Co-working and the tech industry – Where next ? Juliette Morgan Cushman & Wakefield Global Tech Team Lead - London

Outline Co-working in London Definitions in a blurry world The needs of tech companies/What co-working provides Trends – Second Home + We Work Developers use of co-working/OaaS Emergent and international comparisons Future prospects for co-working

Co-working London This is a website called GoCoWo which has an interractive map of coworking spaces in London – they believe there are more than 100, but London and Partners have a figure closer to 220. Either which way it accounts for 3% of floor space in London and is the fastest growing sector in leasing transactions in London

By the numbers – the drivers 4.6m in UK are self employed – higher than records began In London 740k self employed – or 1 in 8 +28% - Microbusinesses 73k-94k Gen Y demanding flexibility in location, culture and collaboration Corporates chasing innovation – internally and externally – accelerators, embedded teams, sponsorship, venturing £’s per desk, not £’s per sq. ft. Low/no commitment

OaaS - definition Co-working – open plan, shared space, usually ‘roaming members’ who pay for access to a desk but not dedicated – av. price £350 Serviced offices – managed serviced space, hospitality driven, rate per month for personal space. – Av. Price £550 Accelerators – programs to develop corporate growth, usually with applications and time limited. Often embedded in Serviced Space. - equity for £’s

Where are the techs? - London

Where tech firms are looking – Hubble

Co-working competition - Transparency

Why co-working matters to tech

Yeah, but can they pay the rent? Yup because they are! They have money, but don’t want to commit long term and absorb money on fit out and lease deposits.

What do they need from offices? Flexible lease length Low/no deposit Ability to expand/contract Plug and work Connectedness Attract talent Credibility ‘acceleration’- a network that speeds up the business Culture

What do they get in co-working/OaaS? Networking Furnishing/fit out Smooth predictable cost Cost and flexibility - bundled Expand and contract Co-operation Events Community No commitment Design quality Brand expression Talent attraction

The role of accelerators in co-working Provide pipeline of new companies Animate the space Attract angels, venture capitalists and the right community A differentiator – e.g. industry specialism Underwrite finances e.g. Corporates paying for space (Barclays/Techstars/Central Working

Second Home – A New Trend Priveleged to work in second home, infact this is my office, run an accelerator in OaaS

Work + Life “offices need to be places where you can relax as well as work, because you’ll probably be spending more time in there than your parents did” Second Home

Curation Community Wellness Brand Vibe Informality Credibility Support services Diversity

Wellness

Nourishment Great onsite food – breakfast to bar, £5 lunch A program of speakers to inspire – Branson, McCartney, Lord Rees, Osbourne, Rogers, Morazov Meditation, yoga, pilates, running Personal controllable environment; lighting, temperature, choose a chair Hospitality vs. Security/hosting Volume, light, environment, nature (gets hot and cold) Raw, authentic, not over designed Plants/biophilia

The Economics Revenue from F&B sales – especially when animating a lobby (loss leader space) Event revenue Co-working revenue Desk rent revenue Sponsorships / brand agreements Meeting space hire

The Services Reception Phone line Internet Furnishing Break out space Meeting space Printing Curation

We Work – Amazing! £5bn global market cap! – Goldman & JP Morgan March to IPO..... 6 sites in London, more in pipeline 4 years old! ‘members’ not ‘tenants’ Beer on tap, beautiful fit out, private offices ‘physical social network’ – the value is the members Start ups, corporates, everyone in between – an ecosystem

How developers are using co-working.... Animate the scheme Bring credibility Attract large corporates to high growth start-ups Manage it directly – e.g. Hello Work (Allied London) Provide pipeline – e.g. Canary Wharf – changing tenant mix Brand building Swing space for occupiers e.g. Office Group at White Collar Factory

International Examples Rocket space – San Francisco Galvanize – San Fancisco, Boulder, Seattle 1871 - Chicago The Porter - Sydney Cambridge Innovation Centre - Boston Neuehaus – New York + London Soho Works – London, Istanbul, Los Angeles Spaces -

Future of co-working Facial recognition tech Occupeyes – real time occupancy Data on social interraction (higher value seats in co-working?) Floorplans with identity Social occupancy impact Real time occupancy cost – liquid space? A tech bubble? Regus round II? Priced into new locations

Conclusion Trend unlikely to go away – 10% of market? OaaS is a critical piece in place making and attracting corporates – balance of new and old OaaS are hoteliers of office space, and taking lease risk to break down real estate offers to growing companies in a way they can use Covenant security questions Watch the investment – tech bubble vs. freelance/company formation in a downturn Corporates using access to co-working for innovation agenda

Thanks Juliette.morgan@eur.cushwake.com @Juliettemorgan