The rise and fall of coworking: Can the model survive in the future?
It seemed like a sure bet, but the bankruptcy of WeWork and the resurgence of conventional offices have slammed the breaks on its growth. Or have they?
Is the party over? In recent months, media authorities like The Wall Street Journal and Financial Times have begun to talk about coworking as a stalled revolution, a highly anticipated groundswell that ended up falling far short of the immense potential it was seen as having just two years ago. Analysts like Kristopher J. Brooks thought that the future had arrived, but the world’s biggest companies have decided to forgo the coworking revolution by sticking to the traditional office model that telecommuting and shared workplaces were supposed to have tossed into the dustbin of history, along with the other outdated relics of pre-pandemic capitalism.
This twist, of course, has taken place amid the still-fresh collapse of WeWork, the main international driver of coworking. The New York-based company, a corporate unicorn that had been making more than $3 billion a year, managed a total of 43 million square feet across 779 locations frequented by around 547,000 professionals, but declared bankruptcy in November 2023, and recently presented a debt restructuring plan which includes fewer offices.
The company has been subject to a pendulum-type luck, illustrative of the highs and lows through which coworking fever has passed since bursting into our lives around 2010. WeWork started as a fairly modest, if promising project, a network of “youthful and eco-friendly ephemeral offices” scattered about Brooklyn. In just five years, it had transformed itself into a large multinational coorwpnoration considered one of the 50 most innovative companies in the world by Fast Company and owned the main floors of prestigious buildings such as the Manhattan Center, Times Square’s Bush Tower, Los Angeles’ Constellation Place and even Chicago’s picturesque North Wabash skyscraper, the posthumous work of Mies van der Rohe.
That such a stratospheric company would go under just when the winds of history seemed to be blowing in its favor was unexpected, but Fortune writer Kelly Gillblom attributes the situation, “to internal company dynamics that have little to do with coworking’s overall health as a business model and trend.” Gillblom sees WeWork as a corporation that has been run as a family business for years, ambitiously, but also capriciously, inconsistently, and in a manner that lacked pragmatism. Founders Adam Neumann and Miguel McKelvey are no longer steering its ship, having fallen victim to a PR crisis that the company suffered in 2018 and 2019 (multiple lawsuits alleging workplace discrimination, assault and bad business practices) and that obliged them to step aside.
Still, Jed Rothstein, creator of a very enlightening Hulu documentary on the company (WeWork: Or the Making and Breaking of a $47 Billion Unicorn), thinks that Neumann and McKelvey erred in thinking that a passing trend — the massive coworking revolution — would last forever. They didn’t consider how big companies continue to prefer the centralized hierarchy of control that traditional office space can provide. Once the uncertainty of the pandemic was over, shared workspaces continued to be an option, and are expected to continue to grow in the medium term, but they are no longer expected to be as transformative.
A recent study from Barcelona’s Universitat Oberta de Catalunya (UOC) suggests that coworking has hit a sweet spot in Spain. The country now has 1,400 spaces for co-working spaces, a number below only that of the United States, India and the United Kingdom. Carles Méndez, one of the study’s co-authors, says this is due to the fact that cities such as Madrid, Barcelona, Valencia, Málaga, Granada and Castellón are able to attract emerging corporations and self-employed expat workers with their “Mediterranean climate and lifestyle.”
With prices around $164.50 a month for a flexible workplace and $263 for a dedicated desk from Barcelona to Madrid, the country has emerged as the top European coworking hotspot and landing pad for a massive number of digital nomads, a phenomenon that is more than making up for the relative lack of interest in the coworking shown by local workers.
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