Where the coworking market is expanding, and why
by Peter Johnson
According to recent research, the coworking market is expanding in cities with population booms. That may seem obvious: population boom, hence coworking boom. But it can also be counterintuitive. For example, this also means the higher the rent is, the more coworking spaces there are. Who wants to pay high rent and pay for coworking space? But people are – in droves. I have three theories as to why.
Coworking helps transplants put down roots
Imagine you’ve just moved to a new city. Perhaps it was time for a change. Or maybe you’ve followed your spouse or partner across state lines because they just got an exciting new job and they had to start ASAP.
So now you’re in a new place, you’re settled, and you’re at a loss: What now? You need to find a job, but sitting at home is distracting and sometimes depressing. Besides, most people get jobs through someone they know.
This exact scenario has led many American professionals to join coworking spaces, according to industry experts.
“If your partner gets a job in a new city, and you both decide to move, you need to go somewhere to form relationships that will help you get a job,” says Sarah Studer, the business manager of Impact Hub Seattle. “Coworking spaces are where you can start relationships that are authentic and meaningful.”
Studer’s experience — and some solid research — show that coworking builds community. That social benefit is one reason why cities that attract transplants can expect to see coworking growth.
Startups flourish in coworking spaces
Many entrepreneurs start their businesses in their garage or spare bedroom — that’s what the founders of Hewlett-Packard and Amazon did. But in today’s expensive housing markets, even an apartment can be too expensive for entrepreneurs, let alone a full house with a garage.
In the San Francisco Bay Area, for example, the median rent for a two-bedroom apartment is $3,377. That’s just too expensive to justify setting up a home office when you’re scrimping to keep your business afloat.
But you also might struggle to find affordable office space anywhere in a growing city, let alone the commercial core. Many coworking spaces are in their city’s central business district and are much less risky than commercial leases.
“As you’re getting off the ground, you can’t afford to jump into a five-year commercial lease,” says Studer. “It’s a lot smarter to start small and keep overhead down.”
Coworking spaces are perfect for freelancers and remote workers
Even though freelancers don’t need as much space as a new company, they still stand to gain from coworking memberships.
Coworking spaces provide some of the services that a coffee shop or public library can’t provide, nor can a home office. Most coworking spaces offer fast internet, meeting rooms, printing facilities, event spaces, package pickup, mailboxes, and other amenities that most commercial tenants enjoy.
A freelancer couldn’t pay for all those services on their own, but coworking spaces spread the cost for valuable business services across a network a freelancer wouldn’t be able to assemble themselves.
Freelancers and other remote workers take advantage of all the same services at coworking spaces, at low cost to their employer. Coworking spaces can also provide a social outlet that remote workers and freelancers won’t be able to find in a home office — and the same networking opportunities that transplants and entrepreneurs look for at a coworking space.
The West Coast cities, like San Francisco and Seattle, that created the 21st-century’s most innovative businesses are also the most successful and fastest growing coworking markets for at least these three reasons.
But the coworking boom really just comes down to this: Urban professionals’ work habits — and entrepreneurs’ office needs — are changing. Coworking spaces meet those new needs, especially the need for community and professional networking. For all these reasons, I’d wager that the next great company will start in a coworking space – probably in a city undergoing a population boom.
