As co-working grows up, niche spaces catering to small businesses take center stage

Posted by Rachel Layne from USA Today on Feb 20, 2018

Karen Burton’s longtime dream of a home for building industry entrepreneurs in Detroit came to fruition in June.

Bolstered by a $55,000 city development grant, Burton and husband Bobby opened SpaceLab Detroit, a 5,200-square-foot co-working space in the heart of downtown just as the real estate market there gathers steam. In October, the area cracked’s Top 10 hottest U.S. markets, coming in eighth.

“I did freelance architectural design for quite some time. I worked from home, worked from my clients’ offices,” said Burton, 52. “I just wanted the amenities available in an architecture office and to be able to share resources.”

SpaceLab now has 30 members working in construction, interior design, architecture, real estate law, property management and even furniture supply. It’s filled with tailored features like a large-scale printing plotter and a specialized materials library. Members are steps from city offices that oversee building applications and permits, and some are already teaming up to bid on new contracts.

As well-known co-working companies like WeWork offer space to businesses in many industries, a growing number of niche or specialty players such as The Wing and Hera Hub, which cater to women, are growing in popularity. There are spaces centered on specific industries such Biolabs, which offers co-working to biotechnology firms, or Boston’s Workbar, which has a regional focus. These specialty hubs are a sign of the co-working industry maturing a decade after the recession sparked demand for more flexible workspace for freelancers and start-ups.

“Co-working has finally become mainstream. Everybody thinks it was an overnight success. But it was 10 years in the making. You now need to differentiate,” said Liz Elam, founder of the industry’s biggest gathering, the Global Coworking Unconference Conference.

The number of U.S. workers that use co-working may double to 1.08 million in 2022 from last year, according to a forecast from Emergent Research and GCUC, pronounced “juicy.” Last year, there were an estimated 4,043 co-working spaces, up from just 14 a decade earlier, the study found.  By 2022, that could reach 6,219.

Co-working tenants pay by the hour, day or month rather than sign years-long leases. They get amenities like conference room space, coffee and camaraderie.

That can bring in more money for operators. Annual profit per square foot for a co-working space is an average $11.08, while space in offices run by a management company bring in $8.86, according to a 2017 survey from the Global Workspace Association. When building owners run co-working spaces, profit per-square-foot jumps to $14.29.

More niche offerings are showing up just as big companies partner with the largest co-working operators. In 2016, Microsoft announced employees in New York, Atlanta, Philadelphia and Portland could work from WeWork spaces globally. About 25% to 30% of WeWork members now hail from companies with more than 1,000 workers.

Connecting with people in similar or complementary industries is a benefit of working in a co-working space. That was one of the reasons Kristi Sherfinski, 45, was attracted to the newly opened Oasis Coworking Community, which houses water-related start-ups inside Milwaukee’s 98,000-square-foot Global Water Center.

“I was looking in downtown Milwaukee for something I could afford. As a start-up company, money is very tight,” said Sherfinski, who runs Helianthus, a one-woman wetland design and environmental firm. “I was really attracted to the idea of collaboration.”

In a report from global design firm HLW and consulting firm Instant Group, 83% of people working in flexible spaces said they benefited in the past five to 10 years from being able to cultivate direct business opportunities, expand professional networks and enjoy a better working environment.

“That’s part of why some of these smaller, specialized spaces can exist because they can provide niche services,” said Peter Bacevice, a research associate at the University of Michigan and director of research at HLW.

Workbar CEO Bill Jacobson, 47, co-founded the Boston-based company in 2009. It now has 18 locations: eight company-branded and 10 that are partnerships. One includes a space for financial technology entrepreneurs and freelancers inside Digital Credit Union, a non-profit financial co-op. Another Workbar space designed to incubate new businesses operates inside Framingham State University.

In 2016, Workbar partnered with office supply retailer Staples and operates in three stores.

Blending cross-industry spaces with niche versions “is a very powerful combination,” Jacobson said.  “And that’s what we’ve set out to do at Workbar.”

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