Flexible Workspaces Could Be The Future For More Americans In The Next Decade
AUDIE CORNISH, HOST:
A new study by commercial real estate company JLL suggests that 30% of Americans will be working from flexible spaces in the next decade - libraries, home offices, co-working spaces like WeWork. Stacey Vanek Smith and Cardiff Garcia, co-hosts of the Indicator from Planet Money, went to a WeWork in Manhattan to report on this future of work.
CARDIFF GARCIA, BYLINE: Scott Homa is the director of office research at JLL. And he says the concept of co-working spaces is not new. It's been around for decades. But the business has never seen anything remotely on the scale of WeWork.
SCOTT HOMA: WeWork is the largest private sector occupier of real estate in New York, Washington, D.C., London, soon to be San Francisco.
STACEY VANEK SMITH, BYLINE: Really?
VANEK SMITH: WeWork doubled in size in 2017 and again in 2018. Now, that kind of growth has not come cheap. WeWork has been burning through cash and venture capital to expand at that pace. It spent nearly $2 1/2 billion last year on leases and renovations and other expenses. It is expected to spend $4 billion this year.
GARCIA: And WeWork wants to keep up that crazy pace, so in order to do that, it is planning to go public later this year. Critics say this spending is reckless and WeWork is getting way ahead of itself.
VANEK SMITH: Here's where things can kind of sometimes get tricky with startups. There's, like, venture capital-fueled growth and, like, actual customers. I mean, are there a lot of actual customers?
HOMA: Absolutely. I mean, their top-line revenue growth really speaks for itself. It's been doubling annually on a consistent basis for the last couple of years, so it really is staggering growth.
GARCIA: Scott says this growth has come from a couple of places. WeWork offices are sleekly designed. They project hipness, and that has really been appealing to the booming startup economy.
VANEK SMITH: Right. Like, if you want to start a company but you don't want to sign a nine-year commercial lease and spend thousands of dollars on desks and couches and a cleaning crew and coffee makers and receptionists and Wi-Fi installation, you can just rent an office inside if WeWork where all of that is taken care of.
GARCIA: According to the website for the WeWork that we visited in New York City, individual offices cost $1,100 a month - more if you want a window. And if you can't afford a whole office, you can just pay to use the loungey common room area for $500 a month - $550 if you want your mail sent there.
VANEK SMITH: And if you want to rent out a conference room, change out your furniture - all of that costs extra. Now, prices are much lower in other cities, but it's always pretty pricey. In fact, WeWork says it makes a 30% profit on the spaces it leases out. It says it can charge these prices because they are still much lower than the cost of opening an office. And even a lot of big, wealthy companies seem to agree.
GARCIA: It's really unclear whether WeWork's aggressive spending and its expansion will pay off, how big it can get after it goes public or if it's just overshooting with all the global growth and spending and someday will just implode.
VANEK SMITH: But even if it does implode, another co-working giant will probably just rise up in its place. If our indicator is correct, in 10 years, nearly a third of us will be here at long communal tables under hip neon slogans drinking free cold brews and trying to use our $300 noise-canceling headphones to filter out all the chatter and the piano.
GARCIA: Yeah. At the WeWork we checked out, there was a piano.
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VANEK SMITH: Stacey Vanek Smith.
GARCIA: Cardiff Garcia, NPR News. Transcript provided by NPR, Copyright NPR.