The UK’s first Global Coworking Unconference Conference – or GCUC UK – was received with excitement this September as the most influential workspace market leaders from both sides of the pond took to the stage alongside GCUC Founder Liz Elam and GCUC UK producer Justin Harley. As this year’s official global sponsor and partner of GCUC global, essensys was there to report back on all the content.
State of the UK Coworking Market
Colliers International Mark Bott, Instant Offices James Rankin and Deskmag’s Carsten Foertsch presented the state of the UK market fresh into Day 1. Leaders in coworking data collection and CRE stats across the flexible workspace sector, these presents painted the following picture of the UK market. For one, multi-site operators make up less than 10% of the market, indicating strong potential for independent operators. Satellite towns in the UK have seen high growth rates of coworking throughout 2018.
Occupier demand for flex space in the UK has risen. The corporate sector accounts for 25-30% of demand, a strong indication of increased market maturity. Where coworking and flex-space leasing were intended to serve short-term business goals, longer average lease terms have increased over the past 18 months, according to Instant Offices, demonstrating that coworking has surpassed a trend and is now seen as a longer-term solution for businesses.
According to Colliers International’s Mark Bott, Central London saw an 130% uptake by operators. Meanwhile there’s been a decline of sub 5,000 square foot deals and thus an increased availability of sub 5,000 square foot spaces. We can conclude that coworking operators are consuming larger space to service the same occupiers who are no longer opting for traditional space of around 5,000 square feet.
Much like GCUC USA demonstrated this past spring, the future of the market will see nichification of coworking spaces, consolidation of providers, globalization, aggregated outsourced solutions, increased coworking competition from landlords developing their own concepts, and digital platforms that continue to enable the coworking environment.
Coworking Market Bubble: No Burst in Sight
The much-anticipated panel at this year’s GCUC UK featured British Land’s James Lowery, Area’s Kathryn O’Callaghan, and Savill’s Mat Oakley. While increased competition and market growth over the last few years pointed to saturation and speculation the bursting of the coworking bubble, this panel showed confidence in the sector. Variety in proposition and brand differentiation among the workspaces in today’s market demonstrate the bubble won’t be bursting any time soon.
Coworking was largely born from the opportunity to deliver a service rather than merely a real estate transaction as business centers did in the past. Considering the increasing occupier demand and gaps to fill in the market, coworking operators have of market share to seize. “Workspace-as-a-service is growing. It’s not just about a one-month lease, but a state of mind,” said Central Coworking’s CEO Grant Powel. Panelists discussed the multi-dimensionality of coworking and the extent to which price can pop the bubble. With brand integrity, differentiation, and service delivery, price comes off the table. Powel drove the point home, “people want service because of choice – people have choice now.”
The panelists touched on two key points. For one, establishing a proper coworking sector by way of solidarity, information sharing, and setting benchmarks that serve as the standard for measuring success and forecasting the future of the market. Lastly, to continue focusing on the customer and capturing as much data as possible. “We live in a data world now,” said Powel. “Any system that can provide a data-rich source” will assist in enriching the existing coworking environment and delivering propositions that serve the future of work.
Future of Work: Optimizing the Workspace
Workspace veteran Frank Cottle guided a panel with PropTech expert Antony Slumbers and Director of Seats2meet.com Roland Van Den Hoff. The impact of artificial intelligence, the latest advanced technology, will have longer-term effects on our environment and how our workspaces and buildings interact with occupiers; they will know who we are and what we want. Algorithms will assist in strengthening community and building an ecosystem in which occupiers can see where and when is the best physical space to meet people they share connections and interests with.
Roland of Seats2meet described coworking as an enabler to more things. From community and business opportunities, this ecosystem can be bolstered even more by technology, creating a marketplace and an avenue to monetize such activities. PropTech expert Antony Slumbers explained that the competitive advantage lies in the brand, which is the representation of your user experience. Operators “must understand the wants, needs, and desires of your customers and then optimize your space from there. Engage your customer from within your ecosystem.” For Slumbers, a ground-up platform across multiple centers can foster flexibility, protect in a downturn, and prevent commoditization within the market.
Coworking: It’s All About the Money
GCUC UK’s day 1 panel on money and funding proved a wealth of information to attendees. Chris Davies, director of London-based Coworking space Uncommon, Enrico Sanna, CEO of Fora, and Giles Fuchs, CEO of Office in Town, discussed their experience with funding the growth of their coworking brands. From management contracts and private money to chasing investors, the panelists demonstrated that there is no easy to come by money tree in the workspace sector. There are, however, some helpful guidelines and knowledge to be aware of.
