Tobi Skovron is sitting in his Melbourne coworking space, Creative Cubes, which is empty behind him.
While the Melbourne lockdown had temporarily closed its doors in late July, Skovron remained convinced that the future of work resided with his business and those like it.
“We created a lifestyle business,” he told Business Insider Australia.
“A place where you can come to work and have an amazing experience, and not some sort of rat race.”
Skovron thinks that when Australia moves toward a new phase of the pandemic, coworking spaces like his will emerge as the victors in the new world of work.
With Greater Sydney still locked down, Melbourne freshly out of what was its fifth lockdown, and Brisbane threatening an extension to snap stay-at-home-orders, it’s fair to say that white collar Australians will be sick of working from home when that new world arrives.
Along with commercial real estate, the coworking sector had similarly suffered from pandemic lockdowns. Nationally office vacancy rates hit 11.9% in July.
However those in the coworking space say that as office workers have re-emerged, companies buoyed by the “WeWork effect” will reap the benefits.
‘An employee’s market’
Lawrence Goldstone, Future of Work lead at PwC in Australia, said the organisation’s research showed the pandemic had shifted the balance of power toward employees, particularly in the Australian market where competition for highly skilled workers has been fierce.
A recent global PwC survey of 32,000 workers showed that 74% of people want hybrid work, with only
10% saying they’d prefer to return to the office full-time.
While perks around flexibility are a mainstay of industries like tech, the overwhelming transformation of the pandemic will be its expansion to multiple sectors, Goldstone told Business Insider Australia.
However Goldstone said these predictions don’t spell the death of the CBD.
“I think [it] will have a strong natural place,” he said, though he thinks its importance will be diminished.
Cliff Ho, founder of coworking company The Commons, told Business Insider Australia that Australia’s coworking sector comprises around 4% of the total commercial market.
“It’s very small,” he said, especially when compared to the 8% share in places like London and New York.
And while he’s heard predictions it would jump to 30% off the back of the pandemic, he doesn’t think the pivot toward the sector will be quite so dramatic.
“I don’t think we’ll get that high,” he said. “But there’s definitely plenty of room to grow.”
Skovron launched Creatives Cubes in 2017, off the back of a decade in San Francisco, where he’d often use shared office spaces in Silicon Valley to run his small business.
He said market research conducted as a customer helped him develop his own company.
“Really a lot of the stuff that I appreciate, and I have created my own version of, came from the hotel sector,” he said, including an expectation that when a customer shows up, almost everything they could need should be provided for them.
Skovron, like many in the sector, has opinions about the outsize impact the hype of WeWork, which has 21 locations across Australia, has had on people’s perspective on the industry.
The main idea he pushes back on is that coworking can be considered a “tech” business.
“I can tell you that what we do is sell office space,” he said.
His spaces house multinationals like KFC, along with companies in tech and finance, startups and small businesses.
What his business offers are the two requirements he thinks companies will be looking for in a post-office world: less overhead and a better working environment for their employees.
“I think what we do here as an operator is actually enable companies to do their best work and focus on their work, as opposed to having to employ someone to sit at the front desk,” Skovron said.
“I don’t need someone managing my IT infrastructure and making sure that bins are out,” he said.
The other factor is the experience; an overused catchall that those in the coworking sector describe with religious fervour.
For Skovron, it’s the value he provides customers that’s greater than the sum of its parts.
“I spent $8 million just on this facility and we have 550 members here,” Skovron said. “But they’re only paying anywhere from $350 to $30,000 a month depending on the size of the company.
“We’re delivering culture and experience for our customers as the primary,” he said.
“That is at the core one of the real value prop we deliver.”
“The unique part about our business is that we have always been a property and fund manager at heart,” Tim Brown, co-Managing Director of WOTSO, told Business Insider Australia.
Along with business partner Jessie Glew, Brown sees this as a core differentiator between the business and that of others in the sector, which generally are “just doing subleasing deals,” he said.
Brown said while WOTSO offered discounts during the last Sydney lockdowns, he thinks looking forward, what their business provides is going to be increasingly attractive to people looking to integrate flexible work seamlessly into their lives.
