WeWork: When Did Coworking Get So Expensive?
More and more people are taking control of their careers and doing something that they love.
Freelancing and start-ups are on the up. More and more people are swapping their 9-5 with greater flexibility and a chance to be the driving force behind their work.
With the increase in freelancers, start-ups and small businesses mean a fostering community and increased demand for coworking spaces such as WeWork. However, when you are just starting your business, even the cost of a coworking space can seem prohibitive. Especially when you consider that you can have free reign of a coffee shop table and take advantage of their WiFi for the price of a macchiato (and a croissant, if you’re feeling flush).
So, is coworking worth the cost and when did it get so expensive?
Did coworking start with hackers?
Many people believe that the first coworking space was initially designed for a team of hackers. The C-Base in Berlin was established in 1995 by 17 computer enthusiasts. They wanted to create a physical space for their community. The C-Base was designed to be a place where people with an interest in computers could come together, work in an open environment and collaborate on projects and share ideas.
In 1999, there was a further development in the coworking sphere when 42 West 24 opened in New York. The premise behind the venture was to provide a productive and pleasant work environment for individuals and freelancers who wanted a place to work. 42 West 24 made sure to make its workspace enjoyable and also have flexible membership option to suit a variety of people. 42 West 24 still operate today, and many other coworking companies use similar principles for their spaces.
While coworking was in existence in 1999 at 42 West 24, it perhaps wasn’t until 2005 where the term coworking was fully utilised as a term for a space that was shared by individual works. It was in 2005 when the San Francisco Coworking Space was launched. However, its launch was not initially successful; in fact, no one even visited the space within the first month of opening. Gradually as people began to see the benefits, more coworking spaces were created such as the Hat Factory.
What about coworking now?
Coworking spaces seem to be an idea that continues to grow and generate significant income for the big players such as WeWork. There were around 15,500 coworking spaces across the world in 2017, and that number was set to rise to 18,900 in 2018.
In 2017, 1.27 million people across the world were using a coworking space. It is not hard to see the benefits of coworking with is chance to increase your productivity, uncover opportunities through networking and create a professional atmosphere for client meetings. However, with many people enjoying the benefits, the companies that provide the coworking spaces are using high markup to make a considerable profit.
Furthermore, we have to consider that with rising numbers of freelancers and startups there is a significant demand for flexible office space and coworking environments. With this demand, coworking providers have the chance to capitalise by seeking higher membership fees or rental costs for their users.
In turn, this rising cost could marginalise many freelancers who may have to resort to their previous methods of working from the local café or their office at home. The success of coworking comes from a premise that office space is accessible and affordable to everyone, with increasing demand and rising prices, there could be a significant flaw in the business model.
The success of WeWork
Despite some doubting the benefits of coworking, such as Patrick Clark who calls coworking spaces ‘an expensive cure for loneliness.’ Coworking spaces are incredibly successful. If you consider that WeWork members pay a minimum of £240 a month for a simple hotdesk and there are 37 WeWork location in the UK, you can see the profit potential.
With a private office price starting at £460 with additional costs for the number of members you have or even a dedicated desk costing upwards of £290 it is no surprise that for some freelancers, coworking is just too expensive.
WeWork’s success is evident. In 2017 the company made $900 million in revenue, a large proportion of that is memberships for working. Also, WeWork has quickly become the largest private renter of offices in London, with 35 locations available and more planned for the future. With this in mind, it is no surprise that WeWork has a predicted valuation of around $20 billion.
When you consider that 75% of WeWork members are first-time entrepreneurs, start-ups and small businesses, it makes you consider whether the high cost of renting a coworking space is worth the productivity and benefits you receive as a member.
Coworking or coffee shop?
Many digital nomads will categorically agree that coworking spaces are just too expensive. After all, coworking spaces come with the typical office distractions as well as the commute that many people want to give up forever. However, coffee shops may be cheaper, but internet access, a comfortable seat and the peace and quiet you need may be hard to find.
Of course, the other option is to work from home, but with a pile of dishes in the sink, the dog that is whining for attention and that comfortable bed calling you for a midday nap may mean that your productivity, and therefore profit, slump.
What’s the solution?
For all freelancers and start-ups, the best place for you to work is the space that you feel most comfortable and most productive.
If a coworking space boosts your speed of work and enables successful meetings, then the cost may merely seem an investment. If the cost of coworking is prohibiting your income, then it may be time to seek other opportunities and find the workspace which will help you to thrive and your business to become a success.