On Friday, April 12th, President Trump and Federal Communications Commission Chairman Ajit Pai announced the repurposing of $20.4 billion from the existing Universal Service Fund, which provides subsidies to various rural telecommunication programs, to create the Rural Digital Opportunity Fund. This follows the creation of the ReConnect Program through the 2019 Farm Bill, a $600 million grant and loan program through the USDA to also support rural broadband development. On the state level, we see states like Pennsylvania making broadband infrastructure development a major priority in the $4.5 billion Restore Pennsylvania initiative. Locally, regions are grappling with how they can best fund and manage local broadband networks after being inspired by successes in Ammon, Idaho or Chattanooga, Tennessee.
Here at Fourth Economy, the impact of broadband infrastructure is rising to the top as an issue facing our clients. In the United States, roughly 20 million Americans lack access to speeds of 25 Mbps, the FCC’s minimum threshold for broadband (This is barely enough for a 4-person household to stream video). Broadband is not only important for the next tech hub or to enable the gig economy; it’s critical for business transactions, marketing of products, and further development of local economies.
As we learn more about the issues and impacts of broadband, we wanted to share two interesting points that have come into focus:
1. Broadband is not just a rural issue
While access to adequate broadband is undoubtedly an issue that is hampering growth in many parts of rural America, a 2018 Pew Research Center survey found that 13% of adults in urban areas say that access to high-speed internet was a major problem (24% of rural adults reported it as an issue in the same study). In our work with Connect Greater Newport in Rhode Island, the lack of reliable, fast broadband has inhibited the expansion and investment in businesses in the region. In fact, the network went down on Labor Day weekend, which was the last major tourist weekend of the season. Businesses were unable to process credit cards most of the day, causing a major loss of revenue. Broadband plays a pivotal role in dense business districts as well as rural communities.
2. Every industry relies on the internet
Broadband supports more than tech companies, advanced manufacturing, or businesses in similar industries. During our work with agricultural communities in West Virginia, one of the most mentioned issues in the community engagement process was the lack of access to the internet. Without the internet, farmers have a difficult time marketing their products or acquiring technology to increase efficiency for their operations. As the use of robots and other technology reliant on broadband develops for agriculture, these areas need access to support their local communities and economies. This issue relating to agriculture specifically has led to organizations like the Farm Bureau adding broadband access to their platform as well as the inclusion of more funding in the 2019 Farm Bill.
What can be done to improve access?
So, after highlighting broadband and its vast impact, the question is, what can be done to improve access? Like many development issues, collaboration and coordination between state and local stakeholders will make the process much easier. The development of public-private partnerships, nonprofit authorities or other governing bodies can play a role in funding and managing the deployment.
While these local efforts are continuing, we see federal initiatives kicking off, including the major funding allocations mentioned above. As the 2020 presidential race picks up, we hope the leaders of tomorrow, especially those looking to connect with voters in rural areas, recognize broadband for what it is – broad in its application and benefits, and central to the conversation around regional growth and development.
Fourth Economy has been doing a lot of work recently in communities with minor league baseball teams. Here is a sample:
Traverse City, Michigan
Team: Traverse Pit Spitters
We are working on a reorganization and partnership plan for local economic development organizations. The ultimate goal is to bring private sector, nonprofit and local municipalities, together around a strategic approach to economic development in order to grow a competitive, prosperous and sustainable regional economy.
Newport, Rhode Island
Team: Newport Gulls
We are working with the Newport County Chamber of Commerce on an initiative launched by the Chamber in 2018: Connect Greater Newport. Connect Greater Newport’s mission is to support the growth of Greater Newport’s existing businesses and serve as a resource to attract new companies to the region.
Team: Lehigh Valley Iron Pigs
We are working with the City of Allentown to develop a Comprehensive and Economic Development Plan.
Being around all these minor league baseball teams has got us thinking… maybe we could start a team of our own! Today, on April Fool’s Day, we are celebrating the start of the baseball season by announcing our plans to start a minor league baseball team: the Fourth Economy Fish Fryers.
We’re trading in our post-it notes and powerpoints for baseball bats and gloves. Instead of spending time in boardrooms, we’ll be spending time in bullpens. Fresh off of spring training, we know this year is our year (or at least better than the Pirates). Here’s our lineup.
- Rich Overmoyer- General Manager
- Pia Bernardini- Director of Baseball Operations
- Jerry Paytas- 1st Base Coach
- Chelsea Burket- Hitting Coach
- Emily Brown – Pitcher
- Monica Hershberger – Catcher
- Chris Worley- 1st Base
- Emilie Yonan- 2nd Base
- Nicole Muise-Kielkucki – 3rd Base
- Josh Devine – Shortstop
- Kristina Harrold – Right Field
- Mickey McGlasson – Left Field
- Kara McFadden – Center Field
- Jordan Daniels- Designated Hitter
Happy April Fools Day!
Over the past decade, co-working has grown from a niche offering to having a significant impact in terms of the commercial real estate market — and providing a new alternatives tailored for remote and independent workers and small teams.
This summer, Fourth Economy was engaged to create a market assessment for the co-working market here in Pittsburgh. As a part of that effort, we reviewed a volume of existing secondary research that answered questions similar to the ones that we were looking to answer in Pittsburgh: what is the market capacity for co-working? Who is the co-working market? And, as we’ll address in this blog post, how is “co-working” defined?
