Co-Working Categorized: People and Places in an Emerging Market

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.

Real estate-centric

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.

Workforce-centric

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.

Our definitions

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 engage@fourtheconomy.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

NIST Announces NMII Competition

Paytas-Blog-20160405Recently, The National Institute of Standards and Technology (NIST) announced the competition to award its first National Manufacturing Innovation Institute (NMII).  Proposers may focus on any advanced manufacturing technology area not already addressed by another institute or open competition. Seven institutes have been funded to date with two currently moving through the review and negotiation process. After attending the Proposer Day session on March 8, 2016, it is clear that many proposal teams have already been formed. Continue reading “NIST Announces NMII Competition”

48 Hours in Pittsburgh with the Consulate General of Canada

Bernard-Blog-20160405To many Americans, Canada is our friendly neighbor to the north, known for an affable attitude, a passion for pucks and a penchant for strong beer.  What is perhaps less known is how critical trade with Canada is to the economy of the United States.  Consider:

  • Nearly 9 million U.S. jobs depend on trade and investment with Canada
  • Canada is the top export destination for 35 states
  • Canada is the number one supplier of crude oil, refined petroleum products, natural gas,
    and electricity to the U.S. as well as a
    leading supplier of uranium
  • 400,000 people cross the Canada–U.S. border daily

Source: http://can-am.gc.ca/can-am/index.aspx?lang=eng

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Big Visions Get Big Dollars in Indiana

IndianaBlogImageOn Tuesday, the Indiana Economic Development Corporation (IEDC) announced $126 million in state matching funds to support three regions in pursuing their visions for growth. The Regional Cities Initiative was developed based on a study of regions that have experienced transformational growth, performed last year by Fourth Economy, and is being funded by a tax amnesty program. Tuesday’s announcement was the culmination of months of planning on the part of Indiana’s regions, and Fourth Economy was fortunate enough to facilitate and advise on the strategy for two of the winning regions in those efforts – Northeast Indiana (home to Fort Wayne) and Michiana (home to South Bend). Here are a few lessons learned from our work helping multi-county, cross-sector partnerships identify and prioritize quality-of-life investments meant to attract and retain population.
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Inspire Yes, But Act As Well

Coffee-Shop-1099Tis the season for annual conferences – that chance each year for trade groups to tout their accomplishments and relevancy. The Fourth Economy team attended our fair share. What we find scary is that while the workshops and keynotes are conveying the seismic changes occurring in our economy, change on the street, in our communities and programs, appear to keep on keeping on as if it were, oh say, 1999. Many of the metrics for growth we heard remain focused on absolute land development, job creation (regardless of type and cost) and more office space.   Continue reading “Inspire Yes, But Act As Well”

Cultural diversity in the “fourth economy”

Diversity-Fourth-Economy

Building the “fourth economy” is all about combining traditional economic development tools with creative solutions to ever-evolving challenges.   The Fourth Economy Index is our framework for thinking about what sets communities and regions up for success: investment, talent, sustainability, place, and diversity.

Elements of these indicators came up again and again throughout three “21st Century Cities and Global Leadership” discussions at the recent Thrival Festival, focusing on questions like what might attract and retain talent in Pittsburgh and how to ensure that economic growth is sustainable.  And while diversity can mean many different things (and does as a metric in the Fourth Economy Index), one element of diversity that had an undeniable presence throughout the discussion was cultural diversity. Continue reading “Cultural diversity in the “fourth economy””

The Future of Work [Podcast]

Workforce-Disconnect

In September, Dr. Jerry Paytas was featured on Workforce Central, hosted by the National Association of Workforce Boards‘ President/CEO Ron Painter. Workforce Central features public & private sector leaders in workforce development, education, business and economic development discussing key workforce issues and investment strategies to help America compete globally.

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What Do Craft Breweries Say About Your Community?

Craft-BrewingYou must know that I (and all of us at Fourth Economy) love local craft beer.  It is among the first things we seek out when visiting both new and familiar communities across the country. Beyond the beer, we also love the places in which they are brewed – the small-towns and big-cities. Those revamped car dealership buildings – home to some favorites such as Fargo Brewing, ND and Kalispell Brewing, MT. That former “mom-pop” auto repair place at the end of dead-end dirt lane – visit Helltown Brewing in Mt. Pleasant, PA. The funky food trucks, local farm to table options and impromptu bluegrass open mic nights that round out the ever-changing scene and texture that is the craft brew pub experience.  We love it all!

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Upper Lawrenceville Community Visioning and Development Plan Receives “Great Places” Planning Award

Upper-LawrencevilleThe Environmental Design Research Association (EDRA), in partnership with Project for Public Spaces (PPS), has recognized evolveEA’s work in Upper Lawrenceville, also known as Pittsburgh’s 10th Ward, with a Great Places Award. The Upper Lawrenceville Targeted Development Strategy was developed through a series of charrettes led by evolveEA in which they helped the community craft a neighborhood identity and a series of principles guiding future development to achieve the community’s long-term livability goals. The principles built upon the existing physical and cultural legacy of Upper Lawrenceville but also were aspirational, seeding a vision for a future yet to come focused on economic, cultural and environmental issues.

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National Fourth Economy Community Index Lists Top Ten Large-Sized Counties

141204-FECIndex

Fourth Economy Consulting announces the latest release of its national community index, listing top counties from across the nation. The Fourth Economy Index highlights those communities ideally positioned to attract modern investment and managed economic growth within the fourth economy.

PITTSBURGH, PA – The latest edition of the Fourth Economy Community Index was announced today, recognizing the top ten large-sized Fourth Economy Communities. These communities—with populations between 150,000 and 499,999—were selected because they represent regions that are poised to achieve sustainable economic growth while attracting people and investment.


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