For starters, a management contract is the cheapest and easiest way to fund your flexible workspace. While it doesn’t always give you the autonomy to do what you want with your space or buildings, the alternative to securing funding is no easy feat. According to Chris Davies, obtaining venture capital means getting used to hearing no from investors until you finally get a yes.
Putting effort into pursuing investors will lead to the freedom of owning your workspace concept and growing it in your vision, with the caveat that you should be completely aligned with your investors. In securing venture capital, smaller operators in the UK are more risk-averse compared to those in the US. It’s beneficial for smaller operators to identify investors that have previous experience investing in similar strategies or brands.
Giles Fuchs, with years of experience in the industry, explained that there are differences between operational cash and investment money. Running a workspace and scaling a workspace operation require different bundles of capital, and an operator must decide which bundle works best for them. Regarding asset valuation, because the approach to office consumption has and continues to change, the way a workspace is valued can vary; consider operational and property valuations, along with the variation based on whether the asset is owned or leased.
For Enrico Sanna of Fora, it’s all about scale. “With scale, you can invest in the things that matter. With scale you have the cash flow to invest in people, to train to the standards of your brand, to invest in technology, and to invest not just the building but everything.” He backed up Giles Fuchs’s point about selecting the bundle of money that works for you: “I don’t always want to use equity to do things. A sustainable business uses cash flow.” To that point, for Enrico Sanna, securing funding for your business requires consideration of scale: “It’s “linked to where you want to take the company, five, ten or fifteen years down the line.”
GCUC UK Day Two: Corporates, Marketing, Tech, and the Unconference
Corporates. One of the most prominent considerations in the workspace market today is the impact of corporate customers and whether they are an opportunity or a threat. We know from the growth of the coworking sector, that shared and flexible workspace is not a trend, but a mainstream, longer-term real estate solution for businesses of all sizes. According to Nick Livigne, “coworking is morphing over time,” from a need for community to a real estate strategy and now a third-party provider of service for employees.
“The experience that operators can provide is many times better than what corporate businesses can provide on their own. It’s culture in a box,” explained Livigne. The by-products of coworking – the community, innovation, and partnerships – happening behind workspace doors are offering even more opportunity to corporates to differentiate their businesses.
From the perspective of incorporating corporates into a coworking space, we can expect the demand to increase. As a best practice and to ensure an excellent experience and service, network security is a critical piece of your service offering. From VPN connections and phone systems to compliance requirements, a coworking operator must be able to respond to the demanding advanced IT needs of corporates and, at the least, offer a secure network connection.
Marketing. GCUC UK’s Mastermind session on marketing strategies stood out among the crowd. Across the panel, the importance of focusing on inbound marketing was unanimous. Inbound marketing is the craft of creating content that appeals to your target audience in such a way that it attracts them to you. In-bound marketing strategies enable you to “shape and put benchmarks around buying decisions,” according to Steve Eveleigh, Cofounder & CEO of Gripped. He broke it down: define your target customer and create personas. Establish who to target, what they want to read, what they want from your services and what their expectations of your product and services are. Then align your content and messaging to the buying journey of these personas. “Being more focused and clearly defined makes you more and more relevant to the people you want in your coworking space.”
Technology. essensys can write all day about what the best technology for a coworking space looks like. The panel on this mastermind session confirmed many of the tenets upon which we have designed our coworking IT and management platforms. For starters, an entirely cloud-based platform facilitates convenience of and accessibility to business-critical activities of a shared workspace. Wi-Fi and good infrastructure are the bare minimum requirements for a scalable coworking business. That said, get your infrastructure right from day one; regardless of how wireless you want to go, the right cabling and switches are crucial. Once you’ve got the basics down, give your members choice. Offer a variety of easy-to-purchase service packages, which can also drive revenue for your business, and, according to Salto Systems, improve member experience with softphone capabilities and continue removing the limitations of the physical workspace. An open API extends the capability of your workspace while ensuring a better, more seamless experience for your members. E
The UK’s First Coworking Unconference
GCUC UK’s first crowd-sourced topics were starting a coworking space, the future of work, niche coworking spaces, and working with brokers. During these sessions, attendees presented questions that might not have been discussed during the mastermind sessions or panels. Peer-to-peer responses during the unconference provide a unique perspective on non-curated topics that are burning through attendee’s minds.
The future of work session participants discussed the extent to which technology has impacted how and where people work and how they interact. People questioned the future of virtual reality and the long-term use of the workspace. Meanwhile, those in the starting a coworking space session questioned the best approach to measuring KPIs, technology providers emphasized the importance of implementing a workspace management software to attract and track leads well before you open. They also pointed out the need to consider your cabling and wi-fi network design before build-out to prevent signal obstruction.
It’s a Wrap
GCUC UK’s first coworking conference was a great success. We hope to see our friends at GCUC back next year for another GCUC UK!