The rise of shared coworking space providers such as WeWork, Industrious, and Knotel has garnered a great deal of attention over the last few years. A seemingly endless wave of media attention has put these companies under a microscope to see how they will fare in an ever-evolving market for office space.
Coworking spaces have rapidly proliferated across the globe, with one projection estimating that by 2020, there will be 26,300 coworking locations worldwide. With such rapid expansion, commercial landlords are attempting to get in on these coworking providers' turf, developing their own coworking spaces.
But how exactly are they doing this? And in a market where tenants' digital requirements are more important than ever, what opportunity do these traditional landlords have to improve on services currently offered specifically by ‘traditional’ coworking providers?
How commercial landlords are disrupting the disruptors of coworking
Well-timed with a rise in cloud computing and the gig economy over the last few years, coworking providers have thrived due to the shortened lease terms they are willing to offer. These are especially attractive to freelancers and smaller companies that do not have the means or need for a “traditional” office.
Not to be edged out, some of the world’s top commercial landlords are now making serious plays to get in on the action these coworking providers have enjoyed thus far:
- Hines, a real estate investment firm that owns over $121 billion in assets, is launching a new venture known as Hines Squared "to provide premium co-working and flexible office space in buildings it owns." The company will place its first Hines Squared facilities, dubbed "The Square" in Houston and Salt Lake City. Hines will work with another company, Industrious, as their operating partner.
- One of the largest commercial landlords in the U.S., Tishman Speyer, opened coworking spaces in Boston and Los Angeles under its co-working business called "Studio." Tishman Speyer owns 165 million square feet of property over 400 buildings. Expansion plans for Studio include sites in New York, Chicago, Washington, D.C., Rio De Janeiro and yet-to-be-named sites across Europe.
- Blackstone and Brookfield Property partners, while still partnering with WeWork to lease some of their space to them, is now starting to provide their own flexible workspace in their own buildings.
It's clear that commercial landlords know a hot trend when they see one. Some may see it as an attempt from traditional landlords to cut out the middleman-- however in reality, it’s also a way for them to meet a tenant base their traditional offering might not attract.
The question is, how can they differentiate themselves from coworking providers' existing brands, which have pre-established name recognition in the coworking/flexible lease space?
The answer may lie in those landlords' ability to provide a superior seamless digital experience that is reliable and secure for tenants.
Providing tenants peace of mind with secure networks
One of the most vital components of any company's office is having a fast, reliable, and secure internet connection. Connectivity empowers productivity as a great enabler for the modern office. In today's workplace, it's an integral part of any company's ability to do business.
In this era, cybersecurity is paramount. Office space providers of any type need to exhibit caution when it comes to strengthening their cybersecurity. If any tenant using one of these facilities suffered a data breach, they could have their customers' data compromised and trust in their services lost. This type of event can be catastrophic for any business and could lead to massive amounts of money lost.
With landlord control of the asset, they ultimately will have more control to deliver an optimal connected experience where a coworking firm may potentially be cutting corners to drive margins in a high capital business. Take, for example, this August 2019 article from Fast Company reporting a coworking provider's susceptible Wi-Fi network.
This inability to properly secure Wi-Fi networks, however, may present a golden opportunity for commercial landlords looking to challenge their dominance in the coworking arena.
Edging out the competition by protecting against downtime
While cybersecurity threats can be a topical issue due to the ebb and flow of data breaches in the newscycle-- there is much to be said for landlords providing a baseline foundation of connectivity that is resistant to outages now that the cost of downtime averages $300K / hour.
There is an increased urgency for reliable connectivity among landlords getting into coworking. As they become the service operator and are going to field new complaints from tenants, the likes of which their current teams don't see (internet outages, bad service areas, etc.). The need to plan for those is up-front.
Owners should ensure that multiple ISPs offer high-speed fiber internet in a building, and should install multiple points of entry on different sides of the building so that connectivity is unaffected if something knocks out service on one side (roadwork is a frequent culprit). Housing telecommunications equipment in a secure space above the floodline and supplying it with back-up power will also help keep tenants online.
If landlords can demonstrably show they offer better digital connectivity in every way - whether that means speed, connection, or security - they may be able to draw companies away from coworking providers and towards their own properties.
To learn more about establishing a proper digital tenant experience with your asset, contact the digital connectivity experts at WiredScore.