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Everything Old is New Again: Industry Consolidation

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We’ve seen this movie twice before.

Our consultancy was launched in 2001, following the dot-bomb and just prior to HQ and Regus each declaring bankruptcy in 2003 – 2004 after explosive growth for each in 1997-2000. They merged under the Regus (now IWG) moniker.

The next wave came as the Great Recession of 2008 and some operators dissolved or were acquired by larger operators.

Here we are at the 20-year mark, with stories again of several operators closing as a result of COVID. We are truly sympathetic to the havoc that 2020 wrought in the industry and the economy. This has been the trial of our global community and of the century, so far.

The other side of that particular coin emerged in the announcement of CBRE’s stake in Industrious as the most recent and largest story for our industry.

Feels a little bit like the movie Groundhog Day.

In the simultaneous reflection and view ahead, we do see the cyclical nature of our industry as:

Current phase: Stabilization of the industry in 2021 through 2022. It will take awhile to transition back to the office, in any fashion. Whether fully remote or hybrid, we will have to proceed slowly in creating new process, procedure and habit. We expect by late 2021, we’ll have much in hand of how our return to the office is working. By 2022 we’ll attain our groove and be more sure-footed.

Near Next Phase: New operators and industry concepts arising in 2023 through 2026. We’re bullish on new trends, new configurations, new solutions and it’s always exciting and energizing to see what arises. Humans are brilliant at adaptation.

Barring any economic implosion, we see that the next consolidation phase comes in 2027/2028, as mergers and acquisitions create efficiencies (i.e. CBRE/Industrious of 2021)

What we do understand is that our industry follows a predictable cycle, allowing us to respond with new ways of enabling people’s best work in a community that each of us identifies as “ours”. This will always be part of our workplace mantra.

 

For solutions in getting to “next”, please reach us at hello@yes-spaces.com 

 

 

 

Throwback Thursday – Revisiting EverythingCoworking Podcast Episode 37

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Ah 2016…. such a lifetime ago! How the world has dramatically changed since then!

For Throwback Thursday, we are re-posting our contribution to Jamie Russo’s Everything Coworking, Episode 37 where we shared our SWOT analysis.

Also, we were a bit prescient in some prognostications about industry consolidation starting in 2021. Just one example: the recent news about CBRE’s stake in Industrious. (scary)

Quick takeaways regarding Experienced Flexspace and Coworking Operators:

Strengths:

Longer view of the industry – have seen the expansion and contracting of the industry.

For YES!, our consultancy has witnessed three of these rounds.  The first wave was 2002-2004 during Dot Bomb era, then again 2008 – 2010 during the Great Recession and then this COVID 2020/2021 cycle.

We have seen an uptick in demand by landlords and developers wanting to partner with YES! to create a flexible workspace experience that will generate higher revenues for them and respond to the high demand for flex offices.

Weaknesses:

Avoid “me too” approach as the market shifts – how do the trends apply to your members and your identity?

Too many may have reacted by tearing down walls with no true plan to curate collaboration. Thanks to COVID, what’s “old” (individual offices with walls and doors) is new again.

Opportunities:

Thank you to WeWork for changing consumer awareness and demand of shared space both by startups and by corporate users (“Rising tides lift all boats”)

May we add that COVID, while clearly devastating, further pushed Work From Home initiatives throughout the globe. We were fortunate in the US to have technologies to enable this possibility, that back in 2000 would have made this even more catastrophic.

There is opportunity in suburban office campuses and malls based on reduced/eliminated commutes and demand by corporate employees to continue working remotely at least a couple days per week.

Potential threats:

Global players that want to enter the US market. It’s Regus entering the market back in 1998. We may be poised to see this cycle again. We are likely in expansion mode in the next 5 years before consolidation. 

We will predict that 2021 will see a settling of the industry, primed for expansion in 2022 with new model variations, new operators and expanded reach into revitalizing exurban destinations. Think tertiary cities with a dynamic and revitalized “Main Street” where live, work and play are all steps from one another.

We’ll get back to you in another 5 years…

 

To partner with us reach us at hello@yes-spaces.com