What is co-working?
The Oxford Dictionaries define co-working as “the use of an office or other working environment by people who are self-employed or working for different employers, typically so as to share equipment, ideas and knowledge.” The general definition was reiterated in the reports we read the most closely *. But this definition doesn’t help narrow down on what the boundaries of co-working are, ranging from a desk one can rent for a few hours to a serviced office space one can rent for a team of 15 workers. Reading them more closely, these reports tended to define co-working, and view the co-working market, through either a real estate-centric or a workforce-centric lens, depending on the benefits or targets of co-working they focused on.
Deloitte’s report defines co-working as a “membership-based workspace with a monthly fee giving access to a desk, office space, Wi-Fi, and other amenities.” The real estate-centric definitions focused more more on the short-term lease and flexible membership benefits of co-working, rather than its community-based or knowledge-sharing aspects. In this framing, co-working is usually lumped in with professional serviced office spaces like those of Regus or WeWork; the different work styles of serviced offices and co-working (specifically, the social difference between working in an open space close to other co-workers, as opposed to in a small rented office with shared amenities) are not emphasized.
This is also reflected in the types of co-working spaces many of the reports we read measure: because their focus is on the commercial real estate implications of co-working — both for the entrepreneurs or remote workers who are co-working tenants and for the co-working operators (like WeWork or Regus) — these reports tended not to measure locally-run co-working spaces.
The workforce-based definitions were centered around the culture of these spaces. This approach highlights the types of worker (e.g. self-employed, entrepreneurial, etc.) as well as the collaborative and innovative elements of the space. For instance, in their “The Work Shop” report, CBRE describes co-working as “the best elements of a coffee shop (social, energetic, creative) and the best elements of a workspace (productive, functional)” combined to give workers the opportunity for an affordable, shared space. This definition explains a general value proposition for co-working — but elides how that value proposition differs across teams of different sizes and across the different types of spaces (from rentable private offices to shared desks) that may create a more or less collaborative co-working environment.
Given these different lenses through which to view the co-working market, how did we categorize the Pittsburgh market for our own study? We categorized it two ways: through identifying three main types of co-working spaces we observed in our market, and through identifying the different needs and motivations of co-working clients, from single clients through 8-person teams.
Three kinds of co-working
In the absence of one specific way to define what co-working includes and doesn’t include, we focused our analysis on workspaces that allow for short-term, flexible lease terms with shared amenities (like kitchenettes and meeting rooms).
We segmented the Pittsburgh market into three rough categories, “Professional Co-Working,” “Community Co-working,” and short-term offices. Professional co-working spaces generally feel more corporate, may have more expensive furniture and finishes, may offer additional amenities like a front-desk receptionist, and are offered at higher monthly rents to reflect those factors.
Community co-working spaces are community-driven spaces with a neighborhood orientation that offer flex and fixed desk workspace at a lower price point than professional co-working spaces. They are similar to professional co-working spaces in that they offer a membership model (often with month-to-month leases) but differ from professional co-working spaces in, corresponding to their lower price point, they may not have professional operations or staffing (like a front desk), the finishes and furniture may be less expensive, and the technology and building operating systems (for example, for teleconferencing or climate control) may be more basic. The trade-off is the emphasis on relationships and community that community co-working spaces offer — as one proprietor told us, co-workers first come to their co-working space because of the space’s proximity to where they live — but stay for the community and connections. Community co-working spaces also differ from the other types of spaces in that they often have a specific community focus, like social entrepreneurship.
Finally, short-term offices range from serviced offices, executive suites, business centers, or other lease-negotiated and based-agreement that may encompass some flexible or open space. Short-term offices differ from either professional co-working or community co-working in that they are specifically offices for small teams, as opposed to flex or fixed desks, and because of their lease-based, rather than membership-based, business model.
Cultural benefits — and costs — of co-working
For the smallest companies, beyond the financial benefits, co-working represents a low-barrier opportunity to participate in a professional culture. For slightly larger companies, the larger culture of the co-working space offers the possibility to either benefit or disrupt the internal culture of the company, depending on how well-matched the two are. Teams of above eight or ten people already have a profound enough sense of cohesion and internal culture that the benefit of being in a co-working space no longer satisfies that need—and a mismatch between the expectations of smaller and larger companies (as contributors to the overall culture of the co-working space) can be a challenge.
The importance of definitions
Reviewing the existing set of definitions for co-working, and creating a framework for understanding the study for our own analysis, was critical to being able to paint a picture of this exciting emerging market for our clients that was as specific and actionable as possible — and helped give them, and us, some new language and tools for understanding how they fit into the market.
Want to talk to us more about co-working and other entrepreneurial supports in your community? We’d love to hear about the impact of co-working where you are. Email us at email@example.com.
*Including Newmark Grubb Knight Frank’s October 2016 report, “Scale of Disruption: The Sharing Economy’s Effect on U.S. Commercial Real Estate,” JLL’s “Shared Workspaces” report, NGKF’s report “WeLease: The Growth of Shared Workspace and Its Impact on the New York City Market,” Deloitte’s report “The London Business Footprint: The Growth of Serviced Offices,”Cushman & Wakefield’s 2015 report “Continuing the Evolution of Flexible Working,” and CBRE’s 2016 report “U.S. Shared Workplaces” and “Work Shop” reports