Workspace Geek is a proud member of several workspace organizations, including GCUC (Global Coworking Unconference Conference), GWA (Global Workspace Association) and WANY (Workspace Association of New York). Beyond affirming our investment in the coworking and shared workspace communities, our involvement in these organizations allows us to hear from operators across the country about operations, business and entrepreneurship.
We recently sat down with Ray Lindenberg, president and founder of WANY, to learn how COVID has affected NYC business center operators and the city’s shared workspace industry. In the following interview, Lindenberg offers a frank look at the current state of shared workspace in New York and shares his informed, optimistic outlook for the future.
Lindenberg: COVID has caused a tremendous shake-up and recessionary wallop in NYC from a business, economic and, obviously, a health risk standpoint – all of which are intertwined. At the height of the pandemic back in March and April, many business centers kept their staffs home.
Business center workers and their clients, who commute into work in huge numbers in a big city like New York, stop taking mass transit, and not all businesses can survive under those conditions. Tons of clients either went under, or held out as long as they could and depended on the generosity and empathy of their BC operators to hopefully work out a reasonable accommodation on the fees that they were struggling with, since the clients themselves were also strapped with their receivables.
It varies, but to this day many NYC business center operators are still down 20-40% on their office occupancy figures due to COVID, and 50-90% down on their inquiries and lead flow.
Lindenberg: The long-term effect will be significant for many. The industry we know will evolve into a new form. One of the major outcomes of this COVID era is that companies and business owners will need to evaluate the wisdom of having and paying for a full-time, headquarter office, where workers may be clustered in a potentially unhealthy and risky indoor environment, and instead opt to give up a space with a lengthy term in favor of a much more favorable and flexible officing term alternative and agreement. We were heading in that direction anyway in recent years with the advancing popularity of coworking, flex-working and the substantial reduced overhead that many companies enjoyed once they saw that headquartering was not as critical in achieving deliverables, and that saving abundant overhead through remote working was a really a super bonus. This was a real eye-opener for many businesses.
COVID is now forcing almost every business to see if jumping on that remote-working bandwagon works for them too, and since it does for many, that will cut down on full-time business center office demand. But that also blasts wide open the doors for the new market demand of large headquartered companies looking into the flexible alternatives of touchdown spaces that business centers specialize in, especially those nearer to where their employees live. So while COVID spells trouble for some BC operators, it also raises tremendous opportunities for others if they play their cards right.
Lindenberg: The flight to the suburbs will definitely knock down demand. But, again, if an operator handles it right, they can replace that lead flow by adjusting their marketing to appeal to larger corporations that will be finally diving into the remote work model, but whose employees won’t be able to work from home part or all of the time for various reasons. Even with suburban flight, there are still over 5 million people who live in NYC who won’t move, and their appetite for flexible work-near-home alternatives will be voracious. Pay attention, business center owners!
Lindenberg: That’s one of the significant emerging feeder programs that the smart operators and salespeople will tap into: partnering and forging fruitful relationships with companies that, for their own survival, need to cut expenses. Especially for companies that will probably never need as much space as they previously had, and who would welcome the hand-holding of an experienced, serviced workspace professional to help them along during this stressful period. Switching to a flexible, non-headquarter, professional, remote workspace will become an exploding trend for many.
Lindenberg: It depends on what you call “coworking.” If coworking means a variety of work-way options under one roof, that are predominantly enclosed offices, with some touchdown spacing, then yes, that hybrid model still works. But if you’re referring to coworking as solely open-plan touchdown spacing that has experienced tremendous growth the past decade, I anticipate those spaces will struggle to some degree until we’re well past the COVID vaccine rollout and recovery period.
Lindenberg: Typically, everything that NYC operators do to succeed in such a dense and competitive market impacts other markets nationwide. NYC operators tinker and improvise relentlessly for their survival. So yes – NYC will definitely influence the U.S. market, but the winning formulas and sweet-spots will take a little bit longer to flourish in a grand scale. I bet dollars to donuts that the secret sauce will lie in flexibility, variety and forging new kinds of partnerships with companies needing guidance with their transitioning to the new, COVID-era demanded, flexible work-ways.
Lindenberg: Surprisingly, from what operators in this neck of the woods are telling me, virtual office services are nowhere near what one would have expected – in this market and at this time, anyway. I believe many businesses and entrepreneurs are still licking their wounds and in a holding pattern, watching the developments on the vaccine front, and seeing which way and how fast the economy’s pendulum swings before committing to their new work-way. My best guess, though, is that virtual plans will go gang-busters by the end of the 2nd quarter of 2021.
Lindenberg: I'm not sure that will have such a high demand in the NYC market, although I know of a few that do offer it. Remember that up until now, we’ve been an intense mass transit-driven economy that isn’t ideal for children tagging along. But with the anticipated boon in suburban business center popularity, I believe those markets will experience a greater demand for child-friendly centers, where children are more likely to tag along in their parent’s car.
Lindenberg: It will for very few; for the best of the best operators who are proactive, antsy about succeeding, and view the COVID era as an opportunity and not just a punch to the gut. In that regard, COVID is the stimulus for true, committed entrepreneurs to get cranking. It’s a recession-causing agent, albeit a very serious one. And in a competitive, free-market society, those who don’t paralyze, and who demand of themselves being in action, and have a healthy, flexible, innovative nature will come out on top – just like in any recession.
If I were a betting man, I’d say that, except for the few, fiercely committed entrepreneurs that won’t rest until they come up with the right winning formula right away, the bulk of the operators won’t experience a reasonable business flow until the 3rd quarter of 2021, and that we’ll approach something almost resembling the hot market of recent years for most, come mid-2022. But it’ll look like a whole different ballgame by then.
Lindenberg: Just the chance to remind everyone that now more than ever, we need to live up to the promise of being the highest of the high-hospitality industries. Unlike hotels, car-rentals, airlines, high-end restaurants, even Disney and other high-enders, who are with their clients and customers for hours or maybe days at a time at most, we’re with our client-neighbors for months and years, in a fishbowl dishing out our special brand of care and customized service, which is precisely why we are the highest of the high-hospitality industries, and why what we do is so essential to the ‘Great Recovery of 2021’. We need to go full-throttle.
Our serviced workspace industry – which originated in 1966 and was the precursor and pioneer of the popular “sharing economy” and “collaborative consumption” movements, offering financially accessible business locations, services and options to entrepreneurs who were willing to outsource and share in the cost of such things as reception and phone answering, copying, cleaning services, conference rooms, and eventually tech assistance and networking – is now poised to be a leader and cornerstone of the ‘Great Recovery.’ We can provide the wisdom and guidance that businessowners can count on to get them in full gear by offering our variety of proven, smart, workspace and work-way options. We’ve spent over a half-century lifting entrepreneurs on our shoulders, and we should be more than ready to lift them even higher this time.
About Ray Lindenberg:
Lindenberg owns Winning Workspaces Hospitality Group, now in its 30th year of operation, where he consults in the US and abroad with business center operators, entrepreneurial speculators and landlords on all facets of operating a successful business center, including design, sales and marketing, operational efficiency, HR and crisis management.
He also cofounded WANY in 2005 and currently serves as president. The Workspace Association of New York is a group of highly successful Serviced Workspace Industry Operators, concentrated in the New York Tri-State area, but with member locations across the US and beyond, totaling over 800 Center locations. WANY is a fellowship of cooperating BC and serviced workspace operators who advocate and share the best practices that makes serviced workspaces the highest of the high-hospitality industries in the world.”