Co-working – millennial fad or the future of work?
Co-working space could account for up to 15 per cent of the Dublin office market this year. Is this relatively new phenomenon here to stay?
Dogpatch Labs’ shared-office space at CHQ in the IFSC. Photograph: David Sleator
Co-working and flexible office space – where companies and individuals rent on a short-term basis in trendy, often Google-like environments – emerged in the US more than a decade ago and now the phenomenon has taken root in the Irish market, where it’s disrupting the traditional landlord-tenant model and being eyed nervously by some. But is it a passing fad? Does it really represent a sustainable new way of working? Or is it more about catering to the comfort requirements of bubble-wrapped millennials?
James Meagher, a director at Knight Frank, maintains the co-working model in Ireland took off “in a major way in 2017” and it will be “very interesting to see how this trend develops in 2018”. This view is echoed by Marie Hunt of CBRE, who says growth in co-working has been to the fore “elsewhere in Europe in recent years”. Meanwhile, Aisling Tannam of Cushman & Wakefield says an increase in co-working/serviced office occupiers taking large amounts of space “is a trend that we see increasing significantly in the Dublin office market over the coming months and years”.
In terms of office take-up, co-working is estimated to have accounted for about 6.5 per cent of the market in 2017 – a small percentage, yes, but up to four times more than 2016. “Take-up in the overall Dublin office market reached 270,000sq m in 2017, surpassing 2016’s total, while also edging closer to the market peak of 288,000sq m in 2007,” says Ronan Corbett, director and head of offices at Cushman & Wakefield.
Booming office market
This latter quote is important because it underlines that the growth of co-working is taking place against the backdrop of a booming office market where take-up and rents are approaching 2007 peaks. So, the approximate 17,550sq m of take-up accounted for by the co-working sector would probably have represented a larger percentage of the market in an “ordinary” year.
Meagher believes co-working could account for up to 15 per cent of take-up in the Dublin office market in 2018 – a significant slice of the action – meaning it’s likely to become much more competitive as a sector in its own right and as a challenger to the long-lease model that has predominated for so long.
Up until recently, the co-working market in Ireland had been dominated by local providers, like Iconic Offices, operating out of contemporary reworkings of period buildings, former cinemas and industrial premises. These have been spruced up to become trendy spaces with a far-from-corporate vibe that would typically appeal to a younger generation.
However, Iconic has branched out into much larger spaces, such as its recent acquisition of the 3,252sq m (35,000sq ft) Greenway building on St Stephen’s Green, and upped its service in some buildings to include gourmet coffee and continental breakfast – all free – plus a concierge service similar to that in a hotel. Its design ethos is constantly evolving and may soon incorporate facilities like gyms, yoga rooms, phone-free zones, cinemas and coffee shops.
Last October, Iconic leased the 1,858sq m (20,000sq ft) South Point block on Harmony Row in Dublin 2 which is located close to the south docklands. The building, a once-bland block, has been transformed with a new penthouse level and also includes a small library stocked with 2,500 vintage books to give workers an area where they can go to think and “chill”. Close to the trendy Silicon Docks area, it is being rented by Iconic under two 25-year leases at a rent of €790,870 or €430 per square metre (€40 per square foot).
Joe McGinley, chief executive of Iconic Offices, has pointed out on many occasions that much of its approach is about giving millennial workers what they want from an office. “Flexible workspaces like ours are part of the sharing economy,” he told The Irish Times recently. “It’s about bringing lots of small and medium-sized businesses together to create just the kind of scale required to bring their workspaces to a standard where it comes a tool for recruitment and retention. Millennials want an interesting space that allows them the flexibility to move around, whether it is a sitting/standing desk or the ability to have meetings in various rooms, or to take calls in a call box where they have privacy to talk to clients. They like to move around because they are used to moving with tablets and laptops. Millennials are blurring the lines between work and play and this is something that we see more and more of – people socialising in their workspace, in the evenings.”
Dogpatch Labs, widely recognised in the United States and Ireland for its pioneering development of early stage co-working “communities”, was another early-mover in the co-working space. It set up here in 2011 and gathered significant momentum in 2015 with a move to CHQ in the north Dublin docklands, where it initially occupied 1,254sq m (13,500sq ft) that was previously in retail use and subsequently expanded into an additional 650sq m (7,000sq ft) by developing the vaults beneath its unit.
The company, which offered free co-working office space to start-ups on an invite-only basis, has evolved into a “pay-to-play” business model that supplies office space to scaling tech start-ups on affordable and flexible terms. Start-ups were charged a rate of €400 per desk per month and Dogpatch at CHQ is now home to more than 40 start-ups, while alumni include many of Ireland’s fastest-growing tech firms such as Intercom and Boxever.
But the big international names in this specialist sector have landed or are scoping out opportunities here. US company WeWork, a significant flexible space operator internationally, agreed rental terms last September on two buildings being upgraded at George’s Quay and Harcourt Road in Dublin city centre. It is to occupy 4,645sq m (50,000sq ft) in the renamed 1GQ overlooking the Liffey close to Tara Street Dart station and 5,109sq m (55,000sq ft) at Iveagh Court, which was occupied until recently by the Central Bank. WeWork’s choice of location in the heart of the central business district and contracted rent, €613 per square metre (€57 per square foot) at George’s Quay and €538 per square metre (€50 per square foot) at Iveagh Court, is quite a statement of how strong it believes the market for co-working to be.
