Sharing office space – or co-working – is a growing phenomenon in Scotland’s business community. The recent announcement of the lease of the ground floor at One Lochrin Square in Edinburgh to a co-working provider is evidence of these changes in working practices.
Co-working ranges from freelancers requiring a hot desk to businesses looking for an office suite and access to meeting facilities on a more exclusive basis.
Companies and individuals with an entrepreneurial, innovative approach to doing business are looking for working space which is consistent with their ethos.
Traditionally, a business would lease or purchase a premises from which to operate. However, the time and cost involved in acquiring suitable premises and also the change in nature of business practices, largely as a result of technological advances, has meant that this approach has not been suitable for all businesses.
There may also have been a change in attitude of businesses, partly influenced from abroad, that they do not need to lease or own premises but that other arrangements for occupying premises are more suitable.
For these businesses, co-working provides an innovative and flexible solution.
Whether it is a start-up or a new entrant into the market place, it may be difficult for a company to plan accurately their future space requirements.
A company entering into a lease could quickly find that the premises has become a constraint to continued growth.
Alternatively, office space and meeting rooms may be underutilised if anticipated growth has not been achieved.
By entering into flexible arrangements, companies can adapt to their space requirements.
At Womble Bond Dickinson, we are seeing how important it is for clients to make the correct strategic decisions on their occupancy arrangements, which may evolve during the life cycle of their business.
We have gained valuable insight and experience as we advised clients on the merits of entering into co-working arrangements.
Companies enter the co-working arena for many reasons: some require space that is inspiring to work in, others require space that is in a location which provides easy access to its employees, customers and collaborators.
Many modern co-working hubs provide space with a contemporary design and access to the latest technology, in a good location, with amenities such as showers and bike racks.
There are also coffee areas and games rooms in which people can socialise and exchange ideas.
If leasing such accommodation is out of reach for such companies, co-working provides access to this type of space.
Another benefit is that co-working office hubs provide a community of businesses who can network with one another and collaborate on matters such as marketing, training and utilising technology.
This approach has been successful in other sectors. For example, there are hubs for businesses in the science and technology sectors, providing a supportive platform to share research and knowledge.
The trend towards co-working has been influenced by international operators entering into the market place in Scotland.
Some of these providers operate hubs in other European and US cities. Similarly, businesses who operate internationally consider occupying premises on a more flexible basis to be a normal way to operate.
The change in attitude towards owning or leasing premises versus co-working arrangements is somewhat similar to running a car.
Previously, the aspiration was to own a car. Now, consumers consider it acceptable and most importantly cost effective to lease a car and hand it back at the end of the term with the cost being seen as a day-to-day expense.
Likewise paying for the right to occupy office space is seen as a day to day expense in running the business which will stop when the premises are handed back.
Co-working office space is on the increase and, for some individuals and companies, provides the platform from which their businesses can flourish and achieve their objectives.
It is important that a business – however big or small – understands the implications of entering into co-working arrangements.
Paul Kenneth is managing associate specialising in real estate and finance at Womble Bond Dickinson in Edinburgh