WeWork, the multinational coworking company, has made a name for itself as a haven for freelancers, entrepreneurs, and small businesses. But as the company expands its reach, now operating 140 locations in 44 cities spread across 15 countries, it's increasing appealing to a different clientele: corporate America.
According to the company's head of product research, Josh Emig, members working for large companies has become the fastest growing segment of WeWorks' business. There are roughly 22,000 members considered enterprise clients, defined as workers for companies that employ more than 500 people.
"There's a perception that coworking is for startups and freelancers," he says, "and that's still true. But we get a lot of larger companies who want to behave more like smaller startups."
The shift is reflective of many larger trends in the economy, says Emig. WeWork research predicts that by 2020, half of large companies will have some form of shared office space office space, whether that's coworking or another model. The concept has become central to corporate strategies on growth and expansion.
"Larger companies are trying to flatten hierarchies, pay more attention to teams, and function like an innovative startups," he says. "Companies are coming to us asking 'how can we tap into this phenomenon?'"
WeWork offers these enterprise clients flexibility, multiple locations, and short-term agreements without the hassle of traditional leases and build-outs. Emig says agility—the ability to quickly ramp up projects in a new city, or start up a "skunkworks" research facility—is appealing. There many be a hipness factor to coworking, but it's also becoming a larger part of the gig economy; the Intuit 2020 Report suggests that 80% of global corporations plan to significantly increase their use of contingent labor over the next few years.
Increasingly, WeWork is also offering specialized services for these enterprise clients.
Over the last year or so, WeWork has ramped up whole floor and multiple floor arrangements with larger firms. Some companies are even leasing entire buildings owned and operated by WeWork (the company wouldn't name specific firms, though reports have surfaced that IBM will be taking over an entire building in New York). WeWork is willing to customize these spaces with signage and branding, and offering unique space solutions and layouts.
The newest concept is called on-site, says Emig. In this scenario, WeWork builds out and operates a shared workspace on property owned by another company. A true adaption of their services, this arrangement brings WeWork culture and community to a corporate campus or larger headquarters.
Emig says these services have become the company's fastest-growing segment. From March 2016 to March 2017, the enterprise membership segment grew 170 percent, and now includes 967 enterprise member companies, as well as five buildings occupied by just one or two member companies.
In a spin off the software-as-a-service business model, it's being described as "space-as-a-service." He compares the desire for more flexible office space to the larger digital shift; companies want their space to be as flexible as their data.
"Real estate is a slow industry," he says. "People are looking at physical assets as more malleable."
Real estate is a slow industry. People are looking at physical assets as melleable, it may seem like a hooky analogy, and want it to be as flexible as our digital assets. I see it as an extension of that disruption. There's technological impact, the way we're able to manage people across space and time now. All these things are coming to bear on more conditional industries.