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Coworking Operators Leaning More On Daily Users To Boost Occupancy



Coworking operators have seen massive drops in business, as the coronavirus has prevented many from stepping foot into an office in months.


That has some operators shifting focus to more short-term users, including those who rent by the day, as a way to drive business during the pandemic. The shift may become a long-term fixture in the industry, experts say.


"My strongly held belief is that the demand for on-demand daily rates is being driven by true market appetite. They had it before, [but] the market wants it more now,” LiquidSpace CEO Mark Gilbreath said. "What's different is the center of gravity is shifting even more toward that."


From the major coworking players like WeWork and Industrious to smaller regional shared workspace providers, the industry is relying more and more on flexibility to attract the army of workers prevented from returning to the corporate office while the pandemic runs rampant.



“We're seeing the parents who have kids at home, the people who need a place to get out, but you can't get out of the house or do not want to get out of the house every day,” Global Workspace Association Executive Director Jamie Russo said. “The I-do-not-want-a-30-day-commitment customer. 'I only want to pay for what I use.'”


The coworking industry was facing some troubles even before the coronavirus pandemic. Global desk prices retreated from $206 to $187 per month between 2018 and 2019, driven mainly by an influx of new supply in major cities and new markets, according to a report by Coworking Insights.


The pandemic didn't help things. In a survey of more than 600 coworking operators and users worldwide, Coworking Insights found that 71% experienced a “significant drop” in the number of customers using spaces. That also led to a 40% drop in membership and contract renewals as well as a 67% fall in inquiries about coworking space.


More than 100 American subsidiaries of the largest coworking provider in the world, IWG's Regus, have declared bankruptcy, and IWG reported a $300M loss in the first half of 2020. WeWork, whose troubles began well before the pandemic, has closed locations around the world, including three in Washington, D.C., this month.

Gilbreath, who also is the president of GWA, said COVID-19 has had an “egregious” impact on the coworking industry. And it remains unclear when things will improve.



“The challenge is; There remains uncertainty around the current health constraints throttling the economy,” he said.


But coworking and flex office operators insist brighter days are ahead. Over 71% of remote workers surveyed by Coworking Insights plan to return to coworking facilities, and nearly 55% plan to consider joining coworking facilities to augment remote working and work-from-home plans.

That is prompting some coworking providers to offer more flexible options for what some see as a coming surge in demand. WeWork has begun to offer on-demand rentals from nonmembers at some locations. Industrious rolled out a program called Oasis this past summer, which allows customers to show up two or three days a week for a reduced monthly membership fee, CEO Jamie Hodari said.


Plans for the program had been brewing for a couple of years, but the pandemic presented the opportunity to finally unveil it. Since June, Oasis has grown 20% every month, Hodari said.

“COVID kind of accelerated the underlying demand factors in the first place. If there's ever a time to experiment with this, now is the time,” he said. “Most offices were utilized 60% of the time. I think that's going to move to more like 30% to 40%. Everything that's happening in terms of empowering employees where to go in and when is already where the trends were headed.”



Russo said coworking operators also are seeing more demand in suburbia, especially with workers needing to get out of the house and away from distractions, if only for a day or so.

“We're starting to see recovery, particularly in more suburban markets,” Russo said.

Firmspace, which just expanded to Atlanta last month, has been offering daily rates since its founding in Austin, Texas, in 2017. But the company is seeing more demand for it in a post-COVID world, CEO Anish Michael said, especially from customers seeking more privacy than they can find elsewhere.


“Some of our people wanted flexibility, and the only way they could get flexibility was to go down to the Starbucks and open their laptop,” Michael said. “That's really what this day-use concept is all about. It's about giving those additional professionals coming in [to] be in a place for a day without the commitment.”


via: Bisnow

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