Over the past few years, coworking spaces have been a trend worldwide, “the new kid on the block” and have certainly attracted a lot of media attention.
The rise of flexible working and the global financial crisis have been major factors in pushing the movement forward.
In London, for example, it is believed that the number of coworking venues has gone beyond a thousand, catering for all sorts of professional backgrounds and budgets.
Also, the serviced office segment has gone up by 67% in the UK and serviced offices themselves now cover almost 500,000(m2) of Central London.
The trend seems to have transcended geographic barriers. Move over quirky office spaces in East London/Brooklyn… hello there coworking venues in South America, Saudi Arabia, India…
Whether the traditional office space concept is dying remains a topic for discussion, one thing is for sure: when a (fairly) new industry starts to boom, investors keep their eyes and ears wide open.
As the trend is now spreading from tech startups to more established industries and it is likely to keep growing, we caught up with John Spindler from Capital Enterprise (a non-for-profit organisation with the mission of providing support for entrepreneurs) to find out a bit more about the future of this industry and whether investing on it is indeed a worthwhile venture.
Cowork Hub: John, coworking and serviced/flexible office are definitely on the rise. However, recent growth in the sector has come against a backdrop of economic weakness. Would the sector still keep growing strong in the case of an economic slowdown?
John Spindler: The obvious answer is: it depends. The churn in tenants makes them more vulnerable to economic downturns than other models, but, the flexibility will also make them more attractive to start-ups/SMEs that are more cost and risk conscious due to the downturn.
I worry more for serviced offices than coworking spaces for their upfront capital costs of conversion are much higher. I suspect some serviced office providers will struggle but I think coworking is a more adaptive and flexible model that might prosper in a downturn.
Cowork Hub: It’s certainly refreshing to hear that John. But, with so much competition from heavy-height (and heavily backed) coworking venues in town, how can smaller coworking venues (such as ourselves) stay in the game?
John Spindler: Well, there are definitely a lot of competition around and with the likes of British Land, for example, opening their own chain, it makes it even more challenging. So, I would say: focus on a niche, deliver a great differentiated service, make money and then see if that niche is sufficiently large to build an international repeatable and scalable business model.
Cowork Hub: It seems that we are on the right path here then, as here at Cowork Hub we offer more than just desk space and facilities for business owners: we enable valuable connections as well as enduring and mutually beneficial relationships between our members. Community is definitely at the ethos of our mission here. So, it looks like that there is definitely money to be made then. From investors perspectives, what is it that draws their attention towards investing?
John Spindler: Investors in general look for profitable market opportunities. Two things are a must in order to catch their eyes: profitable returns and a clear pathway to an exit. When might an exit occur? Who might be willing to purchase the company or some of the shares? What is the likelihood of an IPO (initial public offering)? Entrepreneurs looking for investments will have to address those issues before going on about looking for potential investors.
Cowork Hub is expanding its wings
Following our sustainable growth strategy laid out earlier this year, we are currently taking part in several investment pitches and hope to strike a deal very soon.
This way, we can enhance our already awesome office space in West London, invest in our team, offer a Central London location for our members as well as putting together even more community-led initiatives so that our members can benefit from it and collaborate with each other.
“Cowork Hub is already very proud to gather over 60 industries, businesses and professional backgrounds in one place. But, we have bigger dreams. Having been in business for less than 2 years, we have already achieved an occupancy rate of 94%. We can do more. We can grow bigger (and better) with the right support and the ideal investors on board” – Alex Molokwu – Founder and Director.
Independent professionals are driving the employment revolution
According to The Association of Independent Professionals and the Self-Employed (IPSE), the rise of independent professionals has been a major driver in the British economy.
Their report ‘Exploring the UK Freelance Workforce in 2015’, highlighted statistics that showed UK freelancers contributed £109bn to the UK economy last year. This is certainly great news for coworking operators.
“Coworking space users look for flexibility and value-for-money and that’s exactly what we stand for. With 24/7 access, no minimum contract and dedicated desk membership for less than £ 300/monthly, Start-ups and small businesses are able to grow, downsize or relocate quicker with us. Forget leases, hidden fees, deposits and cancellation fees. Our mission is to make entrepreneurs’ life easier so that they can focus on what really matters: their businesses” – Alex Molokwu – Cowork Hub’s Founder and Director.
The report also notes that freelancers now make up 6% of the country’s workforce, with 1.91m freelancers working in the UK by the end of 2015 – a 36% increase since 2008.
This demand is good news for prospective investors looking at smaller outfits. If you are looking for a profitable enterprise to get involved with, our doors are very much open. Contact firstname.lastname@example.org and find out how this partnership can be a really fruitful one.
By Val de Oliveira