being, relating to, or working in a building where multiple tenants (such as entrepreneurs, start-ups, or nonprofits) rent working space (such as desks or offices) and have the use of communal facilities
Yes, it is actually in the dictionary. According to Merriam Webster, the first know use of the term was in 2007. My intel is slightly different, but to commemorate International Coworking Day this August 9th, let’s take a stroll down the coworking memory lane. Where did it come from, and how has it evolved?
The origins of coworking are thought by many to be very recent. There are certainly styles of coworking that were recently introduced, but the idea of sharing of workspace has been around for a long time.
Coworking 1.0: The Business Center
A California attorney named Paul Fegen is frequently credited with having started the first shared workspace in 1970. Fegen Suites offered sole-proprietor lawyers furnished office space that was staffed, maintained, and available on flexible terms, allowing his clients to give the appearance of big firm trappings at a fraction of the cost and commitment.
The Fegen model for lawyers was a forerunner to what became known as the Business Center (BC), which provided the same services to all kinds of professionals. The largest operator of BCs is Regus, which started in the UK in the 1980s and today has over 3,000 locations worldwide. BCs have traditionally consisted of private offices with shared resources like conference rooms, receptionists, and copy/print equipment. They were designed to have a corporate look and feel, but, as we will see, more design concepts were to come.
Coworking 2.0: Down Came the Walls
In 2005, a San Francisco software developer named Brad Neuberg created the first operation officially to be labeled a “coworking” space. The concept, called The Hat Factory, grew out of Neuberg’s desire for the independence of self-employment without sacrificing the community aspect of working with others.
Physically, the first coworking spaces differed from BCs in that they featured a casual style and open-plan, unassigned seating, allowing for a gym-like membership-based pricing structure. Conceptually they differed in that they focused on fostering collaboration among their members, which they accomplished through space design, event programming, online collaboration tools, and staff trained in community-building. They attracted members who derived inspiration and creativity from interacting with other like-minded professionals.
The best-known operator in the coworking arena today is WeWork, which started in 2010 and has made plenty of headlines with their astounding valuations, IPO attempts, and eccentric founder. There’s even a book and a movie about their spectacular rise and continuing ignominious saga. But despite press-grabbing brands like WeWork, most coworking centers are brought to us by smaller independent operators like CapeSpace and our Cowork Exchange partner, Groundwork.
Coworking 3.0: Growth in the 2010s
Popularity for the coworking style grew dramatically after the financial crisis of 2008, when an unprecedented number of displaced workers were forced to go freelance, and employers began shedding real estate obligations by shifting employees to remote situations. Since then the number of shared workspaces in the world has grown from a handful to over 25,000.
During this growth spurt, BC operators began to see the potential in the coworking model, and coworking operators began to discover that not everyone wants to work in open-plan seating. So in fairly short order, the two models started adding each other’s elements to the point that today they are often indistinguishable from one another.
The thousands of new entrants into the market, however, have found many ways to distinguish their own brands – through design, membership plan structures, and specialization in particular target audiences.
Along with all this growth came confusion about what these things should actually be called. “Business Center” never really caught on outside the industry, and coworking had a lot of resistance from the BC folks at first. Other terms abounded – executive suites, shared workspace, flexspace, serviced workspace, lots more – but nothing stuck until recently.
The upshot is that the industry, long suffering from this identity crisis, has settled on – or been saddled with – the term coworking as the universal descriptor, hence the Merriam Webster definition.
Coworking 4.0: Post-Pandemic
There is no denying that coworking took some hits during the worst months of the pandemic, when everyone’s interest in sharing space with other people went out the window. But as global recovery progresses, demand for coworking is coming back stronger than ever, with millions of workers still on work-from-home status and becoming increasingly dissatisfied with their home environment as a work solution.
That dissatisfaction is driven by one primary reality. Despite all the cool coworking spaces out there and the great amenities and value they offer, the number one reason that people seek out coworking situations, consistently reported globally through all the phases of coworking’s evolution, is human interaction. Coworking provides an alternative to working in isolation.
Whether or not users are interested in the collaborative aspects of coworking, they overwhelmingly prefer working in an environment where there are other professionals and where they can be free from the distractions of homes and coffee shops. Surveys report that shared workspace environments contribute to substantial increases in productivity, creativity, focus and self-confidence. In fact, most coworking operators consider themselves effectively to be in the hospitality industry and are focused on creating welcoming and supportive environments and communities for their members.
An additional pandemic-driven trend worth noting is a shift in coworking demand from the major urban areas – its traditional realm – to the suburban and rural areas closer to where more and more people are starting to live.
Coworking 5.0: What’s Next?
The coworking industry has barreled rapidly through the product lifecycle in the past decade, but it is far outpaced by developments in the world at large. Pandemics, technology, socioeconomic shifts, environmental challenges, preferences of younger generations, and many other factors leave us all in a state of perpetual uncertainty about even the very near-term future. So coworking, born of flexibility, will need to take it to the next level of hyper-flexibility as workspace demand continues to shift.
We don’t know what the world will look like in even a few months as we wait out the Delta wave, but one thing we can promise is that coworking centers will rise to the challenge and continue to innovate to meet the evolving needs of the world’s knowledge workers.
Want to learn more about coworking? Click here to check out our “Coworking 101” video!