.
WeWork brought us beer on tap in the office, and Google have been idolised for decades for their extravagant office perks. More recently companies briefly flirted with events, free food, yoga classes and other “cool stuff” to entice employees back to the office after the pandemic. Didn’t work.
According to Mark Dixon, founder and CEO of IWG, a growing segment of members now treat access to coworking and serviced office spaces like a gym membership: they want a range of office facilities, social programs and amenities.
“Coworking spaces offer a great opportunity for social interaction and community, which…offset some of the elements of remote work that people are increasingly aware of, like feeling lonely or craving social interaction.”Sara Sutton, CEO and founder of FlexJobs.
No surprises there because the days of gimmicky experiences seem to be (mostly) on the way out in favour of more meaningful work experiences such as feeling a sense of belonging, of having work buddies and access to counselling or personal development programs. While some industries are shedding staff, leaders are still highly focused on ensuring they have the right skills to create value in an increasingly digitised economy.
Employee Agency is Shifting the Balance of Power
In 2016 I wrote: Coworking businesses have evolved rapidly from providers of shared real estate to orchestrators of business enablement. The way we experience work is personal, messy, and complicated. Management of employee access to the physical and digital resources they need to perform will need to be integrated, dynamic, and coordinated between real estate, technology and human resources.
In 2024 this is still an important force for change: Worker agency is on the rise, more and more people have more choice and influence over the work they do—and over the organisations for which they work. It’s hardly surprising then that self-determination, including meaningful choice and influence over the work they do (and how, when, and where they work) is on the agenda.
Unfortunately, far too many organisations have been slow to see the value in taking an integrated approach to the blurring of physical and digital work spheres and trusting employees to know how they work best – so they got caught out when the pandemic hit. Many companies misinterpret calls for more agency to be solely about workplace preferences and in response exercise their power by dictating what “flexibility” should mean.
In the Deloitte 2023 Global Human Capital Trends survey, 84% of business leaders surveyed said worker agency is important or very important to their organisations’ success – but tellingly only 17% feel they are very ready to address the issue.
The current disconnect between the technical ability to work from anywhere and the reigning back of work flexibility and choice is symptomatic of the lagging nature of real workstyle and cultural change from emphasis on compensation, location, and working hours, to purpose, voice, trust and workstyle empowerment.
However, the shift to a more dynamic occupancy model is starting to drive real estate, human resources and tech teams to harvest and share existing and new data on workplace use patterns and feedback so they can be better at optimising office resources and enhancing the in-office employee experience.
By digging into qualitative and quantitative data to better understand why people come to the office, People and Facilities leaders have the ability to remove or reduce obstacles to coming in, encouraging more frequent employee decisions to come into the office.
Accessibility and Agility is More Important Than Control
In 2016 I wrote: The difficulty in predicting user requirements and occupancy demand over time will get harder, not easier. If the rapid growth in the ‘new’ economy tells us anything it’s that control of all the assets and resources of a business is no longer a requirement for success. Organisations should regard this as an opportunity to build flexibility into their real estate portfolios by more strategically leveraging a wide range of ‘third places’ (such as coworking hubs, hotels, airports, cafes) with supporting technologies and flexible work policies to un-tether the production of organisational value from physical office occupancy.
In 2024 this is still an important force for change: Company expectations of a remote or hybrid future led them to reduce – in some cases dramatically – and move offices over the past few years. High office vacancy and ‘grey space’ rates in major cities together with rising demand for coworking and serviced office space supports this trend. However, pandemic-era predictions of substantial decentralisation to coworking satellites, third places and more flexible lease terms have not so far materialised, and in fact many companies such as Cisco, GSK and Microsoft are leaving or downsizing their suburban campuses in favour of thriving, well-serviced inner-city locations.
Face to Face Matters More Than Ever
In 2016 I wrote: There is more to it however, than simply frequency of face-to-face communications; the quality of interpersonal interactions relies on a balance between the social and physical dimensions of proximity, privacy, and permissions. Effective environments (including coworking spaces) not only permit, but actively encourage, valuable interactions by bringing people together and removing barriers, while providing sufficient seclusion that people don’t fear being overheard, distracted or interrupted.
In 2024 this is still an important force for change: The more things change the more they stay the same! I could have written this paragraph in 2021, 2022 and 2023 and it would still be just as relevant and challenging for organisations to achieve. While the pandemic has thankfully debunked predictions like the ‘6-foot office’ or the office-as-social-destination, face-to-face collaboration remains the top driver for in-office time. However, hybrid meetings have severely limited facetime for many employees, making a day spent in the office feel no different than working from home. The problem lies not in meetings themselves, but in the inefficiency and excess of meetings, which are the primary distractions and sources of stress that hinder productivity.
The technology infrastructure for better hybrid engagement and collaboration will continue to improve, but face-to-face interaction can only improve if leaders and managers shift their performance expectations away from busyness and presenteeism and allow employees the time and psychological permission to engage in structured and spontaneous interactions in the office.
What next?
Will coworking continue to have the potential to transform the way we work?
Looking back on these five drivers of coworking it’s clear that the pandemic merely accelerated underlying work trends, although the dominance of WFH rather than work from anywhere (including coworking) was a specific result of extended pandemic lockdowns. The socio-economic and technology drivers of seismic shifts in work began well before the pandemic and are ongoing, and as we saw in 2023 with the proliferation of accessible generative AI tools is speeding up rather than slowing down.
Coworking demand is driven by the needs of the workforce, not by real estate pricing or trends. As the workforce continues to become more flexible and distributed, commercial real estate leasing models and flexible space options continue to be shaped by the needs of modern companies and individual workers. 40% of the workforce currently works remotely in some capacity, and the coworking industry has not yet experienced the full impact of this shift to flexible work as many employers haven’t responded quickly enough to this demand
It’s clear coworking is thriving in thousands of communities around the world; as WeWork navigates their bankruptcy filing, IWG is reporting record revenues. The coworking industry is resilient and diversified with approximately 35-45% of spaces operating independently. Many independent spaces are growing profitably with a leaner approach to leasing, buildout, and operating costs compared with the cost-intensive growth model of WeWork. These independent spaces are frequently in mid-size cities, suburbs, or rural areas to satisfy demand for hyperlocal spaces that are walking or cycling distance, and focus on cultivating a community that provides business connections and social support. There are flow on benefits too – these coworking spaces are also catalysts for broader change in their communities, including economic diversification, generation of more entrepreneurial activity and more energised retail centres with a more diverse mid-week customer base.
Workers are also finding coworking spaces increasingly fitting into their new remote-work lives. Mark Dixon, founder and CEO of IWG, the parent company of global coworking-space network Regus, says a growing segment of customers now treat access to such spaces like a gym membership: they’re looking for perks, facilities, social programmes and amenities, though only a small fraction of members utilise the space at a time.
Back in 2021, experts told us that an office-centric world of work was gone forever due to the shift to remote working during the pandemic. The pandemic has indeed fundamentally altered the landscape of workplaces. Presently, over half of office-based employees work remotely, either partially or fully.
However, the question remains: are they achieving optimal productivity?
In my view, the challenge lies in the fact that while most employers have embraced a shift in work location, many have yet to implement new strategies and systems to facilitate material change in how work can be done more effectively. This discrepancy is central to the myriad difficulties organisations and their employees face today.
Significant opportunities for enhancement exist, and coworking offers some insights into the potential to transform the way people work.
