Will COVID-19 Doom Coworking?
What's happening now
In the aftermath of the coronavirus pandemic, Convene, a New York-based coworking company has temporarily closed its 28 locations across the nation and laid off 150 workers. Although one of the smaller players on the market, Convene may provide a peek into what would be forced to do by other shared workspace providers as COVID-19 cases continue to grow at a growing rate.
In March the International Workplace Group (IWG: London) informed its members that it might be appropriate to temporarily close any offices with a reported case of COVID-19. Help workers have often reduced their working hours to only be available to receive orders in many of their places.
Despite its employees being unable to use their facilities, Regus, the flagship brand of the International Workplace Community, has so far declined refund requests, waived monthly service fees, or even given a discount during this pandemic. This has left many members of the Regus frustrated and found ways to cancel their contracts.
WeWork, the world's largest provider of coworking space, has also declined to give its members refunds or waive any of their fees. An angry member base comes at a bad time for WeWork, because in 2019 they had a loss of nearly $2 billion and an aborted IPO. WeWork also relied on SoftBank (OTCMKTS: SFTBY) bailout of $3 billion, which is now searching for ways to get back out of the bailout contract.
How COVID-19 can hurt coworking
The coronavirus pandemic may not be enough to knock the coworking industry down, but it is likely to have a significant negative impact. When companies that have used coworking spaces are accustomed to working from home and are dissatisfied with the lack of the ability of their office provider to negotiate with them on payments, many contracts are unlikely to be renewed. It is likely that the effects of the coronavirus pandemic will have a profound influence on how people socialize and interact in public. This alone can cause many people to opt for more segregated office environments and nearly reset the growing trend in coworking.
Additionally, due to their high turnover rate, the coworking offices rely on a steady influx of new clients. The month-to-month lease options are one of the enticing things about using this form of workspace. With people fearing that the coronavirus pandemic that last months, a significant number of small businesses will likely be terminating their contracts over the next few weeks on a month-to-month deal.
New member orders for coworking offices across the globe have nearly halted. Combined with the rise in cancellations and their global turnover, the shortage of new entrants puts a significant strain on the cash flow for those businesses that already function at a relatively small margin.
How coworking can survive the coronavirus pandemic
One of the key benefits of coworking is the facilities that are offered in addition to the workspace. The big draw is a professional address, meeting room, answering services, and basic office amenities. Many of these services would still be needed even as more people switch to a home office.
Coworking office centers may need to marginally change their attention once things get back to normal, by allocating more space to meeting rooms and small pods to accommodate home office employees who do want the office amenities. The financial effect on coworking spaces is likely to be exponential because the longer people isolate themselves from public environments such as the workplace. The coming weeks will provide a better picture of the coworking fate as the COVID-19 outbreak continues to grow.
Are You Ready to Find Your New Coworking Space?
Victory Workspace has been serving professionals in the Walnut Creek, California area for over ten years, and even after the Covid 19 Shelter in Place is over we will be here for you. We offer a large variety of coworking spaces, short term office rentals, meeting rooms and a welcoming event space with plenty of free parking for you or your guests. All that while providing our clients with daily opportunities to network with other business-minded professionals just like you! To learn more, set up your free tour or inquire about which one of services might be right for you, reach out to one of our amazing Community Guides at Victory Workspace for more information.