Cushman & Wakefield has launched an alliance with co-working firm Industrious to offer landlords integrated management of traditional and co-working space, according to The Wall Street Journal.
The new offering comes as the industry debates the value of co-working space during a pandemic and when the office asset class is struggling to make sense of how the work from home trend will affect the category in the long run.
In short, the office sector is facing both a cyclical recession where demand is lagging because the economy is not at full employment and a unique disruption because COVID has sent workers home.
Coming out of the crisis, Kevin Thorpe, chief economist for C&W, said during the company’s recent earnings call that he expects the number of workers who will remain permanently at home will double from 5% to 10%. Additionally, the number of workers who are in the office some days will rise approximately 40% pre-crisis to 56%.
Thorpe expects a period where office occupiers may decide to allow more people to telework or even adopt a hub-and-spoke strategy. As that happens, real estate investors will undoubtedly want to tweak their portfolio allocations, pulling out of some sectors and increasing their spending in others. Thorpe says these events will “undoubtedly create a lot of opportunity to reinvent real estate.”
Indeed, in an earlier report, C&W itself said that while COVID-19 has made working from home an imperative for many employees right now, coworking spaces are likely to re-emerge as a key workplace option.
The report identifies a number of pandemic-related issues that could ultimately make coworking more appealing. Some companies and workers who have found blending work and home life challenging may find a conveniently located coworking space attractive. A post-pandemic suburban “renaissance” may also benefit coworking locations outside downtown centers.
“As an alternative to committing to large amounts of space under multi-year leases at suburban corporate parks, some companies could opt to implement a re-imagined workplace ecosystem that balances office, home and third places, the report said. “In this ecosystem, some employees [work from home] a couple of days a week and at a coworking office close to their home the other days.”
Partnerships such as the one between C&W and Industrious are likely to proliferate as these trends come into focus, with various players participating. JLL, for example, predicts more landlords will partner with specialists to deliver flex offerings, according to JLL.
Tashi Dorjee, flexible space solutions lead for Australia and New Zealand at JLL, said large flex operators with growing portfolios are choosing these types of agreements.
“They have the resources to propose a financially attractive business model, guide the design and build process,” Dorjee said, “plus they have the capacity to train and manage on-site staff, and fill the space to generate revenue.”