“A group of co-workers is coworking from a coworking space” so what is coworking?

Despite being a mouthful, this sentence is grammatically correct. Three different definitions “coworking” are used and each has a different meaning.

This is why “coworking” is different things to different people.

“Co-Working” simply means the act of working together, usually with others employed by the same company.

“Coworking” also describes a specific product type within a flexible working environment. Specifically, the allocation of open-plan shared desks for communal use by individuals that are not part of the same company.

Customers typically get a “coworking pass” to access either a specific area within a designated building, or any number of properties offering coworking desks within an operating company’s portfolio.

Apart from a “virtual office”, which is just an address service, coworking is the most cost-effective way to use flexible office space since you do not commit to renting a designated piece of private space with a lockable door and you have the freedom to use multiple locations if enough buildings are available.

Usually, coworking desks are either part of an open-plan lounge or segregated from the rest of the building in a large open area / room.

However, “coworking” has also become the word used to describe the entire industry of flexible office space. Historically, the term was “serviced offices” – but these days it can also be called “flex space”, “space-as-a-service” or any number of variants.

It’s important to remember that the flexible office sector is specifically in the business of renting out full-time private office space, not shared desks. 90%+ of space sold within the industry is private and long term, sold on the basis of license agreements to occupy.

What is coworking?

“Coworking” as a shared desk arrangement within a building, represents a very small fraction of the industry as a whole.

The reason for this is straightforward – it is not a major source of committed revenue. A single individual might pay £2,000 to £2,500 per year to rent a shared desk portfolio access pass. Compare this with a dedicated 20-person office on a 2-year term bringing in £240,000 in license fees over the course of their contract. A flex operator would need to churn an awful lot of coworking to make the same amount of money.

The adoption of “coworking” as a term to describe flexible office space in general is therefore a bit of a misnomer.

Many laymen still misinterpret the industry by assuming the whole niche is about shared desks and armies of hipsters with sticker-covered laptops etc. in sprawling lounges.

Not just shared space

The exact opposite is the case – the sector is a full-time professional private office supplier which also happens to provide a range of additional products and services to make a customer’s ability to consume the product much more flexible.

With the advent of hybrid working, the most common use case for coworking is as a way of providing overflow workspaces for staff that do not come into the main office full time.

A 20-person company may take a 2-year contract on a 10-desk office space but then take out 10 coworking passes for their hybrid employes. They will also make use of break-out lounges, telephone booths, quiet rooms and a whole host of other ways to use space which are very common in modern flex space properties.

As a result, that company can cut their potential overall spend by close to 40% to 50% in real terms – this is why flexible offices are such a popular go-to solutions for post-Covid firms uncertain about their future headcount. It also makes the utilisation of space much more efficient – no-one likes paying for space which is not being used.

Why commit to a 5-year lease for a notional number of people that might come in or an estimated number of desks you will grow to over time. The risk profile of this type of commitment is unappealing for many. Coworking (within coworking) offers a very flexible alternative.

So “coworking” as an industry actually has very little to do with “coworking” as a product type within that industry.

Next time someone mentions this, ask them exactly what they mean.

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