“Our properties were all located in the suburbs, rather than in the CBD,” Brown said. “So by default, we were putting a coworking space close to where people live.”
He said since the coworking arm of the company started up in 2012, one of the key attractions for small businesses, freelancers and other workers was proximity to home.
“We really quickly latched on to that concept of not putting [our offices] in the city, and really committing to the idea of flexibility and allowing people to, to work near to home and beat the commute,” Brown said.
The business now focuses “exclusively on the suburbs or fringe CBD areas”, with a mix that’s 70% flexible office space and 30% coworking across 18 sites.
Brown said the most common evolution for one of their clients is a gradual move from a smaller, less expensive coworking space, to a larger serviced office as the company grows.
He said the value to their customers is the ability to complete that business growth without having to decamp to another part of the city.
Glew said the company is working toward developing a “perfect building” that will integrate the needs of an emergent class of flexible workers in one place – somewhere where you can “drop the kids off, go to the gym, then grab a cup of coffee, then go to work,” she said.
Cliff Ho, confounder of The Commons, said the pandemic was “the worst possible scenario to happen to our business model.”
“It’s very hard to run a business when your business is to bring people together,” Ho said.
But he said since restrictions lifted in November last year, his business has boomed.
A new Melbourne site that accommodates 550 people was filled within 10 weeks when it opened its doors in December 2020.
“Then we just launched South Yarra maybe 12 weeks ago and we are already at 85% occupancy there.”
He said he’s also seen an increase in a new kind of approach by customers, too. Companies with 30 employees have been taking up 20-person office spaces and rotating people out throughout the week, depending on meetings and schedules.
“We’ve seen a lot of companies giving up their traditional office space, and reimagining what that looks like,” he said.
The Commons spaces, which stretch across Sydney and Melbourne, are home to mostly tech, media and other creative companies, with Who Gives A Crap, Shameless Media, and Spotify all taking up space there.
Ho has “a lot of confidence in this industry” in a post-COVID world.
“We’ve seen demand because a lot of companies are saying, ‘well, why do I want to sign up for a five year lease somewhere, pay a huge bond, pay for a fit out, pay the internet, when there’s so much uncertainty,” he said
“Also, do I need to pay for this big office, when I don’t really know if some of my staff are going to be remote, or have this hybrid approach.”
The Office Space
The Office Space, an intimate collection of serviced offices in Sydney’s Surry Hills, was brought to life following a trip to Europe by cofounder Naomi Tosic and her husband 17 years ago.
“In Europe, they were starting to do more of these designer boutique spaces,” Tosic told Business Insider Australia.
The husband-wife team manages an eclectic group of businesses and individuals ranging from real estate and medical tech, to graphic design, property development, PR, and law.
While the rise of coworking has popularised a cliche of being “like a frat house,” she said, her business thrives on attracting clientele seeking “a grown up club doing grown up business, but in a beautiful environment.”
She said while the Office Space’s fees aren’t exorbitant compared to many other offerings on the market, its point of difference is a dedication to design and customer service — along with the opportunity to share space with like-minded businesses.
The Office Space’s clients “want to mix with people of a similar calibre,” Tosic said,
“But then with that you want to create a beautiful experience. That’s where the relationship side comes in, which is what I’m really excited about.”
She said she’s had customers working in the space for over 25 years, where she has nurtured the business’ growth. “Those enduring relationships are important,” she said.
Tosic, who also advises commercial real estate, said she thinks The Office Space’s philosophy has lessons for how organisations should approach the office.
‘The last 12 months have forced companies all over the world to reevaluate their existing commercial leasing strategies,” she said.
“Across commercial real estate companies are shrinking their footprint in terms of what they feel that they need — they need much less — but I do think that they are going to want much more from their workplace. I think it’s an opportunity for ‘workplace as a service’.”
The “experience” industry has been gradually seeping into the world of work, Tosic explained. And the pandemic led to a tipping point.
“The workplace is going to increasingly be a service, not a real estate demarcation.”