Corporate Real Estate Managers Embrace Co-working
Thursday, November 2nd, 2017
Co-working, the style of work marked by open shared spaces among workers of different companies and popularized by "solopreneurs" and tech workers, is quickly being embraced by those who manage real estate needs for large corporations.
The trend is explored in a new whitepaper, The Evolution of Co-working and Impact on CRE, released by CoreNet Global, the association for corporate real estate professionals.
In a recent survey of corporate real estate executives, conducted by CoreNet Global and Cushman & Wakefield, a majority globally indicated that they would lease co-working space to manage their organizations' real estate footprint:
North America: 52 percent
Europe: 56 percent
Central and South America: 50 percent
Asia Pacific: 70 percent
According to the new whitepaper, large corporations including Microsoft, GE, Salesforce, HSBC and Nasdaq are examples of those utilizing co-working spaces.
Microsoft recently turned to WeWork, a provider of co-working space, for nearly 300 salespeople in New York City. Those salespeople were based outside of Microsoft's New York City's offices and traveling to meet with clients. Microsoft's arrangement allows them to use the facilities as needed.
"When we talk to our businesses, their crystal ball is reasonably clear for three months, it starts getting cloudy in six months, and it is harder to forecast what the business will look like in five to seven years," says Kevin Sauer, workplace strategy leader at GE. "So, from a traditional corporate real estate model, we're sandbagging the business by signing them up for a long-term lease in space that may or may not suit their business needs after move-in."
The whitepaper lists additional examples.
About 10% of Silicon Valley Bank's 2,500-person workforce of bankers and consultants use co-working space on either a part- or full-time basis. However, the bank has learned that there are some challenges to the new format.
"Eventually, you don't get the market presence that you really need to thrive in the banking industry," says Tom Suro, MCR.w, workplace creation program director, Global Real Estate & Workplace Services at Silicon Valley Bank. "There are some markets where if you are in a co-working facility it is actually difficult to gather clients, because you don't have a permanent office. You're seen as a 'here today gone tomorrow' kind of situation."
Still, co-working is driving change in the traditional commercial real estate market. Landlords are embracing some of the same co-working trends in terms of shared spaces and an active, social environment. Lobbies are being redesigned from places that people walk through to get to the elevator bank to a place where people can come and have a cup of coffee with their laptop or meet with colleagues. Landlords also are creating more shared conference rooms and training rooms that allow tenants to reserve those spaces rather than building them into their own footprints.
While the specific applications are still unknown, experts say there is strong growth trajectory for co-working space and it appears that co-working is a viable alternative for traditional real estate.
"We now have five generations in the workplace. One of the ways to address that is you have to provide variety and choice in the work settings," said GE's Sauer. Companies must think about the type of space they are providing, both within their own corporate footprint, as well as outside alternatives in order to attract fresh young talent, as well as retain existing talent, he adds.