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Market for coworking heats up signaling demand for connectivity

     

While WeWork, one of the largest co-working operators in the world may be going meatless, it?s definitely not cutting back on its appetite for acquiring rivals.

WeWork, with a valuation of nearly $20 billion, has announced plans to expand to 400 office worldwide and recently combined forces with a fierce rival in China, Naked Hub, one of the most significant players in the mobile office arena in South East Asia.

Globally the race for market share in the coworking marketplace is heating up. Companies like Shanghai-based Ucommune has made four acquisition in the last six months and in central London, flexible workplace providers have taken nearly 20% of available office space, and competition is intensifying, according to a report from Cushman and Wakefield.

As WeWork and other coworking operators rapidly buy rivals in a race for market share, they are sending a clear signal that the global demand for office space and digital connectivity is expected to expand rapidly.

The trend is centered around a changing workforce which is connected by technology, a boost in the number of tech-savvy millennials entering the workplace, and a desire by large firms to offload fixed costs of establishing centralized office locations.

As millennials and younger workers enter the workplace they are expected to be able to communicate cheaply and rapidly from anywhere, and it?s up to office space providers to meet this need.

Coworking operators demand connectivity

One of the primary enablers of flexible working is of course technology. Laptops, tablets, smartphones and apps allow workers to remain connected and productive at all times and are making use of solutions that let them access files and desktops remotely through the cloud.

Technology already provides these workers with all they need to stay connected with their teams and access their documents wherever they are. Specifically, VoIP calls and instant messaging apps are increasingly used by workers on-the-go to keep in touch. All that is required is a fast internet connection to make them feel as though they are in the office.

Another driver for flex spaces is that more startups, consultants, and freelancers are entering the workforce, making it hardly surprising that the need for flexible workspace is also expected to continue to grow.

Combine this with the need for a better work-life balance voiced by millennials and an increasing number of people adapting their working habits to remain in employment beyond pensionable age and you have the perfect cocktail for a more mobile workforce.

Large firms are already embracing these workplace changes as it significantly reduces the fixed costs, enabling them to avoid static and expensive long-term leasing arrangements.

According to data collected by Bloomberg, nearly 25% of WeWork?s revenue comes from large companies such as Microsoft Corp., Facebook Inc., and General Electric Co., which often make large, long-term commitments compared with the typical startup customer.

What does all of this mean for?commercial building owners? An opportunity of a lifetime.

Building owners able to meet the increasing technological demands of fast wireless and cellular connectivity by coworking operators can significantly?increase their ROI and mitigate risks associated with single-tenant occupancy.

Meeting these connectivity demands, especially in the technology and startup sectors, can be a lucrative opportunity. Owners with robust fiber connectivity were able to demand 28% more per square foot compared with those without, according to a recent study.

Building owners should focus primarily on meeting the demand for connectivity by providing an effective and robust digital infrastructure for internet, wireless and cellular connectivity by installing fiber throughout their buildings.

Commercial real estate owners can worry less about diversifying their multi-tenant properties to mitigate the risk of single-tenancy and managing the needs of many different tenants since coworking operators often offer a diversified client base and can service both small and large firms which makes resilient to industry-specific ups and downs.

 

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