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Offices Won't Make A Comeback, but Co-Working Will

If you haven't listened to Wondery's podcast, "WeCrashed", I recommend it. It's about darling co-working startup, WeWork, that ended in a bigger disappointment than 2020. It's a great story of a hyper-charismatic founder who starts a hip company and promises a paradigm shift in the way we work and even postulates how it can be a utopian commune. During this saga, coworking spaces were on the rise. Working remotely out of a trendy office with a kegerator was hyped as being the next trend in the lives of thousands of professionals. In Austin, WeWork had multiple offices. Many competitors poured into the market to try to get some of the share. For small companies and startups, physical office space was cost prohibitive. Traditional office spaces didn't make sense. Walking into General Assembly in downtown Austin, one could walk through the maze of glass-paned cubes where founders were toiling to become the next hot startup. It seemed the coworking wave was here to stay with WeWork perched atop its throne.

And then the bubble burst. WeWork was queued for its initial public offering. Privately, however, many numbers were fudged to make the event more successful than it should've been. The SEC became privy to the bullshit afoot as well as many skeptics who were bearish on WeWork to begin with. So began the downtrend of coworking spaces. They still existed and many still held the WeWork business model of sleek interiors with coffee and yoga classes, but the fanfare faded with the IPO. That was 2019.

Fast forward to today and the corporate landscape has been turned on its head. Even conservative companies opposed to remote work were forced to let their employees work from home if they weren't deemed essential. It's September now and many companies have began trickling their employees back into the office. But for many, the distributed workforce has become the new norm. This is both positive and problematic. There are many items in each column we could examine, but I want to focus on only one: face to face interaction. As we've been cooped up in our home offices blurring the lines of the work day and off time, we've experienced a complete lapse in in-person social interaction. What used to be engaging with 20-50 people a day has drastically reduced to one's immediate family and perhaps the cashier at the grocery store. This change was abrupt and we weren't prepared for it. We tried to rally against it with Zoom calls and socially distant hangs, but they pale in comparison to the real thing. With the taboo of proximity now at play, even employees in office spaces now must conform to the new laws of social distancing. "Only one person in the kitchen at a time and wipe everything down after you use it" doesn't really instill normalcy or the lax environment we were used to. No, we are now operating under new societal norms that will take years to shake out.

Though this purgatory seems to have no end, its close is showing its beginnings. The empathy one could have for a coworker has dithered as we only experience them through high resolution screens. The energy of a motivated team around a white board hashing out ideas simply can't be manifested. It's impossible to tap into that frequency when you're divided by miles and relying on broadband internet to connect you. Due to this, I foresee a return back into the physical office. It just won't be an office that the company pays hundreds of thousands of dollars for. Nor will it necessarily be every day. What I see happening is companies will understand that owning vast, opulent offices is now inherent risk. Backing this up is the fact that REI put their headquarters up for sale after spending millions of dollars to build it. I can't blame such action. Like for most people, rents and mortgages are the biggest expense. Nix that and your debt shrinks dramatically. The capital it frees up can be put towards more productive means. This is great for companies as a whole, but slowly the need for human interaction will rise and workers will be less inspired to work if they only communicate with their team members through pixels and microphones. In one way or another, coworking will return. Employees will meet up a few days (if not all) to work together and be inspired by the social energy in-person communication and experience provides. They'll now have a meaningful close to the day as they pack up their laptops and head back home.

A counter to this argument is that commercial real estate is getting railed. With so much supply and abysmal demand, office space will be the cheapest it's been in decades. Perhaps companies won't mind the fiscal risk they bring and opt for a set physical space. This will undoubtedly happen for some companies. There are some tasks that are just better handled when everyone's in the same space working on them. But maybe these same spaces get coopted for coworking space and rent out desks like the WeWork model. We have passed through a one-sided membrane in a singular direction we can never revisit. Everything after this year will be demonstrably different. History books, sociological studies, and more will have a clear delineation in trajectory when reviewed.

All we can do is try to make the most of the situation. Perhaps that's full-remote work. Perhaps it's an attempt to regain the comfort and efficiencies of the office space. Regardless, I think coworking will make a comeback in the coming years.

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