Before the concept of co-working spaces was introduced, there were hackerspaces, which are largely considered to be the precursors of today’s co-working spaces. Then came along Brad Neuberg, a software engineer who introduced the concept of coworking with the first co-working space, which was the San Francisco Coworking Space at Spiral Muse. Neuberg has written a blog about the start of co-working.
The phenomenon of co-working spread all over the world and became the new normal. However, the year 2020 threatened the very existence of co-working spaces globally, due to the COVID-19 outbreak. The pandemic rewrote the rules of working and working together in a common enclosed space was not one of them. With organisations opting for work-from-home options, co-working spaces suffered worldwide, particularly in Amsterdam. Earlier this month, Germany-based Rent24 closed two of its locations in the city.
We have reached out to Rent24 for comments and are yet to hear back from them.
Therefore, in order to better understand the current state of co-working spaces in Amsterdam, we reached out to various co-working hubs in the city and figure out how the pandemic hit them, and the way forward.
The initial hit
Startup Village is a community tech hub in Amsterdam East, on the Amsterdam Science Park. Opened in 2016, the hub offers more space for high-tech and science startups at affordable rent.
Talking about how the pandemic hit Startup Village, Patricia Leek, Partnerships & Marketing, Startup Village Amsterdam, says, “We used to have a yearly 95% occupancy rate and a waiting list. Since the pandemic, we see that our renters easily choose to work from home, and because we offer flexible contract, they can terminate the contract with a month notice. Lots of our startups work in Deep Tech and simply need a laptop and internet. So some left, around 40%. But we also got new renters. But up till now, the pandemic has not been in our favour, revenue-wise.”
Mindspace is a global coworking and flex provider operating over 30 sites across Europe, UK, the US and Israel, including three in Amsterdam.
Dan Zakai, CEO & co-founder of Mindspace tells us, “In our Amsterdam locations we’ve seen a small decrease in occupancy rates in the second quarter of 2020, and then for the rest of the year our occupancy levels were relatively stable.”
Although the pandemic did impact a number of these co-working spaces, most have stayed resilient and are starting to bounce back.
“We’re already experiencing interest from a variety of businesses for our Amsterdam sites, especially from SMBs and startups, across all sectors, including many that never considered flex before. We do expect demand levels to go up over the next few months,” says Zakai.
Mindspace is expanding its Berlin branch, opening another site in Tel Aviv this month and opening its site in Philadelphia, US in April. Zakai shares that they are seeing more deals lately from Marketing related companies (e.g. digital agencies, marketing services etc.), and says, “we attribute this growth to the fact that the need for good marketing is on the rise in order to boost sales across various verticals, in a period following an economic downturn.”
“We’re seeing a greater interest from financial enterprises and fintechs who prioritise security and infrastructure as considerations when choosing an office. We’ve hosted Barclays, Visa at Mindspace sites over the years. Since Covid, we’re also getting enquiries from more traditional industries that are becoming open to it such as aviation, back-of-office / outsourcing companies,” he adds.
“Whilst many of our members have been working from home over the course of the last year, we see more and more of them returning to the office. In Amsterdam, we are already welcoming back smaller companies who cancelled their memberships in March last year to save costs,” says Sprangers.
“They tell us that they value our productive working environment which gives them the necessary inspiration and energy they often lack when working from home. So while WeWork currently may look and feel a little different due to the safety measures in place, we are confident that things will be heading back to normal as Covid measures will be lifted,” he further adds.
“In Amsterdam specifically, we just opened a new landmark location at Stadhouderskade in January 2021. Here, we already welcomed lots of members who are getting tired of working from home, and we are speaking with many companies that are looking for safe, collaborative office space for the coming months. We have also designed a streaming and podcast studio at WeWork Stadhouderskade as we noticed increasing interest in professional audio recording services,” Sprangers tells Silicon Canals.
The vaccine effect
The arrival of the COVID-19 vaccines have offered a certain amount of respite to the weary minds of people around the world, but some are still apprehensive of taking them. The question here is whether the arrival of vaccines will help co-working spaces get back on track.
