COVID-19 has dramatically changed how we think about workspace.
Previously the setting where many of us spent most of our waking hours, office spaces now sit empty as companies have transitioned to virtual, work-from-home setups.
Leaders are trying to navigate this challenging period one day at a time. But as we prepare for the future and the easing of restrictions, we must think about how and where we are going to work.
Financing an office during and after COVID-19
The commercial real estate industry will suffer in the coming months and perhaps years. However, one positive trend is appearing from the pandemic’s fray. Or more accurately, it is accelerating a trend reported for years now: companies are ditching longer-term traditional office leases for more flexible, more convenient coworking spaces. Australia, further along in reopening their economy, is experiencing a surge in shared office spaces. The North American Commercial Real Estate Development Association (NAIOP), a leading industry organization, is expecting the same pattern to emerge in the United States. According to a senior consultant at NAIOP, this pandemic is the “economic downturn to test the coworking business model” that the real estate industry has been waiting for.
What a test it has been. The economic fallout that followed this public health crisis has been devastating. 40.8 million people lost their jobs within ten weeks starting in March in the US. That a major pandemic resulted in layoffs is no surprise; companies, when faced with significant declines in revenue, need to cut costs. The question is, which costs?
This brings us back to workspace. Companies facing hard decisions often lay off personnel because they cannot break leases to save on their other significant fixed cost: office space. Traditional office leases typically bind companies for three or more years with parsed legal jargon that makes them inflexible to tenants. Brightline Strategies, a real estate research firm, found that more than half of commercial tenants are struggling to pay rent and that 45% would like to reduce their square footage as soon as possible.
But where pain points exist, innovation follows, and the innovative reaction to inflexible leases and suboptimal office spaces is coworking.
The coworking model
Coworking spaces, synonymous with shared workspaces, often include a variety of offerings:
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Library-style, hot-desk coworking where members share space and claim desks on a daily, first-come, first-serve basis
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Dedicated desks and multi-person tables in communal spaces
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Private offices
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Suites or entire floors for large teams, serviced by the larger coworking provider
These spaces are managed by the provider, allowing users of the space to come into work to do just that—work. Shared workspaces typically offer membership on much shorter terms than traditional leases. At CIC, for example, we offer any of the above workspaces on 30-day agreements. This flexibility is key to navigating a business successfully through fundings, through downturn, through once in a century pandemics.
Another upside of coworking spaces is outsourcing office management, often a costly aspect of traditional leases. Coworking alleviates this unneeded burden, from overseeing HVAC issues to basic tech support and stocked kitchens. Two prevailing models are the a la carte model, where clients in coworking spaces pay by their usage of, say, conference rooms or printers. The other model is all-inclusive, where monthly fees account for unmetered usage, seen with providers like CIC.
Amenities are in the same vein. Many wealthier corporations are enticing talent with ping pong tables, lectures, in-house massage therapists, happy hours, and more. Coworking centers provide these amenities in their buildings and communities, allowing all companies in the space to compete in recruiting talent without hurting their wallets.
How startups use coworking for flexibility
To understand why coworking will flourish during and after the COVID-19 pandemic, imagine being the CEO of a five-person company looking for office space in January 2020 with a round of funding approaching in February. You don’t know this at the time, but that funding round will go much better than expected, and you will be able to hire five more people than originally anticipated. You don’t know this either, but shortly after you hire more employees, a global pandemic halves revenue and pushes your entire team virtual.
On a traditional, five-year lease in this scenario, the first thing you’d do is hire an office manager to set up your private office space and keep it running smoothly. You’d also have to forecast the company’s growth when you first get space, as this projection would impact how much room you anticipate needing and your budget. In this situation, you would likely pay for extra space before new hires fill it or have to be prepared to get a second lease.
Once the pandemic hits, though, your landlord, an ultra-wealthy national real estate conglomerate, does not budge on the lease and expects payments on time. Hands tied, you start by laying off your office manager, a cruel irony since you still pay for the office space.
At a coworking space, you forgo the office manager. If the company is housed at one of the more flexible providers, scaling up from a five-person to ten-person office after the funding is only a matter of one week’s notice. Then, when the pandemic hits, you weigh your human employees that have thus far emotionally invested in your company against the space you pay for on 30-day terms and won’t be using for likely the next 90 days. After briefly considering laying off the employee who always “replies all,” you instead notify your shared workspace provider of your departure, thankful you have the flexibility to do so.
Indeed, coworking spaces are great for startups, who run a higher risk of failure and are generally more volatile.
Corporate coworking on the rise
Shared workspace has also begun to attract clientele on the other end of the spectrum: corporations. Companies like Microsoft, Apple, and Amazon use coworking centers to base teams globally. Some providers are open to doing custom build-outs, especially for larger spaces that corporations tend to desire.
Beyond the flexibility and convenience, coworking centers can support corporations’ recruitment and business development teams quickly target strategic geographical areas. For example, Kendall Square in Cambridge, MA, is a bustling life sciences hub nestled between MIT and Harvard. CIC, our partner LabCentral, and other coworking centers in the area host many biotech and pharma companies looking to tap into the Kendall Square ecosystem.
