Location is paramount. Generally speaking, locations with a lot of slack in the market are poor candidates whereas those with a high rental income can support the model.
“It will work brilliantly in property hotspots like Dubai, New York and London but less so in your average neighbouring small city,” says John Garbutt, divisional marketing director, Kingspan.
With regard to property hotspots, a greater margin, a higher proportion of startups, and freelancers with home spaces too small for a home office are some of the reasons co-working spaces thrive.
Which type of stock is to be chosen, if selecting between a modern building or a prewar structure in such a location? Heritage buildings are premium because they have “instant character to work from and layer up,” says Cat Farrell, associate, Squire & Partners.
But more than the age, it is the layout of the building that is crucial. “As a rule, buildings with a good mix of open plan spaces, flexible floor plates for a mix of office space, outside space, easy access and close proximity to local amenities works best,” says Matthew Blair, managing director of MBS Recruitment and Property.
Nic Pryke, design director of office design firm, Oktra, says that the ability to “cellularise” space is vital when it comes to co-working. Essentially, designers need to branch offices from a central corridor, the success of which depends on the floor plate grid. “If the grid is 2x2m, you can’t quite fit an office between the mullions and you have to make offices which are 4x4m, which is too big,” says Pryke. “Ideally, then, it’s 3x3, or the partitions will run through the services and you will have to move them, which adds extra cost to the project.”
It is important to consider non-lettable space within calculations. Breakout spaces, external areas and downtime facilities need to be included for the development to be competitive.
So, you have found your ideally-located commercial property to sublet, it is on the right grid, the design meets regulations and non-lettable space doesn’t blow a hole in the budget. How do you maximise on the design investment?
Maximising Design Investment
“Focusing on your market is important”, says Pryke: “What are you offering? For example you might be emphasising community, or perhaps technology, as the added value. Are you aiming to rent to millennials in smaller incubation companies, for whom ambience and vibe is important, or Blue Chip companies who are more focused on the bottom line?”
When letting on an office-by-office basis, internal space can be make or break. Products which can maximise the rental yield may cost more upfront such as thinner insulation or slimline partitioning systems but investment costs are quickly recouped through increased rental yield.
And, of course, today’s co-working tenants, whether start-ups, freelancers or blue chip, are focused on the tech enabling them to do their jobs most efficiently and effectively. As well as comms equipment, this should include add-ons like invoicing systems and systems to manage the centre, MBS’ Blair suggests.
In short, with urbanisation, population growth and the shared economy impacting the way we work and live, co-working is a huge global growth market. There are massive opportunities in the co-working sector and the right choice of site and clear-eyed approach to design will help ensure success - if not finding the next Facebook amongst your tenants.