Sprangers certainly thinks so. “The vaccines will definitely help all of us to soon collaborate safely again.
Zakai believes the majority of employees will return to the office. He says that companies will want to see their teams in the workplace and for the most part, employees will also be keen to return after such a long time away.
“While a small proportion will want more flexibility in their working lives, be it working from home 1 or 2 days a week, or working closer to home – maybe from a coworking space closer to where they live – the vast majority will go back to working as they did pre Covid. WFH trends started long before the pandemic struck and the flexible working week is likely to remain in some capacity post Covid but it won’t become a dominant element,” he explains.
“We believe vaccines will assist in making more people feel safer about returning to the office. In Israel and Germany, for example, return to the office was already on the rise before vaccinations were rolled out, starting Q4 2020, and continue to be on the rise also now, as the program is being rolled out,” Zakai further adds.
For some of the co-working hubs, conducting meetups and events are a key source of revenue. Since the pandemic resulted in the ban on large gatherings, these sources dried up for many co-working spaces in the city. However, once a large population of the city has been vaccinated such gatherings can happen again, with adequate safety precautions.
Leek says, “A part of our business is to have inspiring meetups and tech events on our location. At the moment that’s not an option. So yes I think if events can be organised again with some extra regulations it will definitely help to get that revenue stream running again.”
The future is flex
According to a report by CBRE, 86 per cent of companies see flexible office space as a key component of their future real estate strategies. Also, with most organisations and employees choosing the hybrid workplace model as their go-to post-pandemic work strategy, the demand for flexible office spaces might increase in the future.
“Absolutely, exclaims Sprangers. “The role of the office has been redefined through the pandemic and we are confident that flex office providers such as WeWork can ideally serve the new demand. Businesses want more flexibility and choice in their workspaces and they need to be able to quickly adapt them to suit both employee and business needs,” he says.
“We’re currently working with many of our larger member companies to tailor our workspaces to their desired balance between e.g.focus-driven and collaboration-based work areas. And on the employee side, recent surveys show that more than 90% of employees want to return to the office at least one day per week in the future, as working from the office significantly boosts their morale, experienced corporate culture and productivit,” Sprangers adds.
Leek also believes that flexible is the way to go. “I think the pandemic certainly changed our way of thinking about having a big office building to fit all employees with high costs while people enjoy now the combination of working from home and going to the office. I think in the future more and more companies will see the benefits to give their employees more freedom. What means you need less fixed desks for your employees, and everything can be more flexible.”
She thinks that a 5-day office job will change into something more flexible. But to completely work from home, is not something that she think will happen. “Cause everybody around me wants to go back to the office, want to see their colleagues, it’s that social part of being human that people start to miss after a while,” So, Yes I think that the hybrid workplace model will become popular and flex office are more needed. You also see initiatives popping up. Where big corporate companies can have an account with company X that offers flex desks all around and that their employees just can book a desk via an app.”
“Companies are looking to get back to the office and flex is how they’re doing it,” says Zakai. “Flex is the ideal value proposition to accommodate hybrid, allowing businesses to easily scale up or down really easily to accommodate changing sizes of teams, without being committed to a fixed size space for a number of years. Plus, there’s a viable exit strategy starting with monthly contracts, the ability to de-risk and the benefits of transparent, highly predictable operational / maintenance costs.”
He believes tha a higher number of enterprises will seek more flexible offerings and more space, both to accommodate social distancing and minimise risk. “Having experienced working from home for a number of months, we believe companies will place an even stronger emphasis on the role of the office in their company culture.”
Zakai tells us how, historically, large technology companies were the first vertical to come to flex. According to him, they were first to understand the benefits that flexibility brings, especially when entering new markets and opening satellite offices, as well as to accommodate overspill due to fast growth. “We’ve hosted Microsoft, Samsung, Yahoo, SAP at our sites in recent years – some of the world’s “big tech” companies are our tenants who have renewed their leases with us, and we continue to experience growth from this vertical.”
He also believes that flex provides an opportunity for companies that aren’t yet exactly sure of their office plans to postpone long-term, high-investment decision making.