Co-working spaces are congregating on the West Coast. According to the 2017 Global Co-working Survey, West Coast cities have more co-working spaces per 100,000 employees compared to similar East Coast cities. The survey also shows that co-working is expanding and by 2020 more than 22 million Americans will work in co-working spaces. We sat down with Kurt Birkenhagen is the VP of Marketing at Vast Conference, which conducted the survey, for an exclusive interview to talk about the survey's findings.

GlobeSt.com: Why is there such a high concentration of co-working spaces on the West Coast?

Kurt Birkenhagen: The tech hubs in California and the rest of the West Coast have been redefining how we work since the 1930s. We see this as a natural extension of that revolution.

GlobeSt.com: How and why are co-working space linked to high-rent areas?

Birkenhagen: We see a couple of important factors at play. For one thing, say you're someone in a low-rent area looking to start a business. You may already have a guest room or a garage you can dedicate to the project, but someone living in a high-rent area is less likely to be able to afford a house or apartment with that extra space. It may be cheaper to use a co-working space than to try to upgrade to a three-bedroom apartment. It's interesting to note that the median rent for a two-bedroom apartment in the Bay Area is $3,377/month, which is approximately twice the cost of a two-bedroom apartment in the Los Angeles area, $1,798/month.

That “approximately twice” ratio is similar for two data points we tracked: The concentration of co-working spaces per 1,000 firms with five or less people in the Bay Area (28.64), is approximately twice the concentration of co-working spaces per 1,000 firms with 5 or less people in the Los Angeles area (14.18). The number of co-working spaces per 100,000 people in the Bay Area (36.05) is approximately twice the concentration of co-working spaces per 100,000 people in the Los Angeles area (19.76) There seems to be a very clear connection here, and as rent in L.A. catches up to rent in the Bay Area, we'll see the number of co-working spaces increase as well.

Another factor: High rent areas tend to be places getting an influx of new workers—that's what's driving up the rents. We spoke to Sarah Studer manager of co-working space ImpactHub in Seattle, who said that the spouses/partners of those new workers are turning to co-working spaces as a place to generate a professional network in their new city.

GlobeSt.com: Co-working is growing. What is your outlook for co-working on the West Coast in the next five years?

Birkenhagen: We expect it will continue to grow. The factors we cited above — the pioneering nature of the West Coast, rent increases, and influxes of new workers — only seem to be accelerating. Co-working seems to be a result of those factors so as they continue to be important, so will co-working.

GlobeSt.com: How are office landlords and owners responding to this change, and how should they be adapting?

Birkenhagen: Given that co-working seems to correlate with high rent areas, office landlords and owners may not have anything to worry about! Small start-ups can't afford their prices, but there seem to be plenty of larger, more established businesses that can.

GlobeSt.com: How is co-working changing and evolving from what it is today to deal with some of the challenges you outlined, like noise and privacy?

Birkenhagen: Well-funded companies like WeWork have the ability to experiment with different ways to enhance the positive aspects of co-working, and mitigate the negative ones. We think we're already seeing that.

The old term for a co-working space would have been a “shared office space,” which brings to mind a bunch of desks in a large room. Go to a modern co-working space today, and you won't see that. You'll see private areas for people who want complete focus, you'll see larger meeting spaces for conferences, you'll see a socializing area where people are making connections. Making connections may be the biggest shift. Co-working, as the name implies, is about working together and collaborating, not just about sharing a location.

Instant Insights /

Co-Working Companies Congregate on the West Coast

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