Many corporations are eager to join coworking centers as a way to get facetime with disruptive startups and tap into local innovation networks. For companies looking to go even deeper with a corporate innovation strategy, CIC’s Captains of Innovation program works in a consulting capacity with corporates to build innovation pipelines and partnerships.
The new normal
Now that states are reopening economies, uncertainty lies ahead for offices. It is not just a question of when people return but if people return to their workspaces. Many white collar jobs have survived teleworking thus far, so what will get them back into the office?
The bottom line is workers are wondering how to stay healthy at work, and they won’t opt to go into the office unless they believe it is safe to do so. Workspace providers of all kinds are now tasked with establishing COVID-informed safety protocols in their physical environments such as accommodations for social distancing at work, cleaning regimens, and touchless work stations.
The good news is that for companies based at coworking centers, much of this safety planning and implementation is handled by their workspace providers. Rather than spending time and money reinventing their workspaces to be COVID-safe, companies utilizing shared workspaces can come back into the office and hit the ground running, knowing that their provider is managing these necessary precautions.
Of course, the safety protocols in place vary from provider to provider. Certain guidelines are imposed by city or state statutes (like wearing masks or maintaining social distance in the office), and these habits will become ingrained in office culture. Meanwhile, other measures will be taken on independently by coworking centers themselves.
A recent feature on Boston’s WBUR outlines new protocols in office buildings as the state of Massachusetts begins its reopening phases, highlighting several of CIC’s workspace innovations as examples of what the new normal looks like on the ground. These include (but are not limited to):
Minimizing common touch surfaces
Coworking spaces are reducing the amount of people coming into contact with the same surfaces. This can look like moving from shared to individual amenities like snacks, or private offices becoming fully private, with support staff and cleaning teams entering only upon request rather than for daily upkeep.
One innovative solution towards this end at CIC is providing all clients, staff, and building visitors with a no-contact device to open doors or push buttons.
The rubber tip is used to pressing elevator buttons or pushing doors open (if they don’t already have a foot pull installed). The cap contains a sponge that releases a small amount of sanitizer. CIC founder and CEO Tim Rowe explains that by using the rubber finger, visitors are “part of the cleaning regimen as a user.”
Utilizing COVID pool-testing and self-check practices
CIC plans to soon offer regular coronavirus testing to ensure safety and establish confidence in returning to the office. COVID test availability and access is quickly improving, to the point where CIC is confident it will be able to provide testing to client employees on a regular basis.
In the meantime, a self-check form is used for anyone planning to visit CIC prior to arriving. Visitors take their temperature and document in the form whether they have a fever, as well as report on the presence of various other symptoms. In addition to working to prevent exposure in the community, this tool nudges workers to stay aware of their health.
Reducing workspace density
By now we’re all familiar with the six feet of distance principle. As such, offices are lowering the capacities of shared spaces like hot-desk areas and conference rooms. At CIC locations, we’ve additionally reduced elevator capacity and created directional signage in hallways and stairwells to accommodate proper physical distancing.
Working together to move forward
On-site measures implemented by coworking centers will undoubtedly continue to be complemented by employers’ own measures to keep their staff as safe as possible. After all, workspace providers can’t minimize risk outside of offices, and for many, public transit commuting is more worrisome than spending time in the office. Employer policies may include going into the office in A/B team rotations (e.g. by day or by week) or only working from the office when it is necessary to collaborate.
Curbing the spread of infection is a top priority for people right now, and this influences the decisions of employers and office providers alike regarding the use of physical spaces. Indeed, the migration to virtual spaces in response to this pandemic has inspired ingenuity and revealed a wider breadth of possibilities for how we can communicate and congregate. Some adaptations made because of COVID-19 might stick around for the long haul: for instance, several large tech companies, like Facebook and Twitter, have announced they will allow employees to work from home indefinitely.
But just as the virus has catalyzed entire industries to reimagine how they work, it has also demonstrated the value of in-person connection and spatial mobility. Many people enjoy changes of scenery, seeing familiar faces at the coffee machine, and lunch rituals with colleagues.
There are also practical upsides to working in a physical office. To cite a few:
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That change of scenery many of us are craving? It’s actually shown to increase productivity and creative thinking. Many coworking centers provide greater variety of workspace options than traditional offices do with their emphasis on common areas that utilize different forms of seating, lighting, and creative design.
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According to a study reported in Harvard Business Review, face-to-face requests are 34 times more successful than those communicated by email.
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By now, many virtual workers have become familiar with so-called “Zoom fatigue.” This particular phenomenon of zapped energies as a result of the increase in video calls occurs because of the additional level of attention required to communicate online.
Rather than committing to all-in-person or all-virtual structures, the new work normal will undoubtedly incorporate the merits of both: using digital tools to expand operational capacities and engage a broader workforce, while leaning on physical spaces strategically.
Shared workspaces, by nature, are especially adept at providing the built-in community and social resources that many sorely miss while working from home. This factor should not be discounted. It may be the reason folks return to the office sooner than expected.
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