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Expansions of coworking spaces - Part 1: at the same location

Hub Melbourne: After expansion...

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As the coworking movement develops and the average age of coworking spaces increases, coworking space expansions are taking place more frequently. They cost less to implement than an additional location, and present an opportunity to diversify the space. The downside to space expansions however is that they are circumstantial: while an additional location can be considered at any time, an expansion can only take place when there is available space in the vicinity. This is the first article in a series of describing space expansions in different ways.

Space expansion presents an excellent opportunity to diversify a space and make it more profitable, though comes with a unique string of considerations.  Financial sustainability can be achieved through expansions, insists Francisco Cámara, co-founder of Freeland  in Madrid. He and his partner Ana are currently expanding into the building next door. Freeland is currently not financially viable, but with more space for more desks, without the need to increase administration costs and no ongoing infrastructure costs, there is more opportunity for the business to break even.

Certainly, an expansion can boost revenue, but they can only occur if circumstances allow it. When first opening a coworking space, then, it is worth considering the flexibility of potential buildings. Is there room for growth? Is the size likely to become an issue later on? Given that the bigger a space, the more financially viable it is, these are points that are worth considering early on.

For Hub Melbourne, this point was a strong determining factor for setting up in the 120-year old Donkey Wheel House  they now occupy. The team was aware from the beginning that a bigger space would be needed to be financially viable, and so recently increased their floor space by three-fold, from 200 to 600 meters squared.

The benefits to expanding, compared to opening a second location

Financial viability is of course not the only reason a space chooses to expand. When Office Nomads announced their expansion a fortnight ago, it came following five successful years in operation, and a decision not to open an additional location: a move to continue to center all of their attention in one space, but address the need to grow their community and offer a more diverse environment for their members.

‘We wanted to make sure we were doing the most that we can for our existing community,’ said Jacob Sayles, Office Nomads co-founder. ‘We were at capacity but we didn’t want to grow just for the sake of growing (...) We wanted to ensure that we preserved the (space’s) culture, too.‘

Whatever the reason, there are several advantages to expanding a coworking space over opening an additional location, the first being the existing relationship with the landlord, which many space owners find can be one of the biggest challenges of opening a coworking space.

Indeed, the existing relationship may prove to be quite a blessing. Jacob Sayles and Susan Evans, co-founders of Office Nomads, found that their strong relationship with their landlord was a huge payoff.

‘We thought we were going to lose it, because there was a higher bidder than us - but our landlord ended up giving (the ground floor) to us anyway!’

In addition, despite what may be a significant increase in square meterage (in the case of Hub Melbourne, for example, a three-fold increase) expansions, unlike additional locations, do not require a whole new management team, and can usually be managed with an increase in hours of the original team, or of one more team member at the most. In the case of Freeland, Francisco and his wife, Ana, will even continue to manage the space on their own, keeping overheads low.

Contingencies

Although growth is positive and expanding does have advantages, it also has its disruptive elements, particularly if there is construction involved. To minimize disruption, aim to start work in the low seasons.

“We’re doing our expansion (now) in August,” explained Francisco, “because many coworkers go on vacation at this time."

But more importantly, expanding a space will ultimately mean a change in dynamics, and this can have an impact on the culture of a coworking space.

“One of the things that we realized that’s really important is around culture,” said Jan Stewart, Hub Melbourne host. “We had developed a really beautiful, strong culture in the smaller space - it was very intimate and cozy - so then when we went through the initial expansion there was definitely a period, probably for around a month, which was quite disruptive. We (...) really had to do a lot to nurture (...) the culture. Now it’s more awesome than ever. But I would definitely say that’s a delicate point when expanding.”

Jacob, Susan and Francisco concurred. But in their respective expansion designs, they planned to increase the common areas in which their members could socialize and connect, thereby helping to strengthen their communities, despite what may be a difficult period once their membership grows.

‘We’re only treating (the expansion) as a 50% increase in desks because we’re investing in a large common area,’ said Jacob and Susan. ‘The number one people were requesting was a large common area where an area to have lunch together and sit together.’

This approach - involving members in the process - is also an important point when expanding. Whether the community was consulted regarding workspace layout when the space was first opened, it is essential to consider members’ opinions at a later stage.

Respecting members’ opinions will also ensuring you’re delivering what you need to fill new desks. A heightened sense of member ownership too will encourage them to take an active role in community building. This, according to Alex Hillman of Indy Hall’s recently expanded space, is one of the most important factors in creating a successful and community-driven coworking space.

Member involvement

A good way to allow members to ‘make their mark’ on the new areas - apart from letting them get their hands dirty as members were seen to do in Indy Hall - is to complete the basic infrastructure and open as quickly as possible.

‘We opened (Office Nomads) after 3 weeks of moving in. (E)verything we’ve done to build the space was done while we were open with feedback from our community,’ Jacob and Susan said. ‘All our focus (will be) on what we can do to the space before we open our doors.’

This move, coupled with them fulfilling their members’ desire to have a larger common area, will mean that their community has a vested interest in their project.

When consulting members, operators will often find that they request more space to connect and socialize. This is simply because smaller spaces require as much income as possible to cover overheads. They must therefore monetize as much of the floor space as possible, and thus have less room for common areas and event space.

Design

What this comes down to is creating space diversity, and a consolidation of one of the basic logistical ideas of coworking: to provide flexible workspace solutions. Expansions present an opportunity to create a balanced atmosphere, where professional meets comfortable, in a blend of ‘inward facing’ and ‘outward facing’ space design.

Inward facing design, as described by Clay Spinuzzi in his article on coworking in the Journal of Business and Technical Communication, is ‘focused on facilitating comfort and relationships within the coworking site,’ and is less suitable for formal meetings. ‘Outward facing’ space design, on the other hand, ‘facilitate(s) professional contacts with outsiders, to impress rather than to comfort,’ and is particularly suitable for client meetings.

Madrid coworking space Freeland’s image, for example, is polished, and so outward facing. Furnished with changing designer pieces, the spaces acts as a quasi-showroom for its members, mainly from the creative industries, who can invite their clients into the space with comfort. The expansion is a chance to balance this image with an inward facing area. “It’s going to be a place where you can leave your mess and not be worried about bothering the other members. It’s going to be a ‘work in progress’ kind of space, you can use it, and not being worried about coffee spills,’ said Francisco.

The Hub Melbourne’s expansion also allowed for diversification of space. In a co-designing project with Hassell, architectural firm focusing on collaborative workspace solutions, the 400m2 ballroom in the Donkey Wheel House was transformed into three distinct - though not separate - areas.

The lounge area, complete with Dujardin couches (and in contrast to the re-creation of an outdoor area with ‘grass’, deck chairs, and a hammock), create an environment which appeals to their corporate partners, explained Jan, and so serves their mission to be cross-institutional, connecting freelancers and small businesses with corporations.

The Hub has since enjoyed a huge increase in corporate membership and often hosts corporate-organized events. This, along with its ambitious and incredibly successful ‘100 members in 100 days’ campaign, means the hub now has around 600 members, and up to 100 people passing through its doors daily. The expansion and campaign made Hub Melbourne break-even for the first time since opening, a milestone that they celebrated two weeks ago.

The last important point when expanding is to ensure the ease of moving between the old and new space. This will ensure that members new and old are able to connect and collaborate, and will help all members feel that they are part of a growing and rich community. While coworking spaces are about the communities they host, the space must facilitate interactivity. Something that should be striven for at all stages of operation.

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