Are Co-Working Spaces In Danger Of Losing Their Cachet?

 

Corporate campuses are stepping up their game as are landlords and real estate services firms. Anyone else noticing this shift? Co-working companies need to watch their backs.

 

I just heard that Microsoft will soon be my neighbor in Soho at a brand new, really spectacular building at 300 Lafayette Street (pic above). They’re leasing almost the entire space at 70,000 sq. ft. The building is gorgeous with floor-to-ceiling windows, terraces and lots of green space.

Per Microsoft: “This is part of our ongoing effort to provide modern, team-based workplaces for employees, to foster the type of creativity and collaboration that will lead to ongoing innovation that will benefit our customers.”

That’s virtually word-for-word how co-working spaces like WeWork describe themselves.

At the other end of the spectrum, Walmart is also building a fabulous new campus – in large part to attract talent to Bentonville, Arkansas. It’s long overdue!

The new campus was a major topic of conversation among locals during my recent trip to Bentonville. My driver even pointed out the 300-acre location. Based on my one and only sales call to Walmart’s HQ years ago, I understand why they feel the need to step it up (easily the saddest, most depressing workplace I’ve ever visited).

So kudos to Doug McMillon and his team. It sounds like it will be state of the art digitally. The building will also offer plenty of natural light (a top request of the staff). Plus, they’re providing on-site childcare and building a massive park with bike trails that will be available to the local community as well.

Facebook is also developing a new campus for their Oculus division. Known as Burlingame Point, this 803,000-sq. ft campus is the largest lease ever signed in San Francisco.

 

Read on below for co-working updates (e.g. did you know there is now a company that only builds co-working spaces in NFL cities?). And, my firsthand experiences at two local hotels that have been highly touted for co-working.

 

CO-WORKING UPDATES

Background on the co-working category for the uninitiated:

The workplace environment has changed dramatically over the last decade (which coincides with the 2010 launch of WeWork).

  • Some of you may also have been around NYC when Neuehouse launched with much fanfare in 2011. They took co-working to another level of excellence with a strong hospitality offering and a highly curated membership drawing mainly from the creative and tech fields.
  • And of course, the granddaddy of all of this co-working amazingness is Soho House, founded by Nick Jones in 1995 in London. Unfortunately, he only retains a minor interest in the company now and as a member I must say their “growth at all costs” strategy has taken its toll. Still great to be a member, but definitely not as magical.

 

Where is coworking most popular?  (Source: CBRE)

  • A quarter of all coworking space in the country is in Manhattan.
  • Not surprising, since Manhattan has the country’s largest overall office market with 13.5 million sq. ft. of office space (triple that of Los Angeles, the next largest market).
  • However, what did surprise me is seeing how much of coworking’s growth is restricted to a handful of major U.S. cities.
  • The top 10 markets for coworking represent 70% of the country’s total inventory.
  • Only 15 markets in the country have coworking markets larger than 1 million square feet.
  • And major office markets like Austin, Charlotte and Nashville are not even in the top 10.

 

Hana, the new coworking brand from CBRE is targeting NFL cities:

 

Co-working in hotel lobbies.

Last week, I checked out the situation at two local hotels that have gotten a lot of buzz about how fabulous their lobbies are for co-working, taking meetings etc.

 

The Public (215 Chrystie Street)

Downstairs lobby space looking into the restaurant and back garden

 

The Public has both a first-floor space (pics above) with tables set up with lots of chargers – I can’t begin to tell you what a huge plus that is!

They’ve also set aside the entire 2nd floor for coworking (pics below). It’s a gorgeous space overlooking the gardens and offers both couches and communal tables.

What I loved about The Public for working:

  • Great vibe, very friendly staff.
  • Free wifi.
  • My fellow co-workers were totally cool. Based on what I overheard, quite a few foreign travelers plus groups working on techie/social media projects.
  • The first-floor is great because you can order lunch from Public Kitchen (the Jean-Georges Vongerichten restaurant). And he even showed up in the afternoon. People were ordering pizzas and bowls.
  • Upstairs, there is no food service per se but you can buy food at the downstairs deli counter. The bar, however, is open all day on the 2nd  floor but doesn’t open until 5:30 downstairs. Odd.

2nd Floor space at The Public:

Escalator heading up to 2nd floor

Overlooking the garden

 

Misses at The Public:

  • I sorely missed the personal service and staff attentiveness of Ludlow House.
  • I also missed food served on plates with silverware versus the Styrofoam take-out containers from the deli counter.
  • And most of all I missed seeing the familiar faces of my Ludlow House fellow members.
  • However, I’m sure that might change if I made this my regular spot and started running into the same people and staff day after day.

 

CitizenM Bowery (189 Bowery)

I like this hotel quite a lot but it’s not as chic as The Public, nor as busy. However, it was pleasant working downstairs in their huge, airy, light-filled gallery space.

  • The staff is friendly and attentive.
  • The big miss for me is that they con you into paying $15 for wifi but you soon realize the wifi is available to all and only people who are easily guilted into paying, do so. ME!
  • Also, their food is not good. I had the salmon with grains and it was clearly something they heated up in the microwave in back. The breakfast buffet, on the other hand, which is served until 11 am, looked good.

 

 

 

 

WORKPLACE PERKS: WHAT’S IN/OUT  (Source: Atlanta Magazine)

Out: Nap pods
In: Restoration rooms (or prayer rooms)

Out: Company pub crawl
In: Wine-tasting, plus TED Talks

Out: PTO
In: Paid “self-care” time (take a yoga class!)

Out: Bean bag chairs
In: Soundproof phone booths

Out: Parking permits
In: Borrow-a-bike room

Out: Long commutes
In: Corporate allowance, for your home office furniture

Out: Leadership training
In: Best-selling author talks

Out: Khakis
In: Jeans

Out: Expense accounts for travelers
In: Milk Stork for traveling new mothers (a prepaid, express-shipping service for breast milk)

Out: Foosball
In: Saging (keep energy flowing with the aroma of fresh sage)

 

Bottom Line.

A major shift in how workplaces are leased is on the horizon. Landlords and real estate firms are starting to reclaim the business they’d previously handed off to coworking companies.

It’s also more about “flexible office space” versus “co-working.” In other words, the focus has shifted back to companies and away from small startups and freelancers.

This is shaping up to be a challenging time for WeWork – especially as they prepare for their IPO. Way more competition in the sector and a reality check about losing VC money.

What is not going to change is the need for short-term leases, flexibility and turnkey operations.

I also anticipate we’ll see cutbacks in the levels of hospitality. My fellow co-workers and I have been spoiled and I fear we will not take kindly to having the niceties cut as impending IPOs put a spotlight on profitability.

Looks like we may all soon end up working in one of those cool hotel lobbies.

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