INSUBCONTINENT EXCLUSIVE:
buildings.Consider this an ongoing discussion about Urban Tech, its intersection with regulation, issues of public service, and other
complexities that people have full PHDs on
The rise has been so remarkable that even the headline-dominating SoftBank seems willing to bet the success of its colossal Vision Fund on
spike to $45 billion.And there are no signs of the trend slowing down
With growing frequency, new startups are popping up across cities looking to turn under-utilized brick-and-mortar or commercial space into
empty lots into spaces for outdoor co-working and corporate off-sites
closed during the day into private co-working space during their off-hours.Before you know it, a startup will be strapping an Aeron chair to
restaurants and open spaces that line city streets going to be filled with MacBooks, cappuccinos and Moleskine notebooks That might be too
tall a task, even for the movement taking over skyscrapers.Photo: Vasyl Dolmatov / iStock via Getty ImagesSo why is everyone trying to turn
your favorite neighborhood dinner spot into a part-time WeWork in the first place Co-working offers a particularly compelling use case for
under-utilized space.First, co-working falls under the same general commercial zoning categories as most independent businesses and very
replacement for the often crowded and distracting coffee shops used by price-sensitive, lean, remote, or nomadic workers that make up a
growing portion of the workforce.Thus, businesses can list their space at little-to-no cost, without having to deal with structural layout
changes that are more likely to arise when dealing with pop-up solutions or event rentals.On the supply side, these co-working networks
member at a much lower rate than traditional co-working spaces
Spacious, for example, charges a monthly membership fee of $99-$129 dollars for access to its network of vetted restaurants, which is cheap
alternatives, while tight-margin businesses facing increasing rents for under-utilized property are able to pool resources into a network
and access a completely new revenue stream at very little cost
were applying to join the network on their own volition that only five percent of total applicants were ultimately getting
accepted.Basically, the business model here checks a lot of the boxes for successful marketplaces: Acquisition and transaction friction is
Unit economics seem strong, and vetting on both sides of the market creates trust and community
customers benefit from added flexibility as more locations join the network.Photo: Caiaimage / Robert Daly via Getty ImagesSo is this the
way of the future The strategy is really compelling, with a creative solution that offers tremendous value to businesses and workers in
But concerns around the scalability of demand make it difficult to picture this phenomenon becoming ubiquitous across cities or something
that reaches the scale of a WeWork or large conventional co-working player.All these companies seem to be competing for a similar
demographic, not only with one another, but also with coffee shops, free workspaces, and other flexible co-working options like Croissant,
which provides members with access to unused desks and offices in traditional co-working spaces
Like Spacious and KettleSpace, the spaces on Croissant own the property leases and are already built for co-working, so Croissant can still
offer comparatively attractive rates.The offer seems most compelling for someone that is able to work without a stable location and without
the amenities offered in traditional co-working or office spaces, and is also price sensitive enough where they would trade those benefits
instead of paying a monthly membership fee to avoid the frictions that can come with them.And it seems unclear whether the problem or
Would the desire for a private working environment, or for a working community, be enough to incentivize membership alone And in less-dense
less certain how many will actually fit the profile that opts out of both more costly but stable traditional workspaces, as well as
potentially frustrating but free alternatives
And if the lack of density does prove to be an issue, how many of those workers will live in hyper-dense areas, especially if they are
But will the trend of monetizing unused space through co-working come to permeate cities everywhere and do so with meaningful occupancy
That said, there is still a sizable and growing demographic that need these solutions and the value proposition is significant in many major
urban areas.The companies are creating real value, creating more efficient use of wasted space, and fixing a supply-demand issue
fear in turning them into part-time co-working spaces.
