3 min read

We need new distributed, flexible workspaces - but who will pay?

Remote working has brought the workplace into the home, and turned a spotlight on inequality.

Some of us have spacious book-lined studies, while others are perched on a kitchen table hoping their toddler will stay out of the frame.

Many white-collar employers have announced plans to slash dedicated office space, while executives at Google and Facebook say many of their employees will never return to the office full-time.

In the long run, home working will not be satisfactory. Even those with dedicated office space at home will need to re-engage with their work colleagues face-to-face.

As a result, thousands of service sector or knowledge workers will be looking for somewhere else to go. We have seen a marked increase in the number of propositions for distributed flexible co-working spaces, so-called third places.

I love this idea – I first produced a white paper about this with CBRE in 2013 – but I worry about the economics.

 If more home working results in smaller head offices, the money saved is unlikely to go to employees, or to be used to finance third place costs.

Employers might be persuaded to supply you with a better chair, a mike and a webcam, but the other possible use of the money saved might just seem more appealing to the employer, which could deliver more profit to its shareholders, or reduce its post-pandemic recession-induced losses.  

So the third place costs will probably have to come out of the employee’s pocket, competing with increased housing costs (to pay for the fourth bedroom/home office), and/or increased commuting costs (to access bigger houses for the same price), and even, maybe, a tax on home working.

It is commonly assumed that we can maintain or even increase our productivity while being banished from the environment that was specifically designed for us to be productive.

There is no evidence (yet) to challenge the idea that we create value by congregating together (this is knowledge agglomeration, which explains why we have tall buildings in London, New York and Shanghai). Any medium- to long-term losses in productivity due to separation means there will be less money in the system to pay for third places.

Maybe it will be possible to prove that home working adds real value.  Maybe (and in my opinion this is much more likely) we will be able to establish that well-designed third places are likely to be more productive than home working.

Until we get hold of that evidence, however, the third place will have to be either: 

(i) very cheap (examples of the application of this model include asset-lite tech platforms that will tell you which local pub will let you use its empty space in the mornings); 

(ii) subsidised, by local authorities (libraries?), or businesses (banks, phone shops, Amazon, Starbucks?);  or

(iii) very exclusive, for self-employed well-off knowledge workers.     

I really want to be wrong about this, and the race is on to collect the evidence we need to understand this pandemic-induced phenomenon. In time, no doubt, the third place idea will drive many a great business, but right now the economic evidence is missing.