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Coworking: Why it’s so popular and how it’s affecting commercial leases in LA

| Apr 21, 2016 | Commercial Leases

The Harvard Business Review (HBR) is a highly prestigious, often-cited source of information on leading trends and the prevailing views of business elites. As such, it is hardly an oracle of the future.

And so, when HBR devotes significant space to a phenomenon such as coworking, it suggests that the phenomenon has already become influential among decision makers.

In the case of coworking that is indeed the case. And as we will discuss in this post, the rising popularity of coworking has important implications for the commercial leasing market in Los Angeles.

HBR on the benefits of coworking spaces

Coworking spaces are workplaces in which members don’t all work for the same company yet share a communal setting. This setting often features lots of amenities, such as free beer on tap or the ability to bring your dog to work.

It isn’t amenities such as free beer or gourmet coffee that are the real driver, however, behind the increasing popularity of such spaces. As the HBR noted in a recent issue, the popularity comes from the perception that a coworking setup offers a more meaningful way to work.

Since the members don’t all work for the same employer, traditional office politics are downplayed. Instead, there is the opportunity to collaborate and have conversations with other professionals – some of whom are doing very different types of work.

Harvard Business Review conducted surveys that identified other sources of satisfaction as well with the coworking setting. Another benefit is participants in coworking spaces often have the opportunity to help each other out, using their unique skills sets. And they get to do this in ways that don’t involve trying to climb the corporate ladder.

Small wonder, then, that so many people have found coworking so meaningful – and that it is becoming so popular. This is reflected in the Coworking Manifesto, an online statement that has been signed by people in upwards of 1,700 workspaces.

Implications for commercial leases in LA

The popularity of coworking is also affecting the commercial leasing market in Los Angeles. As the LA Times reported this week, firms that offer coworking space are getting plenty of business from tenants looking for that space.

As the Times pointed out, it used to be that coworking settings were associated mostly with startup companies (often in the tech industry) and with independent professionals looking for someplace other than or in addition to a home office.

What’s happening now is that more and more companies in more and more industries are looking at the advantages of coworking spaces.

It isn’t only the collaborative benefits of the shared space that are driving this, of course. The fact that leases for coworking space tend to be short-term is another. Many companies like the flexibility of such arrangements.

After all, a company may seek to respond to an opportunity in its industry by adding contract jobs or perhaps expanding in a new city. Using a coworking space allows for such responsiveness, while also keeping costs down and allowing for a way of working that employees have enthusiastically embraced.

What’s best for a particular company

As with any other commercial lease, it’s important to get sound legal counsel before signing off on a lease for a coworking space. By doing so, you will be in position for the proverbial win-win: furthering your own interest while doing something that benefits others as well.