Three Reasons COVID-19 Makes Coworking Spaces Even More Important
Will COVID-19 kill coworking spaces?
That would seem to be a logical and immediate prognosis to make in the new era of telework and social distancing. The punditry is full of predictions about what aspects of life will be forever changed as a result of the pandemic, lockdowns, and resulting economic fallout.
Any place or activity that brings together a sizable number of strangers is a top candidate for irrevocable disruption and lasting harm. Shared desks and office space and common areas, which require people to leave home, could permanently lose their allure. Or, at least, demand won’t return to what it was just a few months ago. In New York City, not surprisingly, WeWork locations have been “virtually empty” over the last few weeks.
The pain for WeWork will continue—but I don’t think that signals broader pain for coworking spaces in general. In fact, there are at least three reasons why the coworking industry should emerge from the COVID-19 crisis not only stronger but also more important and necessary. In fact, they’re probably one of your key recovery assets now.
Reason No. 1: Remote Workers Have to Work Somewhere
As Richard Florida and Steven Pedigo have observed, the pandemic should prompt cities to “embrace telework.” They cite Tulsa Remote, a program rolled out by public and private organizations in Tulsa, Oklahoma, to attract remote workers from elsewhere. Coworking spaces play a key role in that program, hosting the relocated remote workers and helping them plug into the local scene.
A colleague of mine points out that large corporations will likely look to “de-densify” their offices—both to help their employees manage the crisis and transition in the recovery, as well as to avoid future such disruptions. Big companies of all kinds already locate some employees in coworking spaces. With big business emerging as one of the post-crisis “winners,” we will likely see this trend continue.
Many people are now just becoming comfortable with telework for the first time and figuring out all sorts of ways to make it smooth. That could mean more employees and employers become comfortable with it. But that doesn’t mean all those remote workers will work at home forever. After a couple of months of lockdown and working at home, my guess is that millions of people will be eager to work from somewhere else, anywhere else.
Reason No. 2: Resource Coordination for Small Business
Coworking spaces don’t just serve the needs of remote workers: they are a crucial support structure for small businesses, sole proprietors, the self-employed, and other entrepreneurs. In particular, they are a lifeline for small businesses that “operate on the periphery” of local economies. For many of them, working at home doesn’t provide a solution, and the burden falls especially hard on those in lower income quintiles.
It’s these peripheral businesses who will be the hardest to reach with the resources being funneled through the Small Business Administration. Many already face significant barriers in accessing capital or local business networks. They might not have the wherewithal to apply for new loans and grants. City officials are already expressing concern and frustration that they can’t get in touch with all their small businesses who could benefit from the CARES Act authorizations.
Coworking spaces are well-positioned to help coordinate and direct the assistance being pushed out through various local emergency relief funds. They are better connected to the peripheral and hard-to-reach businesses; they know them, in many cases, personally; and, they have trusting relationships with them.
If you are a mayor or philanthropic foundation or chamber of commerce, you should turn to your local coworking spaces to see (a) how they can help you support the local economy, and (b) how you can support them in continuing to fulfill their vital role.
Reason No. 3: Community is Key to Recovery
Coworking spaces are local economic engines in their own right. In its 2020 Impact Report, released in January, Launch Pad revealed that, across its five locations, their member businesses had:
Created over 9,000 jobs,
Raised over $230 million in equity capital, and
Leased over one million square feet of commercial real estate.*
(*FD: I assisted Launch Pad with their Impact Report.)
Those are exactly the kinds of numbers that city and regional leaders care about. Come summer, after the emergency period of the crisis abates, they’ll be looking for ways to create jobs and fill office space. Coworking spaces can help.
Just as important as economic impact is the community dimension—and that will be critically important for recovery and rebound. As we move into a future defined by some ever-present level of social distancing, community ties could fray. The economic hit to small businesses will, says Tyler Cowen, lead to “decay” in “organizational capital” which will be hard to restore.
Entrepreneurs, business owners, and workers will need social networks and local connections more than ever to regain their footing. We’re already seeing some degree of communities rallying around their local businesses through gift card malls and other sources of support. That’s a great sign; hopefully, it persists.
When lockdowns end, however, it won’t be like flipping a switch. Some businesses won’t reopen; some entrepreneurial dreams will be permanently stymied. Community strength will be essential in helping people re-connect, build new networks, and support each other.
That’s what effective coworking spaces do: they’re community hubs, essential sources of the Local Connectedness that will be a key ingredient in rebounding from the crisis.
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