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How the Australian co-working industry has changed in 10 years

Brad Krauskopf
12 March 2021 5 minute readShare
Australian co-working industry

There have been a number of big trends and pivots within the co-working industry that have come to the forefront, changing the way businesses and employees utilise co-working and office spaces, writes Hub Australia founder and chief executive Brad Krauskopf.

This month marks 10 years since Hub Australia officially opened its first location, a 200-square-metre space on Melbourne’s Bourke Street, with four staff and 70 members. Ten years on, we’ve grown to five cities across Australia, a team of 80 full-time staff, and thousands of members.

Post-COVID changes to the workplace, combined with our focus on customer service and quality spaces, mean that Hub expects its number of members and locations will double in the next 12 months.

As one of the first co-working spaces in Australia, we have seen the industry change significantly over the past decade, slowly in some aspects and rapidly in others, such as the changes that occurred as a result of COVID-19.

A focus on experience

Over the years, organisations have chosen to base themselves at Hub because it helps their teams love where they work, and consequently, helped them to attract and retain the best talent. COVID-19 drove home the value of the office for organisations, not just to the productivity of the company, but also to the happiness and wellness of their team.

While building community was sufficient in the early years of co-working, Hub and many in the industry have worked hard to significantly raise the level of their offerings so companies can add value for their staff and business.

While often cited as the weakness in the co-working business model, the flexible terms co-working operators provide, if managed well, are a strength and have given businesses like Hub the advantage of a laser-sharp focus on creating a customer experience.

Traditional leases and high CAPEX have meant that landlords, commercial real estate (CRE) and corporations have not needed to innovate and listen to their customers at the same rate the flexible office industry has.

As a result, landlords and CRE are now increasingly looking to co-working and flex as part of their buildings to retain tenants by optimising the experience of all those that use the office and retail amenity. Operating flexible workspace at scale is complex and means that many landlords and CRE are looking to partner with operators rather than go it alone and try to catch up.

Our focus on our customer and positioning in the market at the premium end means that Hub now identifies as a hospitality company whose mission is to create workspaces that people love. 

Co-working and workspace-as-a-service is now for businesses of all sizes

Many co-working spaces were originally designed to meet the needs of freelancers, start-ups and small businesses. These individuals and businesses needed flexibility, an escape from the isolation of working from home and couldn’t afford a CBD office.

In 2016, after five years in operation, the majority of members at Hub were team members of companies rather than founders or freelancers. Previously, founders and freelancers required a cheap desk and a co-working community comparatively more than the team of an organisation that had colleagues and needed a professional and exciting environment to get work done.

Over time, this meant co-working evolved to cater to the needs of larger teams and, in many cases, provided a better experience for those larger teams than they had in their own traditionally leased office with high CAPEX and inflexible terms.

Just as companies now procure IT as a service (software, cloud storage etc) rather than invest large amounts of CAPEX and resources into infrastructure, it now makes financial sense for companies to have some or all of their workspace procured as a service.

The five- to 10-year traditional lease has been writ large by COVID-19 as simply not matching the constant disruption of operating business in the ’20s. More than just financial sense, in the war for talent your office is a tool for attracting and retaining the best talent and it’s easier to leave this to a specialist rather than trying to figure out in-house how to build and operate an amazing workspace. 

The rise of the hybrid working model

“Hybrid working” is the latest name given to the seemingly obvious notion of letting your team work from distributed locations in a way that is most productive for them and the company. When we started Hub, we were calling it “anywhere working” and using the line “work how you want, when you want, and where you want”. Of course, this wasn’t really possible unless you were a freelancing digital nomad.

Following COVID-19, technology has caught up, and whatever your view on the importance of the office, we know that a lot of the work previously being done in the CBD office can be completed elsewhere.

But working from home doesn’t work all the time — 2020 resulted in high rates of burnout among Australians, showcasing the importance of office time alongside days spent at home[1].

As a result, many business professionals aim to continue to work from home one to two days a week, while working in the office for the remaining days to spend time with their teams.

This has impacted the type of office space needed by many businesses, with larger companies now exploring smaller, flexible workspaces as an alternative to traditional long-term leases in larger CBD corporate headquarters. Many companies are also exploring a “hub and spoke” model where satellite offices are established in key activity centres to enable staff to Work Near Home (WNH) so they can escape the distractions of working from home but avoid the commute when they need to be at a CBD headquarters.

Whatever version of hybrid working works best for companies and their teams, expect the question “What are my options to work flexibly?” to be in every job interview and annual review this year. If your company does not have a good answer, the best talent will go somewhere that does. 

A greater emphasis on amenity and staff learning and wellness

Co-working has always been recognised for providing a more holistic service to teams, with a strong focus on community, learning and perks for all members.

Ten years ago, co-working in Australia was an emerging industry with basic amenities and little resources. The ping pong tables are long gone from Hub and in their place are high-end furniture, fitness studios, relaxation spaces, podcasting equipment, fully equipped kitchens and full-service cafés.

This offers time-saving assets that add to the workday experience and creates a positive, friendly workplace culture for their employees. Community lunch events have now made way for a full suite of in-person and online learning and wellness programming.

Without a doubt, co-working has had a huge impact on workplace standards over the last 10 years, and I strongly believe its impact will be even bigger over the next 10 as flexible workspace becomes part of every company’s workplace plans.

While we are a business that has to maintain a business model that keeps it successful and growing, I’m also proud of the things that we’ve been able to hold on to.

Across the world, quality operators, premium or not, put the customer and their members at the heart of what they do, creating happier people and companies at work.

I still love that first moment of walking into Hub in the morning and being welcomed, the buzz of the café to start the day, and the ability to choose where and how I work.

Brad Krauskopf, founder and CEO, Hub Australia

[1] https://thenewdaily.com.au/finance/work/2021/01/15/working-from-home-burnout/

How the Australian co-working industry has changed in 10 years
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Brad Krauskopf

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