The ‘Space as a Service’ product has been a successful concept within the real estate sector in recent years. But the COVID-19 pandemic has severely disrupted the business model, which may not bounce back in quite the same way once the dust settles. Globally, the co-working industry was a $26 billion dollar industry in 2019, helping small business owners work collectively, yet separately and giving them access to amenities such as:
- business-class printers
- high-speed internet access
- spacious common areas (which often include desks, chairs, lamps, and lockable file cabinets)
- free refreshments
- an onsite staff
- private phone booths
Companies like WeWork also host events such as wellness sessions, networking events, one-on-one introductions with investors and industry leaders, and catered lunches where members share tips, knowledge, and expertise. For freelancers and small businesses, co-working and flexible working spaces were just what they needed to start and grow their companies. Co-working spaces started popping up from early as 2000. Space as a service was a profitable product for real estate businesses and flexible working spaces were set to grow up to 30 percent annually for the next five years across Europe in 2019. The characteristics of the space as a service model enable landlords to charge higher rents because of the short-term commitments and generate a higher return. The flexibility allows the business to cut their cost quickly if they don’t succeed. But today, the strengths of the business model become its Achilles heel, as tenants are struggling through the pandemic and cut their cost by working from home. Then there is the safety aspect as well. Since the threat of COVID-19, co-working spaces have been temporarily shut down. This has led many to wonder whether the co-working industry will be able to recover. Let’s take a closer look.Click here to learn more.