Traditional office space is losing ground to a new idea in commercial real estate that has taken root in Southern California and around the country. WeWork and other brands are offering flexible desk and office space on a subscription basis with a host of amenities. This new configuration undercuts the old model in several ways. California real estate market investors and developers alike will want to look deeper into this opportunity.
One of the central problems for new businesses is handling the cost of overhead while trying to establish a foothold in a market. Unlike with an established business, new ones may see the need for rapid hiring or firing of employees. They need the ability to expand or contract overhead needs quickly without being locked into long-term leases. Co-working commercial real estate space offers this with a monthly subscription that can begin with as little as desk space and move up to dedicated offices.
Another benefit for emerging businesses is the ability to share space and amenities with the owners and employees of many other businesses. Members have the possibility to network during the business day with many potential clients and suppliers who they otherwise would not have met. The informality of common areas and interest of even Fortune 500 companies in this flexible commercial real estate increase the appeal of co-work office space to business owners.
Developers of this new format for commercial real estate will likely face many challenges, including assessment of zoning laws, managing venture capital and decisions regarding property management companies. Just as with traditional commercial real estate, an experienced attorney can often help developers avoid potential problems and capitalize off the new trend.