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The Bat Haus Coworking and Event Space in Brooklyn, N.Y. (Shridhar Gupta photo)

Co-working spaces, like many other businesses, were caught flat-footed by the drastic drop in activity when the pandemic hit last year.

Almost overnight, people worldwide fled shared offices to work from the safety of their homes. The drastic drop in customers forced some co-working centers to close, while others had to rapidly adapt their offering to weather the coronavirus storm.

Now, with employers growing more optimistic that it will be safe for staff to return in the near term, demand is poised to rebound this year as many organizations consider allowing employees to continue to work remotely at least on a partial basis, real-estate experts and business operators say.

“People want to return to work,” said Mike Kriel, chief executive officer of Launch Workplaces, a Maryland-based provider of co-working spaces. “The nuance is they don’t want to return to work the way they used to. They don’t want 40 hours five days a week in the same space.”

Such a shift to a so-called hybrid office model, where staff come into the office a few days a week and work remotely the rest, may help employers and employees find middle ground.

READ: Long live remote working: How the future of work has changed for good

Studies show that businesses seek to have personnel back at their office desks in some fashion once the pandemic subsides, while employees who have been working remotely want to keep doing so at least a couple days a week.

About 68 percent of employers want workers in the office at least three days per week once it’s safe, according to a PwC survey published in January 2021. At the same time, a Global Workplace Analytics survey of 3,000 people working remotely during the pandemic found that 76 percent want to continue to telecommute at least 2.5 days per week.

But remote work can be done from anywhere — not necessarily the home. Staying at least partially remote enables employees tired of working at home to tap alternative remote venues such as co-working spaces.

“By definition, co-working — more specifically, flexible space — provides the perfect answer to their needs,” Kriel said.

A surge in demand for flexible space

Mindspace, an international co-working and flex-space provider, is already seeing a surge in demand for flexible space, for several reasons.

Based on the firm’s report on 2021 flex work predictions, Nicole Nanikashvili, Mindspace’s brand and content marketing lead, said that companies are hesitant to make multi-year leasing commitments.

Also, those using hybrid models want co-working spaces because they offer flexible options that let them scale office space up or down as needed, she said.

“If they were to stick to traditional offices, they wouldn’t be putting all the space to good use at all times,” Nanikashvili said.

At the same time, people are tired of working from home, she added. While some people have adapted to the shift, many are facing burnout because of blurred boundaries between their professional and personal lives, she said.

Pandemic highs and lows

To be sure, some of the larger office space rental companies that also offer co-working space have experienced the highs and lows of the pandemic. Co-working giant WeWork has closed several locations and Knotel filed for bankruptcy.

Smaller operators have felt the impact as well.

Emily Kendrick, community manager at WestBase Coworking in Asheville, North Carolina, recalls having to alter her expectations from the moment her co-working space opened in March 2020, just as the U.S. was shutting down due to the pandemic.

“Business has been a bit slower than anticipated, and that’s both good and bad,” Kendrick said. While she would have liked more growth, she says her business has grown at a manageable rate.

She agrees that flexibility has been key to keeping and attracting customers.

“Many co-working spaces — ours included — have shifted toward even more flexible memberships, allowing people who work from home the freedom to work in our space just a few times per month, rather than committing to a full month or longer,” Kendrick said.

Post-pandemic horizons

Tomas Sulichin, president of the commercial division at RelatedISG International Realty in Florida, says that while he witnessed the entire office-space sector come to a standstill due to the pandemic, he expects the industry to pick up as vaccinations increase and people realize that co-working spaces may be safer than office buildings.

“Co-working spaces are already designed to keep safety measures in line by allowing flexibility and spacing between individuals,” he said. “As people get more comfortable, they will be coming back into the co-working space.”

Organizations also will be able to accommodate employees who want to work full-time in-office as well as those who want to remain remote by offering memberships to co-working centers.

Another factor that may spur demand will be the need for flexible spaces for small groups. Co-working centers may appeal to small businesses that have no office space but could use flex-space facilities for occasional meetings. A recent Clutch report noted that 59 percent of small businesses that don’t have office space aren’t planning to buy or lease property this year and could be potential users of flexible spaces.

Scott Homa, the head of office research for the Americas for Jones Lang LaSalle (JLL), which frequently assesses the commercial real estate market, agrees that flexibility will be key for both co-working spaces and offices.

While co-working operators have experienced a “dramatic boom-bust cycle,” the future of real estate will retain many of the key elements that fueled the pandemic’s disruption, he said in a statement on JLL’s website.

“Space will be fast, flexible and fun,” Homa said. “Pre-built spaces, agile design, technology integration, flexible lease terms and hospitality services will become the norm and continue to transform commercial real estate from a commodity to a consumer product.”

A major disruption for commercial real estate

JLL forecasts that flexible space will grow to 30 percent of the office market by 2030. Today, it represents less than 5 percent of that market.

“It is hard for me to imagine 30 percent of traditional office space going to flexible use, but it would be exciting to see,” said Kriel of Launch Workplaces. “I hope it happens. The commercial real estate industry is about to disrupted in a big way because of the pandemic.”

As demand for co-working centers increases, Kriel expects new operators will enter the flexible space market.

“Building owners will begin to try to do this themselves and third-party management groups will come to the market and new operators will come as well,” he said.

Kendrick at WestBase expects more co-working spaces will expand to the suburbs as remote work opens up opportunities for workers all over. Most of her clients live within a two- to five-mile radius from her business.

Co-working spaces as ‘hub-and-spoke’ centers

While more professionals may start seeking out co-working spaces as an alternative to working from home once the pandemic ebbs, flexible-space operators also stand to benefit as “hub-and-spoke” centers for businesses, Kendrick said.

By using co-working spaces as a “hub” or a satellite office closer to where employees live, organizations can arrange for these centers to host small teams regionally and provide a space for collaboration, she added. Businesses that are fully remote but somewhat local could also make up traffic in co-working spaces post-pandemic.

Kendrick says more people will seek co-working spaces as they get comfortable being in a public space and seek a remote option away from home.

“I think remote work will only help co-working companies,” she said. “I expect that even those who love working from home will want to come into a co-working space to work, if only a couple of times a month. They like the convenience of being close to home without being home.”

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