Coworking Firm Considers Funds in Addition to Initial Public Stock Offering, Reports Say
I am not ashamed to acknowledge that I have a selfish interest in this thing. My family has made a very good living off of office space, both representing owners and tenants.
Also, as a human and more so as as Christian, I have an interest in what I see happening to my fellow man. As someone who has to live in a status quo economy, my world order matters to me.
As an office expert who looks at what co-habitation does to office space, I look at the long term issues that it presents, many of which are being ignored.
To the building owner with a vacant, preoccupied space, the buildout costs are often less than for a conventional tenant. There are many, large and empty floors … do not miss this point. Backfilling these with co-working facilities solves an immediate problem. The asset manager scores points. He has a full building.
But, these floors are vacant for reasons that remain to be resolved. The asset manager retires. It is his successors problem. He did his job.
Tenant spaces are getting smaller, more employees work out of their homes or co-working facilities. The tenant improvements required to subdivide and renovate the space of a former full floor user to accommodate smaller tenants are much greater than just paint and carpet. They include firewalls, exit corridors, substantial modifications in air-handling and electrical systems
The owner has, in effect, cast his lot, placed his bet on co-working. If it does not work, the long term future of the asset is in trouble.
This is not just because of the unaddressed issues noted above, when that sexy, co-working tenant moves out, the space has to be remodeled for other tenants; and sexy office space is more expensive to remodel than conventional space because you often have to replace a whole set of super cool finishes that the next tenant would not want. Even reutilizing super cool stuff can cost more than conventional space.
If co-working begins to falter, and we suspect that it will, these issues are all set to happen when a whole lot of other problems occur in the economy – the perfect storm scenario where a set of problems meet a second set of problems which only serve to make both that much more consequential.
Here is the next set.
As a Christian, I believe in the priority of work for both the employer and the employee. Stable employment is critical to establishing a career, a profession and raising a family, having time to teach our children important things. That means that the jobs must have an ora of permanence, and my attitude towards my work should project this.
The short term office phenomena may mirror permanence, but it lacks substance. Both employer and employee are prepared to escape on short notice. For the employer, he has limited commitments; for the worker, the alternative job market becomes as easy as walking down the hall to the break room.
As a child, I once heard this music myself. The game was musical chairs. The way that we played it, we always had one less chair than players. We went around in a circle as the music played, giggling. It was all great fun until the music stopped, and you were left, staring at the others, lacking a chair.
One day many of the chairs will evaporate into thin air.
Like the building owners before them, the business owners will have solved a short term problem – no employees, no costs, no responsibility.
This will be devastating.