Viewpoint - 14/03/2017

The rise of coworking across the Northern Powerhouse

As computer technology becomes faster and more mobile, the way people want to work is changing, and more rapidly than ever before.

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The desire to be in the right city and the right location is still as important as ever, but there is now a growing emphasis on being in the right environment – one which is relaxed and relaxing, inspires and nurtures, and fosters a supportive community. Cue the rise of coworking.

Coworking is defined as ‘the use of an office or other working environment by people who are self employed or working for different employers, typically to share equipment, ideas and knowledge’. Businesses and individuals typically commit to flexible memberships rather than licences or short-term leases, in return for access to a workstation with a personal mailbox, storage and landline services, as well as meeting room hire, catering facilities and often a calendar of networking events, for a specified amount of time.

In the seven years since it was officially launched, the number of people using the coworking model has grown to more than 100,000 and estimates suggest that by 2018, one million people will adopt the same working practices.

Coworking across the Northern Powerhouse

While coworking evolved from micro businesses using it as a way to manage property costs in London, it is becoming increasingly popular across the core cities of the Northern Powerhouse, albeit largely in the form of more traditional serviced offices, incubation centres or small office suites offered on inclusive ‘easy in/easy out’ licences.

One operator to fully embrace the coworking ethos in the North is pay-per-minute work, meeting, social and event space concept Ziferblat, who recently announced it was adding to its award-winning Edge Street facility in Manchester's Northern Quarter with the acquisition of 6,000 sq ft at MediaCityUK's the Tomorrow Building (see below).

In London and the South East, demand is high and coworking spaces are limited. While there are currently less than twenty schemes offering coworking spaces across the Northern Powerhouse, there is a growing desire among investors and developers to create more.

  • XYZ, Manchester

Allied London was the first to send a message that it is not just the micro business that would benefit from this modern approach. It initially experimented with the concept at the old Granada Studios before investing in its 160,000 sq ft XYZ scheme. Designed with coworking and interaction at its core, this was created to disrupt the financial district of Manchester and has successfully done so, with demand far outstripping supply.

  • MediaCityUK, Salford

Originally intended to be an incubator and short-term space for freelancers and small businesses working on fixed/flexible contracts, The Greenhouse has now evolved exponentially. Due to the level of demand for space, it is now complemented by the Tomorrow Building, a speculative new build offering a range of coworking spaces.

  • Windmill Green, Manchester

This brand new scheme is being developed in response to the success of Manchester’s other initial coworking schemes – and with a firm belief that not only is the way people work changing, but also amenities and workspace should be high quality and convenient for users.

Coworking is integral to the design and overall concept.

  • The Shed, Manchester

Manchester Metropolitan University has established a space not just for its own students, but for use by the wider digital sector too. People from a range of different disciplines and backgrounds are using it and are working together for mutual effect. Those running it say that demand is so high they could fill it three times over.

  • Leeds Dock, Leeds

Allied London has taken the principles of success from its XYZ building and reapplied them to the waterside Leeds Dock building, evolving its own coworking space model.

  • Other coworking schemes across the Northern Powerhouse include:
  • Launch 22, Liverpool
  • coWorkz, Liverpool
  • One Aire Street, Leeds
  • The Beacon, Newcastle
  • Union Street, Sheffield
  • Duke Studios, Leeds

The evolution of coworking

Despite its infancy, a clear model of success is already emerging for coworking space. The more central to a scheme coworking and the concept of community are, the greater the likelihood of success.

It is no longer sufficient to offer a presentable and functional workspace, those embracing coworking want an ‘experience’. Developers need to look to the leisure industry for inspiration to provide an appealing ambiance and a concept that fits with their business and personal values.

Like any other businessperson, coworking space users want high quality leisure facilities and amenities. They should not simply be available nearby, but integrated within the scheme and convenient for users.

Most importantly though coworking space should offer the promise of collaboration. Users want a ready-made business community that is supportive and inclusive. Privacy is a major issue for coworking space users, as there is a very real possibility that users could find themselves working alongside competitors. This potential drawback must be outweighed by the prospect of a wealth of other people’s different experiences to draw upon.

Communicative but not disruptive

While the concept of collaboration and interaction between business space users is appealing, the relaxed coworking environment, which encourages communication, also relies heavily on users being respectful of others' space and being communicative but not disruptive, a fine line to tread. Some developers are subsequently responding to this by introducing vetting procedures for space users.

There will always be a diverse range of occupiers, those who embrace the coworking ethos, and those who are more traditional. At present the ‘traditionalists’ are in the majority, but micro businesses (the greatest users of coworking space) are increasing in number and now equate to 96% of companies in the UK.

Challenges for the property industry

Workplaces are evolving as the workforce becomes more agile – open plan has replaced cellular and mobile working is now standard practice. As the next generation – who have never experienced the ‘traditional’ way of working – enter the workplace, the flexibility and mobility that coworking offers will become the norm.

However, like the private rented sector model, coworking is still an emerging form of asset class and one which the property industry is not yet geared up for. Traditional leasing structures do not currently permit businesses to ‘share’ occupation of their premises with other businesses outside of their own corporate structures, unless prior written consent is obtained from the landlord.

Fundability is also an issue for investors and developers, who typically insist on institutional leases to determine the viability of a scheme before bringing it forward.

In order to remain current, competitive and meet the burgeoning demand, the property industry must acknowledge the importance of this growing trend and react faster than ever before, otherwise owners of buildings that are unable to offer the benefits modern businesses expect will quickly find themselves struggling to compete.


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