IWG's New Office Concept Seeks to Lure Workers From Home
International Workplace Group, the world's largest shared office provider, plans to roll out a smaller coworking platform designed to appeal to remote workers and their employers as it confronts a string of bankruptcy filings by affiliates struggling with lower demand in the pandemic.
The new concept, tentatively called "Spaces Desks," is a division of IWG's Spaces brand but its overall footprint and the number of working areas in the center would be smaller than typical Spaces locations. The new concept "sits in between" Spaces locations and working from home, IWG Chief Design Officer Maarten Jamin said in an interview.
As a result of the stay-at-home and lockdown orders designed to slow the spread of the coronavirus, IWG said it expects to see companies worldwide spread out their workforces in in a model with a large central office surrounded by smaller satellite locations.
Those satellite offices may allow workers to drive and avoid public transportation, a key concern for those looking to avoid close contact with strangers during a commute or when they arrive at coworking spaces with shared kitchens, desks and other amenities that have lost popularity with the coronavirus outbreak. Moreover, locations are becoming available in prime spots as retailers close across the United States and abroad.
Using an app under development, people could rent a spot at Spaces Desks for about $10 per day in a center close to their homes, Jamin said. "They can meet clients in a more professional environment than at home or at Starbucks," he said.
The new Spaces concept is designed to offer workers accessible locations with a short commute that are near shops and other amenities typically found around shopping centers. "That really speaks to the drive toward the hub and spoke," Michael Berretta, IWG's vice president of network development for the Americas, said in an interview.
Jamin said IWG would offer deals to large companies such as software producer Microsoft that would enable its employees to access Spaces Desks. It also has been designed to appeal to the solo person who has been working from home since the pandemic started in March.
"We are working on smaller footprints now that could work in tandem with our existing operations in a city," Berretta said.
The roll out of the new concept comes as IWG, which had 3,392 locations under brands Regus, Spaces and No. 18 and 63.8 million square feet across the globe as of June 30, planned to accelerate closing 4% of its global locations "as a direct result of COVID-19," according to a regulatory financial report filed Aug. 4.
IWG plans to open between five and 20 Spaces Desks locations in top-tier cities so they can be convenient to workers across major metropolitan areas. After Spaces Desks launches in the United States, IWG plans to bring the new concept to the United Kingdom and then other countries.
IWG plans to open one of the first locations of Spaces Desks by early next year at First Street Napa in Napa, California. The Napa location will have about 100 seats for workers, about twice as many as the average number planned for other Spaces Desks locations, Jamin said.
The new concept also is expected to open, possibly as early as December, at Perkins Rowe in Baton Rouge, Louisiana, with 60 to 70 seats. The third location is slated for Washington, D.C., and would have about 40 seats, Jamin said.
The new concept could help landlords struggling with retail and other spots left vacant by businesses that closed during the recession caused by the pandemic, Jamin said. "The landlords will hand over the buildings or spaces as a clean shell," he said. "We'll cover everything else."
Jamin said IWG and landlords probably would work out a shared-profit arrangement for the centers. "For the landlords, there's no investment," Jamin said. "At least they're making money in the interim."
In the United States, IWG said it sees the new Spaces Desks concept as a path to new growth.
"We have a very large opportunity in front of us from building owners who want to institute flex [offices] into their portfolio," said Berretta.
IWG's move to launch a new concept is indicative of renewed interest in flexible office space during the pandemic. Before the coronavirus outbreak, coworking and flexible offices lost some luster because of implications of WeWork's failed initial public offering and attempts to get out of leases to which that company had committed. And during the outbreak, sharing desks has been a source of concern.
IWG's new platform is about to be unrolled as some of its affiliates negotiate with landlords after scores of Regus affiliates filed for Chapter 11 bankruptcy protection in the wake of business plummeting during the stay-at-home orders. Under bankruptcy protection, the U.S. Regus affiliates could rework lease terms with their respective landlords, and if they cannot reach an agreement, the affiliates can reject leases through the bankruptcy court.
Berretta said he would not comment on the bankruptcy filings or how they could impact IWG's Spaces, No. 18 or other brands. He did say, however, that the new Spaces concept could involve some franchising.
"IWG is continuing to look at franchise opportunities in the United States," Berretta said, "and this concept would fold under the opportunities."
Jamin said the idea for the smaller Spaces concept came about during a brainstorming session with IWG CEO Mark Dixon as the company discussed how society and the workplace would change in light of the coronavirus pandemic.
"We asked, 'How can we in IWG assist in that or profit from it. We are a business after all," Jamin said.
Spaces Desks was designed with safety and social distancing at the forefront, Jamin said. The centers will be filled with tall bookshelves and workstations spanning about 6.5 feet by 6.5 feet. The size of the cubicles meets current recommendations to stay at least 6 feet from others, Jamin said. Fabric screens also will create additional separation.
The new concept also incorporates a routing system to help regulate foot traffic inside the centers, he said. Jamin said IWG has designed wide avenues and one-way streets to help limit interaction. The spaces also will have sliding systems that allow the size of work areas to be changed as needed.
Jamin described the overall look as both homey and professional with lots of plants, accessories and top-grade coffee and vending machines offering drinks, snacks and headphones.
"We think this is going to be a very growing and successful addition to our brand portfolio," Jamin said.