WeWork was the focus of discussion during part of the investor panel at Happy Healthy Offices this week, just as new research showed Australia is a hot spot for this office format, known for its ability to practice and influence a greater sense of community and bent towards sustainability.
According to the Coworking Resources report the sector is still growing rapidly in 2019, despite a slowdown compared with last year and a slow down in the growth of established businesses in the sector.
However, there was an “unprecedented” number of space openings by newcomers, suggesting that the dominance of larger coworking operators such as WeWork may be slipping.
New coworking ventures – including firms, independent business owners and entrepreneurs – made up 65.3 per cent of new opens worldwide with chains and expansions making up the remaining 34.7 per cent.
Year-on-year growth may have declined slightly (from 15.2 per cent in 2018 to 9.5 per cent in 2019) but the upward trajectory is expected to continue, with the number of coworking spaces expected to balloon to more than 25,000 compared to the 18,287 open today worldwide.
There was also strong growth per capita in less populated countries despite the more conservative growth figures overall.
Australia near the top in co-working
Australia has emerged as the sixth fastest-growing market for coworking at 3.2 per cent growth per capita. Melbourne is the biggest hotspot for coworking growth in the country.
Luxembourg experienced the fastest growth in coworking, followed by Singapore and then Ireland. Australia’s neighbour across the ditch New Zealand and the UK rounded out the top five.
So what does this ongoing growth in coworking really mean?
Coworking has been heralded as an inherently sustainable model as it intensifies the use of existing building stock, not to mention the social sustainability benefits of forging a close-knit community of like-minded, creative workers.
- See our story Coworking is about real people not technology
Many of the big players in the movement have also tapped into the wants and needs of the fastest-growing demographic of workers – millennials – by fostering a sense of community in these sites and running strong sustainability agendas.
Market leaders such as WeWork, for instance, decided to go meat free partly at least because a plant based diet is considered to have a lower carbon footprint and be more sustainable.
- See out story Just how sustainable is WeWork, the company that wants to disrupt work real estate and more?
But many are watching with interest as to how this will play out.
And not least the traditional property market, especially when one of the biggest players in the sector, WeWork, continues to report losses alongside rampant growth.
This was explored by speakers at The Fifth Estate’s Happy Healthy Offices event on Wednesday this week.
For ISPT executive general manager, property operations and service strategy Marcus Hanlon, WeWork is “nailing the market”.
“The workforce is changing as the workforce is made up by more millennials than ever before.
“In 2024 they will become the major force in the workplace, and their view on life is very different to myself and others in the room, about how they work, where they work, who they work with.
“It’s less around loyalty to one company for their entire life. It’s about the gig economy, freelancing, coworking, working with other people on different projects constantly.”
This workforce dominated by millennials is less than one lease term away, he pointed out.
Hanlon says the CEO and cofounder of WeWork Adam Neuman is tapping into this market successfully, claiming that its evaluations and size is based more on “energy and spiritually” than it is revenue.
“They’ve nailed the market. They’ve got the market exactly right, the trends are right.
“But the jury is out from a financial perspective.”
Workplace experiences lead at Mirvac, Paul Edwards, who was also speaking at the event, said its agility is something to watch. “They are quick to change things around as a business and try new things”, such as dormitory housing (WeLive), early childhood education (WeGrow), fitness (WeRise), and social gatherings (MeetUp).