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Coworking Office Model Goes Mainstream

Evolution or revolution? The commercial office space sector continues to experience a fundamental shift in design and space utilization as more and more organizations seek to reduce overhead costs. The traditional model, perimeter private offices surrounding a large bullpen area, was for decades, the preferred model. It was deemed highly efficient in function by maximizing floor space utilization  while, at the same time, providing a modicum of privacy for bullpen employees. However, in the never ending quest to minimize overhead costs, many organizations opted to allow employees to work from home. This strategy did, in fact, significantly reduce the amount of leased space required to run a business and, initially, was well received by employees. This model appeared to be a win-win for both the employee and employer.  But, over time, work from home employees began to feel isolated and disconnected from their peers and their employers. The missing piece was, as Tony Hsieh, CEO of Zappos calls it, “serendipitous encounters” with colleagues.  Collaborative workspaces, as it turns out, allow for the sharing of ideas, generates positive organizational energy and promotes a sense of connectivity to an organization.  These are all positive work environment elements but, bringing every employee back to the corporate office is at odds with the corporate mantra of overhead cost reduction. What to do?

One answer is the growing trend to coworking office layouts. In this model, the walled-in office of the past is replaced by open floor plans and common areas often shared with a number of different employers. This model also has the benefit of allowing young startup companies, especially tech driven startups and freelancers, to lease office space at very affordable rates. In some national models, tenants can lease space in units as low as one hour a day! Tenants pay for only the space they need and use. The trade off for affordability and convenience is a lack of privacy and confidentiality.  However, developers of this model, and there are a growing number in large markets, are addressing these issues by adding small privacy areas to the open floor plan and “selling” the usage on an hour by hour basis.

Technology has ushered in a new age of entrepreneurism and popularized the concept of “start up.” With rents in many of the large markets prohibitively expense, the marketplace has made the adjustment, as it always does, and developed a model that successfully combines need, affordability and profit for both the tenant and developer. This model is here to stay.

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