These two buildings should hit the co-working letting market in the second or third quarter of 2018. “They will offer much-needed flexible space for larger occupiers hoping to avoid long-term lease commitments and expensive fit-out costs,” says Paul Finucane of Colliers, who is also “aware of two other co-working operators” in the market for about 3,716sq m (40,000sq ft) each “so the flexible space model is here to stay”.
Other international operators rumoured to be looking at setting up shop in Ireland include The Office Group and Regus.
So, what are the benefits of co-working?
It enables entrepreneurs to work alongside others in a collaborative and shared environment. This allows you to learn from others who have already gone through the processes of setting up and developing a business. As a result, you should get guidance on how to avoid the potholes they’ve encountered and get to where you want to go faster.
Those co-working share resources (office space, desks, etc) and this helps to reduce the amount spent on common office overheads like broadband and printer costs. Co-working also allows you to avoid a lot of the baggage that comes with renting office space, such as signing up for a fixed-term lease, installing infrastructure and paying utility bills. A co-working space takes care of all of that, and allows you to rent the space on much shorter, more flexible terms.
Co-working offices are often found in high-quality buildings with a prime city centre address – that’s places and locations that would typically be beyond the budget of most early-stage entrepreneurs. Most also include access to meeting rooms and event spaces, meaning you can entertain clients on site.
There’s plenty of opportunity to discuss projects and developments in business with your peers and find out better ways of doing things or even collaborating. As co-working can put you near people with vastly different skill sets and potential solutions to problems, you can get a different perspective on things that could turn out to be very productive. By finding a co-working space that aligns with your field of work – like Dogpatch for tech start-ups – the potential for cross-fertilisation is even stronger. Possibilities to expand your personal and business networks with fun and ease is one of the main attractions of co-working – as creativity tends to flow in these spaces through the sharing of ideas and feedback, unlike in most other conventional offices.
The buzz of working alongside other entrepreneurs, too, can often drive you to make a success of your own business. Contrast this with working from home, where there is no possibility to meet other entrepreneurs and strong discipline is required to ignore the many possible distractions (TV, pets, family members, etc). Going to the office takes away the ability to easily shy away from your responsibilities to your business.
For some, keeping work separate from home allows them impose structure on their day and certainly provides a reason to get out of the house. In fact, going to a co-working space offers the structure of an office-style environment but the entrepreneur has all the autonomy they could want without any of the politics.
Then there’s the social aspect of co-working as opposed to beavering away on your own as a freelancer. Interactions in a work environment are an important part of daily life and can have a positive effect on your mental well-being, particularly as the life of an entrepreneur can be lonely at times. The emotional support of being surrounded by a like-minded community of entrepreneurs is also an attraction of co-working, as a happier worker is usually more productive.
“Having a dedicated space from which to work and conduct business is vital for companies in their early stages,” says Dublin BIC chief executive Michael Culligan. “But in a city in which only about 3 per cent of office space is vacant and prices are reaching record highs again, entrepreneurs and freelancers are finding themselves unable to access office space from which they can hire talent, scale and access customers easily.”
Dublin BIC operates two co-working spaces at present. The Guinness Enterprise Centre (GEC) is the largest single-building enterprise centre in Ireland, with more than 90 companies located in the start-up hub, and an additional 100 companies co-working from CoWork@GEC. Space@DublinBIC, located on Dawson Street, is the newest co-working community in Dublin’s city centre. It is managed by Dublin BIC in line with its mission to empower entrepreneurs to start and scale and is designed as an affordable office solution for entrepreneurs, freelancers and start-ups.
“With the city centre being increasingly dominated by bigger corporates, it is important that we work hard to ensure there is a healthy ecosystem of business – large and small, established and early-stage,” says Culligan. “By choosing to locate themselves in the GEC or Space, start-ups and scale-ups will not only benefit from being immersed in a hub of entrepreneurship, but they will also be surrounded by the supports they need to ensure their company is a success. It is not just the space that is important. We create a fantastic entrepreneurial community with lots of events, networking and social activities designed especially for fast-growing entrepreneurial companies.”
This model seems to suit fast-growing, early-stage companies that don’t want to be tied down to long-term leases and commitments. “The speed at which companies are expanding is rapid, particularly those in the technology sector,” says Hannah Dwyer, head of research at JLL. “We are expecting this type of demand to continue to drive activity in the office sector in 2018.”
The growing phenomenon of co-working is, perhaps, also indicative of the changing nature of work, which is becoming increasingly casualised as full-time roles become part-time “gigs” in technology’s never-ending advance.
But co-working does give the digital workers of the new economy more control over their working lives. It can also be good for freelancers to be surrounded by kindred spirits seeking relief from the demands of life in a large corporation in an environment where they can be fulfilled rather than just employed.