Emma says that, in the near-term, outcomes will vary from operator to operator, and building to building, depending on the profile of its customers: some coworking spaces are vulnerable because they depended on sectors like the arts, which are struggling to recover, others have shorter-term contracts, or smaller business tenants, and some have occupiers eager to capitalise on the flexible space they have – whilst others do not. These variations will determine who thrives and who merely survives in the next 6-12 months.
As for new development and operator expansion, Emma suggests this will be patchy until the economy has stabilised.
‘A lot of growth has been put on hold, but to be honest that predates the COVID outbreak, as operators like WeWork, who were driving growth, changed their approach to seek profitable locations rather than simply volume of floorspace,’ she says.
The likely outcome is a series of more flexible hotel-style operating agreements between landlords and coworking brands. And if this becomes the norm, and is widely seen as viable, it could kick-start a new round of coworking start-ups and expansions.
‘This is a challenging time for all operators, who mostly have fixed leases with landlords,’ Emma explains. ‘Some operators are trying to renegotiate those arrangements in the same way that retailers are now talking to landlords, but it is still early days and, unlike the retail sector, we are not seeing floorspace returned empty, although this is possible. We’ve certainly not seen the rash of CVAs (company voluntary arrangements) that has enabled the retail sector to reconfigure its property.’