The Coworking Evolution In Times of Crises

The coworking’s “identity crisis”

Let me share some more thoughts about what I mean by the concept “identity crisis”. The coworking movement seems to be wandering between being all and only about the community on one hand, and on the other, going to the other end of the continuum, being the office rental industry that we remember from the past.

We are even able to see how spaces are trying to differentiate from one another based on whether a space is an “authentic” coworking space, the way we know it. Very often, I distinguish them in a simplistic way, as community-driven and real estate-driven spaces. They were founded for different reasons, they have different values and set themselves different goals.

For many who were fighting for establishing the coworking philosophy, there was a bitter sense of disappointment when the real estate-driven spaces started influencing and transforming the community-focused coworking movement into a services and facilities industry. As this process gained momentum, many of us felt like the magic was gone.

Gradually, we realized that in order to sustain our flexibility, freedom, outside-of-the-box attitude, we cannot ignore the profitability side of the business – short-term contracts, no cancellation policies, high turnover, and dynamic occupancy were measures taken by many to address this issue.

In that sense, I believe that there are many spaces out there that are successfully balancing between both – having a healthy community and being a successful business. However, I know from experience that this balancing act is not easy, either. When members start to perceive your space mainly as a service provider and not as an embodiment of a community, then the role confusion upsets the delicate equilibrium.

This inherent ongoing tendency of splitting the initial “unified coworking identity” into intangible community values and tangible economic results is what I call an identity crisis of the coworking movement. On the one hand, this process can be seen as a cause for this dynamic role confusion, but on the other, it is a chance for the movement to build and attain role integrity and cohesion.

Back in November 2019, however, none of us anticipated that the COVID-19 crisis is coming our way and that it will affect us on so many levels – physical health, mental health, sense of belonging, sense of community, local and global economy, employment and stability.

COVID effects on coworking evolution

We can now say that the coworking business is facing two huge crises – the external COVID-19 and the internal identity crises. And this enormous challenge seems to be here to stay. The COVID-19 crisis didn’t spare the complications and struggles neither for the community-driven nor for the real estate-driven coworking businesses.

On a profitability level, it raised numerous concerns linked to the business models (changes in the desks density, recalculation of the prices, repurposing open spaces). All coworking spaces faced a huge wave of cancellations – events, memberships, leases. This led to a drastic drop in recurring revenue. On top of that, new state regulations were addressed to all these spaces. And somehow naturally, one single question just hanged in the air – how would the future of coworking look like?

On a community level, the COVID-19 crisis challenged the overall sense of belonging. Everyone faced the difficulty to keep the community together, to build digital communities, and to shift all events entirely online. But let’s be honest – online interaction can only partially replace direct human contact. Many spaces were left to rely on the solidarity of their community, and space operators had to put extra efforts for the retention and attraction of members.

Taking all this into account, it is now crucial how the coworking movement and industry will face, go through, and withstand the COVID-19 crisis. We all know that the coworking concept, in its essence, has a long-term advantage which, however, has to go first through the short-term challenges of the present.

So let’s go back to the question…

How would the future of coworking look like?

On a profitability level – The digitalization has developed quickly – many bigger companies are now opening up to remote work. Those companies will also rethink their office expenses and will perhaps start looking into the home office and coworking options. Therefore, the coworking industry will possibly see inquiries coming from companies that were not their usual contingent. The spaces who manage to survive will see a rise in the rental demand eventually. But they will also have to be creative and come up with smart solutions to reshape their business models, which were previously mainly based on sqm/sqft or number of desks.

On a community level – This long social and physical isolation, stress and loneliness, has made the society thirsty for social interaction, connection, belonging, togetherness. And this is what the coworking concept offers – something intangible, that is beyond the physical space – the pinch of “magic”, called community. This will be the unique selling point, the added value that people will be craving for and will still be willing to pay for.

As a conclusion, I would say that presented with a global pandemic crisis, the coworking businesses have the advantage and potential to provide solutions to the unique social and economic challenges of these troubling times, and in the same time, resolve its internal role confusion and redefine the structure and balance of its core values. This process is an opportunity for a “new” coworking identity to emerge and to answer the previously raised question – how would the future of coworking look like.

To be continued…

This article was initially published as a blog post for the European Coworking Assembly. If you want to find out more on this topic, don’t miss to check the episode of the Coworking Values podcast, where we discussed the New Coworking Identity Amidst the COVID-19 Crisis.