Over the last few weeks, I’ve been asked by a number of industry observers about the possible outcomes for the coworking sector of WeWork’s IPO being either a tremendous success or failure.
I usually shy away from commenting publicly about any single coworking brand, as our job at included.co is to enrich the value of memberships at as many entrepreneurial communities as possible. However, as I’m connected to 60+ local coworking sectors including the extremely competitive New York and London markets, I get asked questions like this a lot.
Whilst there have been many articles that look deeply into the The We Company IPO and S-1 filings, this will not be one of those, instead I’ll explore why I believe the sector as a whole will continue to grow regardless of any specific IPO, chain, brand or person.
Reason 1: The 97%
I think it’s worth highlighting that according to Deskmag there are expected to be 22,400 coworking spaces worldwide by 31 Dec 2019. That would make WeWork’s total number of spaces by Q2 2019 around 2.35% of the whole market, regardless of their impressive growth.
A huge number of the 97% are independently owned/run communities who have brought a tonne of alternative, affordable and supportive coworking products to markets to urban, rural and remote locations worldwide. These spaces have also been built up with nearly-zero budgets, and many have survived through the tightest of financial constraints, their resilience should not be ignored.
It’s worth noting here that many coworking operators are coming together into coworking alliances for better representation, collaboration and promotion around regions (eg in Europe, London, Germany, Switzerland, Atlanta, Kansas City, North Texas to name a few), female-empowerment (eg Women Who Cowork) and buying-power eg (included.co). These alliances will support the industry’s resilience too.
Reason 2: Parallel investments in other operators are up
Just like investment in Uber led to (or de-risked) investment in Lyft and other ride-hailing services, investments in other operators like Knotel, Huckletree, Industrious, Serendipity Labs and many many others have gone up over the same period.
This has put more funds into training staff, developing processes, further diversifying the coworking products available and marketing the concept of flexible tenancies and community-orientated workspaces.
Reason 3: Adjacent investments into proptech is up too
We’re seeing rapid investment (and M&A activity) into the proptech sector that serves what would traditionally be referred to as the commercial real-estate (CRE) sector. Both, the increased investments into the sector and the continued growth of the sector, have increased the appetite of investors for the software that differentiates or improves any provided workspace products.
As included.co is working on integrations to power the perks and benefits in many of the best proptech solutions, I’m going to skip linking to examples of this, but I’d be happy to share them privately via email if you’d like.
Summary: 21,872 other spaces, and investments across the board
And so to summarise, whilst there could be hype or a shy away from the sector due to the IPO results, I truly believe that the sector will continue to see steady growth due to the 1000s of resilient independents, the vast investment into other operators and the vast improvements in how tech is rapidly improving how we find, use, and experience workspaces.
Whilst I’ve tried to keep this post short and punchy, you can always contact me to see if we can arrange discussions of topics like this in more detail on your stage, with your organization or at your coworking breakfasts.