Commercial Real Estate, Marketing, Technology

Coworking in Southern California

In Local News…

The Big Takeaway:

Coworking is becoming a major player in the Southern California market, with multiple coworking companies including WeWork making substantial investments in these markets. Regardless of the industry’s permanence, local firms and competitors need to learn from these companies and adopt successful practices as coworking grows.

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WeWork is far from the only coworking space in Southern California.

With JLL opening a coworking satellite office in San Diego last week and Carr Workplaces recently re-entering the LA market, the conversation around coworking in Southern California is heating up.

According to BisNow, coworking space grew almost 62% in the top 20 office markets in the U.S. from 2017-2018. The industry is twice as prevalent in urban markets compared to suburban ones, and it is particularly popular with “large technology industries and entrepreneur populations.” There is room for growth too- according to Jeff Langdon of Adaptive Office Resources, the amount of commercial office space dedicated to shared office space is expected to grow 8-10% in the next few years.

Competing With Coworking

As these coworking companies grow in Southern California, traditional office owners have struggled to keep up with the competition.

At companies like WeWork there are plenty of advantages for members: around-the-clock access, additional amenities, an attractive client meeting location- and of course free beer. These amenities aren’t just window dressing- they affect productivity too.

According to a study conducted by Harvard Business Review, employees who work in a coworking space are more efficient than those who work in traditional spaces. Employees notice the difference too- “71% of people who join a work space see an increase in creativity and 62% report an improved standard of living,” according to another global survey.

Coworking proponents agree that added flexibility is a key component of its value. According to a recent survey, only 10% of workers think pay is more important than having autonomy over their work schedule.

The social aspect is a distinct advantage as well. According to the same HBR coworking study, “Coworkers reported that having a community to work in helps them create structures and discipline that motivates them.”

Not Just For Small Business

With its additional flexibility and social aspect, coworking is not just popular with small-scale startups and independent business owners. It also can serve as an ideal “test office” for larger companies looking to expand in new markets.

Companies like Bank of America, Salesforce and Microsoft have adopted the coworking model in select markets. They point to advantages in recruiting flexibility, improved innovation and creativity, cost effectiveness and most importantly setting up a “launch pad” temporary headquarters for potential future expansion.

As these companies continue to rely more on coworking spaces’ unique values, traditional office space providers must look to their competitors to adapt to changing demands.

Shifting Paradigms

For traditional Southern California office spaces, lessons can be learned. In order to effectively compete with coworking spaces, and to improve employee productivity, office space owners need to model successful examples.

First, office owners should look to embrace cross-departmental communication with open office design. In coworking spaces, employees across companies and industries act as resources by trading skills, giving advice, and sharing insights. The same principle can be applied in a traditional office: opening up the floorplan and incentivizing cross-departmental cooperation can help inspire employees to reach out to the next cubicle for new solutions to an old problem.

Second, office spaces must emphasize employee autonomy. Companies can achieve maximum productivity from employees by trusting them with their time. By catering to employees’ individual work styles, studies show that you will facilitate a happier, more productive work environment.

By focusing on these proven strategies, traditional office space owners in Southern California can better compete with coworking spaces in the short term while improving tenant satisfaction and productivity in the long term.

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