Dror Poleg says there is an office vacancy crisis.
In a recent Washington Journal article quoted:
“I don’t see a silver bullet or even a series of bullets that can solve the office-vacancy crisis,” said Dror Poleg, an economic historian and the author of “Rethinking Real Estate.” Yet, he added, “now that people are working in more places and moving around more throughout the day, suddenly there is low-hanging fruit that will become relevant to fill space.”
Commercial property managers are under pressure to maximize assets by keeping vacancy rates low and lease terms high. But between remote work trends and economic shifts, office vacancy rates have climbed to record highs — reaching 16.4% in Q3 2022 according to JLL [1]. For managers with blocks of empty suites, coworking presents a timely solution for generating revenue from unleased space.
Coworking provides flexible shared workspaces where diverse professionals work alongside each other in a communal setting. Users typically pay a monthly membership fee to access desks, offices, meeting rooms, and amenities.
The coworking market has exploded from 300 spaces globally in 2009 to over 25,000 spaces today [2]. Industry revenue is projected to reach $13.3 billion by 2025, up from just $6.1 billion in 2019 [3].
For commercial property managers struggling with high vacancy rates, coworking is an exciting option that goes above and beyond simply filling space. It delivers benefits like:
Of course, property managers and commercial real estate professionals want to keep assets productive. Empty offices don't make you money. Coworking provides a flexible way to monetize excess space of all sizes while meeting the changing demands of the market.
Creating a flex space isn’t just adding a key fob to a door and putting some tables in an open area. Coworking spaces are meaningfully designed to offer a mixture of workspaces, amenities, and opportunities that make them attractive.
Often, that mixture is also a pipeline of growth for members. Caroline Crowder and Chris Hively at Grow-Co in South Carolina applied a philosophy to the layout of the space as a deliberate design to inspire entrepreneurs.
“The coworking space is designed around Heivly’s ‘aspiration stack’ philosophy of flex spaces. It’s a configuration in which the physical space is motivational to members and encourages communal interactions. The offices are strategically designed with one goal in mind: inspire founders to get to the next level. To that end, the smallest offices segway into ones that are slightly larger and have a few more desks and chairs, and continue to gradually increase in size.”
The typical mixture of space usage looks like this:
Open coworking (15-30% of space): Shared tables and benches foster community for solopreneurs and small teams.
Dedicated desks (20-25%): Assigned desks offer personal space for consistent users and remote teams.
Private offices (40-60%): Offices of varying sizes host 1-20 desk private spaces for teams, professionals, remote workers and small businesses.
Meeting rooms (10-15%): Bookable rooms for calls, meetings and collaborative work sessions.
Event space (5-10%): Multi-use space for gatherings, events, receptions and co-working activities.
Phone booths, lounge areas, conference rooms, printers, high-speed internet, coffee bars and kitchen access also attract members seeking amenities of a proper office without the cost.
Managing a thriving coworking space requires a flex space management platform that handles everything from member management to billing and space utilization tracking. Key features of Coworks flexible office management software include:
- Real time event feed and promotion
- Membership and account management
- Invoicing and payment automation
- Integrated access control
The Coworks platform delivers a complete operating system to optimize your coworking business. That’s why commercial real estate groups like Highwoods Properties tapped the company to help manage its new coworking space, The Commons, in downtown Raleigh, NC.
“The Commons takes an all inclusive hospitality approach,” said Highwoods Senior Vice President Skip Hill. “Most such spaces provide flexible offices and meeting solutions. The Commons goes one step further — we want to become a business partner with our teams. We are invested in our customers’ success. We want The Commons to be a long term solution.”
Coworking offers something fundamentally different from traditional office leasing. With conventional office space, tenants sign multi-year leases and build out their own office with no connection to other tenants.
Coworking provides a managed community where the operator curates a mix of members and facilitates connections through layout, programming, events, and shared amenities.
For many members, the community and experience are just as important as the physical workspace. Members actively seek out spaces where you can feel the energy and collaboration in the air. A recent survey showed 70% joined coworking for the social atmosphere, not just a place to put their laptop.
Coworking also attracts a wider range of businesses than traditional leasing, from solopreneurs to enterprise teams. The diversity of the community facilitates innovation, networking, and cross-pollination of ideas across industries.
So while coworking provides the flexible workspace so many now demand, it also activates a building through community-building and great member experience. This allows property managers to compete with newer “Class A” buildings by fostering an engaging culture that attracts tenants.
The combination of flexible space and a flourishing community delivers value traditional offices cannot. Coworking reinvigorates assets through experience-driven places where people want to work, connect, and grow their business.
Hire a Community Manager
This role oversees day-to-day operations, member experience, programming, and marketing. The community manager greets new members, troubleshoots issues, enforces community guidelines, coordinates events, and ensures the space meets members' needs. They set the culture and facilitate connections. Consider hiring someone with hospitality or community-building experience.
Host regular events
Offer networking mixers so members can connect in person. Host lunch-and-learns or speaker sessions to share knowledge. Organize skill-sharing workshops or hackathons for collaborative learning. Schedule social events like wine tastings or yoga to bring people together around shared interests. Holding events at least 2-3 times per month give members reason to engage.
Curate a diverse membership
Pull from a wide mix of professions like tech, marketing, finance, health, legal, real estate, and more. Engage solopreneurs, remote teams, freelancers, independent professionals, non-profit organizations and brick-and-mortar small businesses. Include a range of ages to create a truly diverse group of members.
Provide support services
Offer reception help, mail handling, meeting room setup, office admin assistance, basic IT support, access to printers/scanners, and back-office services. This helps attract solopreneurs, remote workers, and independents by providing resources they lack on their own.
Promote your space
Share events and announcements via email newsletters, social media, and member communication platforms. Highlight member accomplishments and company growth via blog posts and social media spotlights. Advertise unused offices or custom packages on commercial listing sites and niche startup/remote worker boards. Post openings for community manager, event coordinator or receptionist roles. Consistent marketing and outreach helps attract new members and businesses.
If your team doesn’t want to take on the added administrative challenge of a coworking space, bring in experienced operators. The team at DenSwap can help you find someone with the right experience.
“We were starting to get a lot of landlords and commercial real estate (CRE) professionals coming to us as we were outputting general information and tools for the industry. They had tenants who had vacated their properties or had coworking businesses in their properties that were struggling. They asked us to find other operators — like matchmaking.”
With the right mix of flexible space and community-building, coworking can transform your vacant offices into a revenue-generating business while meeting the changing needs of today's market. Let's connect to discuss how coworking can help you reinvigorate underutilized square footage.
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