he American workforce is changing. According to NPR, one in every five workers is a contract worker. Experts predict that in a decade, over half of the workforce could be made up of freelancers. Couple this trend with the fact that providers of co-work spaces continue to aggressively expand their footprint. Take WeWork, a popular provider, who announced last fall that it became the top tenant in New York, surpassing JP Morgan, the largest U.S. bank. These trends together create an interesting ripple effect on the rise of co-working spaces.
What is a co-working space? A co-working space is a building where individuals rent out space — a seat, a desk, or even an office — so they have a space to work. This allows freelancers, contract and remote employees a place to work outside of their home, provides space for client meetings, and allows these free agents to mingle with other workers, something they don’t get working from home.
Workspace experts Allwork report that there are over 14,000 co-working spaces in the world today, and they predict that the number of co-working contract employees will rise to 3.8 million in 2020. Even enterprises are utilizing these co-working these spaces to attract talent and test the talent pool in a new market. In response, more providers are entering the market to capitalize on this newfound trend. This rapid growth is exciting, but is it sustainable?
One concern is the variable nature of some freelance positions, and in turn, the short term nature of some co-working memberships. Co-working spaces that accept month-to-month memberships may struggle to fill spots in the event of an economic downturn or change in the job market. One potential upside for providers is that according to WeWork, 25% of their co-working space members are held by enterprises comprised of more than 1,000 employees. These clients can provide stability can add a layer of resiliency in the economic cycle changes. If owners of these spaces are vigilant in how they manage memberships, they stand to benefit from the growth that’s being seen in this sector.
The nature and makeup of the workforce is very different than it was even five years ago, and other industries will continue to adapt to these changes. It will be exciting to see how co-working spaces expand and adapt to fit the current contract workforce, and it will be interesting to see what other industries adapt to meet the needs of this growing population.