The largest, flashiest of our kind went down in a glorious, public, and arguably worst initial public offering in the stock market’s history. The charismatic CEO who checked every box of the pretentious, self-starter lunatic that everyone loves to love (and loves to hate) has run off with a large check, and is living on a beach outside of Tel Aviv.
Then, shortly thereafter, the most atrocious attack on small businesses takes place: a pandemic of epic proportions, holding physical office space hostage for the better part of a year.
So where do we go from here?
Here is what I know: Long-term leases were already losing their appeal pre-pandemic. We live in a world where entire markets are disrupted in short, sporadic consumer changes. I believe turnkey solutions to office space are the wave of the future.
This is a wave that coworking has already started to ride. Independent workers and gig economy employees already amount to a significant percentage of the American workforce, and I suspect growth will continue with unemployment rising. And most businesses coming to the end of their lease will find it hard to swallow high tenant improvement costs with a long-term agreement.
I think we will see a large consolidation of coworking spaces in the next three to four years. The smaller, more niche, community-driven spaces already have a hard time finding sustainable revenue streams. Larger, more expansive coworking brands (think Industrious, Impact Hub, Knotel) are well positioned to accommodate larger tenants who are ready to downsize to hip, efficient office layouts with strong community ties.
So, here at The Mill, we think there is something to be optimistic about in the years ahead for our industry.-30-