Why COVID-19 May Increase Demand for Coworking Spaces
As small business owners, we are somewhat accustomed to dealing with uncertainty and risk, but COVID-19 has forced many of us to rethink our entire strategy and in most cases, change the way we operate. In a post COVID -19 future how will we adapt? Which businesses will emerge? Which ones will survive and which ones will disappear?
History suggests that crisis spurs innovation. Canned food, Kleenex, Duct Tap and penicillin were all discovered during times of war and economic instability. Even my favorite modern-day invention, Bitcoin, was invented in the aftermath of the 2008 financial crisis. Pre COVID-19, industry and legacy institutions were already being disrupted by new technology and innovation. We were already seeing that long term job security is a thing of the past. Yet, in these times of disruption, we find ourselves in a global crisis. This can only mean that entrepreneurship will continue to grow, but how will this effect coworking spaces?
According to BDC Micro-enterprises (firms with 1 to 4 employees) represent 53.8% of all private employers. This was one of the reasons for the explosive growth in the coworking industry in the past decade. Will this continue or will new social distancing protocols and fear make it less likely for entrepreneurs to leave their homes and join a coworking space? Again, if we look to history for the answer, we can see that the need for social gathering did not disappear with past pandemics and chances are it won’t disappear with COVID-19 either.
For a large portion of micro enterprises and freelancers, it’s not a viable option to operate from a home-based business. The requirements for a commercial/office space lease often require a 3-5 year lease, and large deposit. If you require office space then this will take up a huge chunk of your start up costs. Since COVID-19, several small businesses have had to renegotiate their leases and not all landlords are willing to be flexible. This has forced many entrepreneurs to re examine their options. Coworking spaces do not require a lease, a large deposit or any sort of indemnity agreement with any landlord! Coworking spaces are no more of a liability than a gym membership.
After COVID-19 small businesses, in addition to rent expenses, will have a lot less money to put into capital purchases, such as desks, printers, chairs, and other office furniture or equipment they require to operate. Coworking spaces provide all of these with your monthly membership so that these capital purchases reduced or are not necessary at all.
Monthly expenses such as hydro, internet, maintenance/strata fees, parking etc, add up to one huge monthly bill. If you are a member of a coworking space, you don’t pay any of these bills. When small businesses have less money to spend on monthly expenses coworking spaces become the smarter option.
If existing coworking spaces can survive the short term impact of this crisis, I think they can adapt and thrive! But you might wonder, in an industry that relies on revenue per square footage, how they will adapt to social distancing? If members choose spaces based on how far the desks are apart, how clean the space is kept, or whether they are overcrowded, how would that be any different from the past? Coworking spaces will continue to thrive and as long as they understand what the needs of their members, they will continue to necessitate a growing number of small businesses and freelancers who more than ever, feel the need to gather and innovate!