Step back...What is a co-working space?

At dinner the other night with my sister and brother-in-law, they asked me how work was going. When the word co-working left my mouth during my reply, my sister stopped me and asked, "So what exactly is a 'co-working' space"? I was shocked. Who doesn't know what a co-working space is? Neither the lawyer nor the engineer I was staring at across the dinner table did. Then I remembered that I live in my bubble (thank you, techie friends) and A LOT of people have no reason to know what co-working is.

So let me back up and explain, what is a co-working space? And why are they part of an industry to pay attention to?

A man named Bernard DeKoven takes credit for coining the term "coworking" in 1999, originating from the idea of "working together as equals". Regarding our modern day use of the word, story has it (and this is debatable) the first "co-working space" was created by Brad Neuberg in 2005. He operated Hat Factory, which was a live/work loft in San Francisco used to house a few tech workers and anyone else who wanted to use the facility. He went on to create Citizen Space, a network of co-working spaces that drive the values of community, openness (meaning transparency in business, along with justifying the open floor plan), collaboration and accessibility for all. Fundamentally, co-working spaces are created to foster these values. Logistically, co-working spaces are:

Office spaces with open floor plans and shared conference rooms, kitchens, event spaces and common areas.
A space operator (i.e. Citizen Space) that creates the community and encourages collaboration between members.
Amenities like snacks, coffee, reception services, internet, child care, free beer, happy hours, business meet ups and education series.
Flexible and low commitment real estate. Most co-working spaces operate on month-to-month agreements.

With the rise of the mobile workforce and more people/millennials going out to start a business of their own, co-working spaces are in high demand. The venture capital investment in the technology sector has been unprecedented in the past 5-6 years, flooding the real estate market with tech start-ups. Rather than take on a 2-10 year lease, a growing start-up can move into a co-working space and pay more as they increase headcount. Instead of working from home or at the neighborhood coffee shop, a mobile worker can spend $350/month for a desk in a co-working space.

Along with the desk and internet, you reap the benefits of the community and amenities in the space. The type of community and amenities you receive ranges, at times drastically. Some spaces are co-working "incubators" for budding start-ups and help their members find funding, education, recruits and mentors. I like to think of co-working spaces as hotels - take for example Marriott, Four Seasons, the boutique Hotel Zetta and Best Western. They all serve a similar purpose, but you definitely know the differences when you walk through the door.

I am using the word "co-working" liberally. To be honest, I am not in the business of co-working, but rather of shared office space. The difference between the two varies depending on who you ask. Most co-working operators don't see themselves as shared office space providers, but rather community creators. They want to attract the members that will create the energy and conversations they envision in their space. They are in the business to create a space where like-minded individuals want to work, rather than find the best ways to increase profit margin.

To me, the difference between co-working and shared space is the business model and who it attracts. Co-working is a per desk model; the right solution for a freelancer looking to meet and be inspired by like-minded people. It is a great solution for a start up with 1-5 people who are looking for ways to save costs and take advantage of the shared amenities. Shared office space is a per office model and attracts larger start-ups, small to mid size companies and large companies looking for a flexible solution before starting their own office. Shared space invests heavily in the technology infrastructure, space build out and service center amenities. Shared space is built for business first, and fosters a community second. Because of these investments, shared office spaces can often ask for more money per person.

The new generation is creating a mix of the co-working model and shared office space model. My company is opening its first co-working/shared space next month. The co-working space is on the first floor of the building and includes event space and additional conference rooms, which tenants of the building can use as well. Our shared office model will be on the upper floors, allowing companies the privacy of their own suite with the flexibility and business amenities they need.

Let's call the industry flexible real estate. As the demand increases, so do the companies popping up hoping to get a cut of the budding industry. This includes new operators, but also online marketplaces, large corporations, furniture designers, real estate brokers, IT professionals and landlords, among many more. It's time to take notice.