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Coworking Concept to Target Retail Space in Suburban Areas - Eleanor's Place

Power Shifts From Employer to Employee for Flexible Workspace Policies, Survey Says

(this article re-published from CoStar News)

Executive Darin Harris knew there was a correlation between employee retention and offering flexible workplaces to would-be staffers. After all, Harris is the chief executive of U.S. operations for shared office behemoth International Workplace Group.

The shared office and desk titan, based in the Dallas area, has concepts that range from the longtime Regus brand that offers a standard office environment, to the Spaces brand for the collaborative entrepreneur, to the yet-to-open No18 brand designed as business-lifestyle.

About 80 percent of U.S. workers would choose a job with a flexible work environment over a competing job that didn’t offer flexibility, according to IWG’s 10th annual Global Workspace Survey of 15,000 professionals from industries in 80 countries. About a third of those surveyed valued the ability to choose a work location over an increase in vacation time.

“This confirms the power shift is going to the employee in how they want to work and where they work,” Harris said in an interview. “Businesses understand employees are more productive when they have agility in how they work.”

Of course, those results from a survey that IWG paid for are exactly what the company would want to hear, and what it would want to tell prospective clients to win more business.

Even so, about 83 percent of businesses in the past 10 years have either introduced a flexible workplace policy or planned to adopt one, Harris said, a figure that independently supports the demand outlined in the survey results. Businesses are seeing the financial benefits of giving employees the opportunity to work in flexible environments, which is why IWG is expanding to suburban markets to set up flexible work spaces in storefront retail areas and malls.

The company recently launched its franchise model and plans to find would-be franchise owners next quarter, said Harris. CoStar News talked with IWG’s top U.S. leader about the company’s expansion plans; it was edited for length and clarity.

CoStar News: How has IWG’s coworking model evolved through the years?

Darin Harris: » We’ve done the research and not just one model fits the way people want to work. The research shows there’s a power shift from the employer to the employee. If employers want to attract and retain talent, they need to offer flexibility. Businesses are also seeing productivity increase when they offer something their employees want, which is agility.

Why is IWG expanding its concepts in the suburbs?

» As employees are driving this power shift, they want less commute time. That is the reason behind the flexible workspace growth with coworking going into malls, street-front retail or retail centers. We are growing in these locations. In Texas alone, we have six Spaces expected to open, some of them in retail centers, such as The Shops at Legacy. We also have plans to open a location in Southlake, which is also another suburban location.

How do you identify these new locations?

» We look at a lot of different factors ranging from density to traffic patterns to microeconomic factors. There is a lot of business growth in different areas of the city and we also look at which brand we would chose to go there. We plan to open our first No18 brand in the second quarter at The Shops at Buckhead in Atlanta. This will be our lifestyle brand designed to be very club-like with businesses. It will have beautifully designed lounges tailored to support member’s needs and offer a lot more amenities. This will be a place executives will be able to call home. We have a few other No18 locations in the pipeline.

Does IWG lease space outright for its concepts or partner with a landlord?

» We do all different structures to meet the needs of a specific location. For us, it is what’s the most effective and efficient transition that makes this a viable opportunity for the landlord and us. The right partnership, whether it’s a shared-profit model or a traditional lease model, enables us to create a great partnership with the landlord. Today, coworking accounts for about 3 percent of the market. We believe that 3 percent will go to 30 percent in the next few years and we have seen substantial competitors come to the marketplace.

How has coworking competition impacted your business?

» For us, there is no other competitor that has our global footprint and operating platform. We have spaces for all locations and geographies. We have 3,300 locations in more than 900 cities globally and we are not only taking that number, but we are working to substantially increase our number of locations. Scale is important for our customers that want to work wherever they want to work. This gives them the ability to try our different brands throughout the globe. From a competition standpoint, we are ahead of the game already and our growth has been substantial. Last year, we added 60 locations. This year, we plan to open 65 locations. In Texas, we have six opening, including one on Congress and 5th in Austin, The Epic in Dallas, some in Plano and one at Town and Country Village in Houston.

One of those competitors, Hana, is being launched by real estate services firm CBRE in Dallas. Do you see Hana competing with IWG brands in the future?

» We focus on how we meet the demand from clients. I would imagine they will focus on large clients, but we serve large, medium and small businesses. We are not focused on our competition. We are focused on being the best we can be as the power shifts toward employees during these real estate decisions.

Where does the industry — and IWG — go from here?

» In the next five to seven years, we’ll continue to see the evolution of employees wanting to work in the way they want to work with many retail locations in close proximity to their homes. We’ll see more opportunities in mixed-use developments and suburban markets. It’s not just a one-size-fits-all approach, we are going to see growth in multiple markets and formats to meet the demand.