Last year, it was suggested that co-working spaces were the next big trend. We were guilty of falling for the hype. In fact, we did a report where we compiled the top nine co-working spaces in Southeast Asia and WeWork was number 1 on that list. Well, enter 2019 and things seem to be going in a different direction altogether. It turns out that the largest shared spaces occupier WeWork incurred massive losses in 2018 leading to its recent tryst with Japanese conglomerate Softbank. The latter slashed down its intended investment worth $16 Billion to only $2 billion.
Following this setback, WeWork is now known as ‘The We Company’ or simply ‘We’ in short. The name change was announced immediately after the change and is a move to rebrand the company’s image and push it beyond the co-working umbrella. With the name change, the company has also set some new “We goals”. The rebranded vision of the company is to “build a world where no one feels alone” and “create a world where people work to make a life, not just a living.”
Although it is inspiring to see how Adam Neumann – CEO of WeWork is handling this situation and promising to make a solid come back, it is true that sadly the numbers are alarming, and not quite in his favour. The truth is that WeWork, has been able to increase its revenues in the past couple of years but still could not make profits. Given the circumstances, it appears difficult for WeWork to live up to its post-money valuation of $47 billion.
We all know that co-working spaces gained significant popularity in recent years with more and more millennials walking down the path of digital nomadism and freelance but there seems to be something that is not striking the right chord with this business. It would be fair to say that 2019 might not be a great year for co-working spaces as people seem to be drifting away from the whole sensation behind it.
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Here are some of the reasons that co-working may not have hit a wall:
Inability to build a proper company culture
An important reason why these office spaces might not work is the inability to build company culture. Since co-working spaces are common properties that are open to all, it is difficult to build a unique culture is identifiable as yours and yours alone.
Co-working spaces often sell on the fun of the place and shared values as a common work area. This sounds great on paper, but when you’re trying to build a company, having a strong culture that you can call your own is important to retain staff and build a real brand.
Unreliable internet
Co-working spaces are built for digital nomads, startup owners and freelancers. Sadly, most of these commercial renting spaces seem to be missing the main point. Their target audience lives for high-speed and reliable wifi connection. Freelancers are free. On one hand, this is why they come to co-working spaces to work while on the other hand, this is exactly why they can walk out and camp to the cafe next door, the second your internet stops working, which seems to be the case at many co-working spaces.
More focus on Insta-worthy decor than on functionality
As of now, there are 1.1 million Instagram posts for #coworking. It is clear that co-working and digital nomadism were “cool” to the millennial workforce, and social media had a lot to do with co-working spaces being the new rage in recent years.
However, this led the office space owners to focus a lot on Instagram-worthy aesthetics. In this race, they forgot to take care of basic functionalities like bigger tables, comfortable seats, enough power points (not only the ones accessible to corner seats) and decent air conditioning. While beautiful interiors and classy decor are nice to have, it is much more important to have a functional office that helps you get the job done.
Location can be a problem
Rent is expensive, especially in the top business districts, so having a co-working space in the centre of town can be convenient, but chances are that you’ll be paying for that luxury. This can often limit which companies take up that option and have to settle for those that are out of the way.
Some co-working spaces are very affordable, but they can be out of the way, making it a long commute for most people.
Lack of proper amenities
One of the selling points for many co-working spaces is free coffee and snacks. While coffee and productivity have been paired together for a very long time it isn’t actually hat directly correlated to business success.
Most coworking spaces have great coffee and bakery items, which are either available for free or reasonably priced. While great coffee and delicious muffins sound great, a working space needs more than that – well-equipped workstations, printers, copiers and other relevant amenities.
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Though it is a bit too early to say for sure, it looks like there has been a bump in the road for the co-working industry. Shifting consumer needs, inflated valuations and a lack of general awareness have led to a slow-down. Whether the industry will pick up soon is to be seen, but for now, it seems that the digital nomads and startups are starting to walk away from the concept of a shared office.