Cost-cutting And Talent Recruitment, Not Climate Change, Are Why Nokia And HP Inc Are Eying Coworking In 2020

The move to coworking, the sharing of office space by different companies or self-employed workers in order to trade ideas, boost creativity and improve on the traditional 9-to-5 routine,  is on the rise across all sectors of business — especially with global companies like HP Inc and Nokia. 

WeWork reported that 40% of its tenants in 2019 were large companies, while a whole new generation of real estate and digital companies are making coworking the norm for some businesses.

Attracting Generation Z  

Companies are competing to attract Generation Z, workers born after 1997, just entering the workforce.  This group of 61 million people comes digital-ready with the expectation that work can be done from anywhere and not necessarily a traditional office building filled with rows of cubicles.   They expect their workspace to include areas for collaboration and to be aesthetically pleasing and interesting while near to public transportation and environmentally conscious locations. 

“One of the biggest challenges Nokia faces worldwide is getting our real estate footprint close to where Generation Z and Millennials want to work,” said Nokia’s Erich Schroeder, in their business transformation team.  “We have to be near to companies like Apple and Google, then add the ‘wow’ factor to our offices. Some of our 30-year-old spaces are not places where Generation Z wants to live and work.”

Increasing Job Flexibility 

This challenge for employers is nothing new. Companies have long tried to cater their workspaces to appeal to the tastes of workers, from suburban office parks to urban live-work units.

Now, however, advances in technology and resulting mobility programs are helping companies create likely the most flexible work culture ever. In a 2019 study, the JLL Occupancy Research Report noted that 30% of companies globally have mobility programs with about 20% of their employees participating.   

“We find that Hewlett Packard employees increasingly value flexibility in their day-to-day job,” said HP Inc’s Marta Barata, in their strategy and portfolio department for Europe, Middle East and Africa regions.    

She added that HP Inc tries to continually improve its programs to meet the changing workplace culture. This includes rolling out new mobility and office-as-a-service programs in a measured way. 

Reducing Real Estate Costs

Reducing costs is a major factor driving companies to outsource some of their  real estate. The new generation of mobile-minded workers produce a lot of vacant desks with only 63% of office space being utilized on average, according to the JLL study.  Reducing the overhead of long-term lease commitments as well as duplicative space resulting from mergers contribute to increasing the need for outsourced real estate options.

“When we merged Nokia with Lucent-Alcatel, we went from over 50,000 to 100,000 employees in over 100 countries,” Schroeder said. “Simply eliminating redundant locations to reduce costs was not the answer.  We ideally needed a global office-as-a-service expert provider to tackle this massive legacy problem.” Schroeder believes this trend will continue to grow as we see consolidation.

Climate Change Is Not The Driver

While Unilever, Dell, IKEA, Apple, Ericsson, and Intel, among others, have made a public commitment to reduce their carbon footprints, the cost to implement sustainability leads most companies to a more pragmatic, cost-effective approach.  

Barata and Schroeder both mentioned that a full commitment to sustainability is something the many companies cannot afford.  While their companies are committed to principles of sustainability in their new office choices, their immediate decisions around office-as-a-service solutions are driven around cost control and worker flexibility.   They said that reaching a higher level of sustainability will be a byproduct of coworking. In 2019, The  Exponential Climate Action Roadmap suggested that companies cut their greenhouse gases by 50% in 2030 by increased use of office-as-a-service and building efficiencies.

Companies Eye Coworking Providers

With over 12,000 locations worldwide, companies now have more choice, when it comes to adding coworking to their real estate portfolios. Whether providing more flexible work options for employees or lowering real estate costs, a new group of companies is offering alternatives to the traditional real estate model. 

Coworking companies sublet space from a building owner, then allow a company or individual to rent a desk, office, or conference room on a short-term basis.   Some well known US companies include WeWork, IWG, and Industrious.

Digital coworking companies aggregate locations into their booking services.  Whether a freelancer or a company, the user can book a space on a mobile app to their credit card.  The Croissant and Deskpass services focus on freelancers, while companies like Upflex and Liquid Space target larger companies.

How Upflex Does it

Upflex designed a coworking booking system for the needs of larger companies by allowing their employees to book a desk, office, or meeting room anywhere, on-demand.  The Upflex app taps into a network of 8,000 locations around the world. It is the Airbnb model applied to office space for companies.

For the employee, the app allows them to choose an office space based on location, price, amenities, or type of community. A female entrepreneur might want to find a female only office space, while a software engineer might want to find a tech hub to work out of. 

For a company’s real estate manager, Upflex means managing fewer lease agreements with office providers and more choices for their employees.  Billing is handled centrally, and usage can be tracked by the company. Upflex also provides a space manager to help companies rollout the service to their employees.

  “Company real estate managers no longer have to deal with dozens of long term leases, said Christophe Garnier, CEO of Upflex.  “More importantly, our clients want access to a global network work of flexible office inventory that matches their needs and reduces their costs.”

How Industrious Does It  

With 45 cities and growing, Industrious is the largest premium workplace provider in the US. It offers a range of flexible office options, from single-person offices to enterprise suites for teams of 20 up to 200.  Well known global companies, as well as small companies, use Industrious to supply their US office space.

At each of Industrious’ locations there is a dedicated community manager to run day-to-day maintenance of a workplace, as well as providing programming that aims to make the employee experience better. Industrious is uniquely known for creating productive and engaging workplaces for companies. 

What’s Next 

“The next phase of workplace-as-a-service is more on the landlord side, but will have an extreme impact on occupiers.  More and more building owners are recognizing the value of flexible space, amenities, and activated space and are working to include that as a core-offering for all tenants,” said Hodari.  “Industrious is partnering with landlords around the country to manage their tenant experience for entire buildings.”

This post first appeared on Forbes.com. To see the original, click here.