In mid-2018, American-founded co-working market leader, WeWork, officially launched in Dublin at Iveagh Court. WeWork already has more than 5,000 employees in 562 locations across 32 countries, and now Ireland. Clearly, the call for these flexible shared workspaces is rising.
Sharing is caring
Co-working spaces generally offer a mix of hot-desks, private offices, meeting rooms, security services, and communal facilities. Hot-desks—a desk shared by multiple users over different shifts as opposed to each having their own personal desk—is, of course, the cheapest option. Among the many advantages of co-working, some facilities offer their members access to all locations country-wide, allowing them to book desk space in wherever they might need it.
Over the past decade, the trend of co-working in Ireland has grown and become a statement choice for world-class businesses about how contemporary offices should function and what millennial employees have come to expect. The Financial Times ran a story about this generational shift in 2016: “If co-working is the future, big businesses want a piece of it. Corporate employees are swapping suits for jeans and occupying desks at co-working spaces, traditionally a refuge for freelancers, start-ups and workers in the creative sectors seeking companionship and the use of a photocopier. The appeal for blue-chip employees is clear: the vibe is cool, working alongside energetic start-ups and techies.”
Co-working brings like-minded companies and people together in the same space, often allowing for even more business to develop and grow. People meet, exchange ideas, then business cards, and so the ball starts rolling. It also means that companies avoid the overhead costs of owned office space—costs like tax, maintenance, parking, insurance, cleaning and amenities. Shared working spaces will also help lower the global carbon footprint in the long-term. It is challenging to find anything negative about it.
Shifting to share
These flexible sharing arrangements might appear to offer a lesser degree of certainty, however, on paper, they can be more profitable. The margins increase with the standard of the premises and the quality of services offered. The potential opportunities for landlords who are in a position to respond are very real.
To put it into context, in 2017, 8% of all office leasing in Dublin was for co-working space, a figure expected to increase exponentially by the end of 2019. It is estimated that by 2030 as much as 45% of the global office market will be flexible space. This is more than a mere trend that cannot be ignored by landlords or developers. At this juncture, commercial landlords have two significant options—either to seek a co-working service provider tenant such as WeWork, only realistic for large spaces, or to begin offering greater flexibility and a wider range of services to individual businesses. Beginning to compete with co-working providers for small business tenants can be done if the landlord first understands what they are competing with, at the very least by visiting some of the nearby hot-spots to see what tenants are being offered.
Co-working is great for single-person businesses, but once a business grows, there is a greater need for privacy which open offices do not provide, and private suites within co-working spaces can be expensive depending on the location. Perhaps this is the offering to start with—affordable private offices for small businesses within a large building with the possibility of expansion. Landlords will also need to offer and therefore provide an overall package—rent including rates, insurance, weekly cleaning, waste disposal, quality cafeteria facilities that encourage inter-business networking and community building, internet and phone lines. Reception services, communal meeting rooms, and on-sight parking will be big pluses.
We want to share
While the initial driver for this sector was affordability, desks and private offices in quality co-working spaces are now higher than average market rents, clearly indicating that cost is no longer the main factor—flexibility is. This flexibility, coupled with quality amenities, good coffee, and empowering company, is proving co-working to be the way of the future.
In fact, Dublin has been ranked 19 out of the top 30 cities in the world for the best environment for the technology sector, a ranking which was boosted by access to co-working spaces. The ‘Tech Cities in Motion’ index by property agent Savills measures cities based on six categories: Business environment, tech environment, city life and wellness, talent, real estate costs, and mobility. According to the index, co-working providers accounted for 13.5% of the office space market in Dublin in 2018, where the average cost for a co-working desk in a private office is €670 per month, higher than the average cost of €590 across the remaining 29 cities in the index. The highest co-working cost for a desk in a private office was San Francisco, where averaged $1,050 (€930) per month.
Despite concerns about Brexit and what it will mean for the European economy, Ireland’s economy, workforce, and property market are on the rise. It seems there may be little to worry about here and heaps of opportunity instead.