The impact of Covid-19 on coworking spaces: evidence from Germany

Manuel Mayerhoffer (Department of Entrepreneurship, Faculty of Business Administration, Prague University of Economics and Business, Prague, Czech Republic)

Journal of Corporate Real Estate

ISSN: 1463-001X

Article publication date: 14 June 2021

Issue publication date: 3 August 2021

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421

Abstract

Purpose

Prior to the Covid-19 pandemic, the German coworking industry has grown rapidly as one of the fastest-growing coworking markets globally. The pandemic, however, has brought the industry to an abrupt halt. The purpose of this paper is, therefore, to explore the impact the pandemic has had so far on German coworking spaces.

Design/methodology/approach

Using an online questionnaire, quantitative data from 38 coworking space owners, operators and employees of a total of 77 spaces in Germany has been collected regarding their situation before, during and after the peak of the first wave of the pandemic from Spring until Summer 2020. The data has been analyzed using descriptive statistics.

Findings

The reported income losses significantly outweigh a decrease in costs of the spaces. Nevertheless, the member base seems rather unaffected, and coworking spaces are exploring adaptations to their businesses with a strong shift to the digital environment. Fear of re-imposed governmental restrictions is evident, as well as justified with a looming second infection wave.

Research limitations/implications

Due to the sample size, the data may lack generalizability. Therefore, recommendations for future research are provided.

Originality/value

Data on the impact of the pandemic on coworking spaces is scarce. This paper provides a first necessary overview for the industry as well as the academic field to allow for action to be taken.

Keywords

Citation

Mayerhoffer, M. (2021), "The impact of Covid-19 on coworking spaces: evidence from Germany", Journal of Corporate Real Estate, Vol. 23 No. 3, pp. 170-185. https://doi.org/10.1108/JCRE-10-2020-0044

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited


Introduction

Coworking is a contemporary workplace phenomenon where independent professionals work alone together (Spinuzzi, 2012) in a shared office space on a paid membership basis. By doing so, these mostly unaffiliated, location-independent knowledge workers (Spinuzzi et al., 2019) can benefit from the physical and social proximity (Parrino, 2015) in many different forms, including knowledge exchange, a co-construction of a sense of community (Garrett et al., 2017) as well as coopetition (Bouncken et al., 2018) as a form of positive competition among members. As such, coworking spaces allow remote workers to work outside their home in a more stimulating environment (Weijs-Perrée, van de Koevering, et al., 2019).

Early forms of collaborative spaces had already existed in the 19th century, however, the contemporary understanding of coworking is generally considered to have emerged in 2005 (Orel and Dvouletý, 2020; Spinuzzi, 2012) with Brad Neuberg’s The Spiral Muse in San Francisco. Once the concept of coworking had gained traction, the industry has flourished and grown at significant rates (Foertsch, 2019), driven by the digitization of work processes (Orel and Dvouletý, 2020) and remote work opportunities (Spinuzzi, 2012) which have also enabled the rise of digital nomadism (O’Brien, 2011). As a result, the coworking model has further drawn attention by corporate users (Spreitzer et al., 2015) and academics (Waters-Lynch et al., 2016).

However, with the outbreak of the novel coronavirus SARS-CoV-2 (hereafter Covid-19) in Wuhan, China, in December 2019, the global economy has come to an abrupt halt. To contain the spread of the virus, governments have been forced to impose restrictions and lockdown measures, which have severely affected the coworking industry as well. Only in March 2020, a decrease of almost 50% in footfalls had been recorded (The Business Research Company, 2020), estimating the market to shrink by approximately 13%. Other studies, such as the Global Coworking Growth Study 2020 (coworkingresources.org, 2020), paint a more positive picture, expecting the industry to still grow in 2020, but at lower growth rates. They expect the growth to rebound by 2021 with a yearly growth rate of 21.3% to more than 23,000 coworking spaces globally, and almost 2.5 m users. Detailed data recording the impact of the Covid-19 pandemic, however, is scarce.

Germany is considered the fifth largest coworking market (coworkingresources.org, 2020), accounting for 3.85% of the global number of coworking spaces. The country has suffered from more than 300,000 confirmed cases of Covid-19 (Robert Koch-Institut, 2021) at the time of writing this in October 2020. A much stronger outbreak had been successfully contained with the introduction of governmental restrictions, such as banning or strictly limiting social gatherings, maintaining social distancing norms, and local lockdowns. This, however, has also meant economic losses, with the country’s GDP falling by 9.7% in the second quarter on the first quarter of 2020 (Statistisches Bundesamt, 2020), which the federal statistical office reports as “the sharpest decline since quarterly GDP calculations for Germany started in 1970”.

The coworking model heavily relies on the physical proximity of members to provide them with the benefits outlined above. However, with the peak of the pandemic in Germany in April, the imposed restrictions have forced the industry’s spaces to either rapidly adjust their business model, or to close the doors for their members, also depending on the gravity of the local circumstances. This is unprecedented for coworking spaces, and will have a tremendous economic impact on the industry. That being said, the current situation is also likely to initiate significant transformations for the concept of coworking, as well as to impact developments of the future of flexible work arrangements. Moreover, whilst remote working processes are commonly in place within companies, such arrangements have only recently started to emerge for coworking spaces, emphasizing the need to study these collaborative environments and how they have developed during the pandemic.

However, it remains unclear how heavily the German coworking spaces have been affected economically, as well as what they have done to cope with this new situation. The aim of this paper is, therefore, to explore the impact of the Covid-19 pandemic on German coworking spaces, intending to answer the following research questions: (i) How has the pandemic affected German coworking spaces economically? (ii) What strategies were employed by the coworking spaces to mitigate the impact? (iii) What are the expectations for future developments?

The benefit of such information would be threefold. First, investigating the extent of the impact on German spaces would allow for more targeted lobbying to support the local coworking spaces throughout this pandemic. Second, identifying major trouble spots within the spaces may allow both practitioners as well as academics to develop suitable recommendations which may aid the industry to ensure business survival. Third, building an understanding of how the pandemic has affected coworking spaces, and how they have responded to it, can provide scholars with valuable insight into future development patterns of the coworking model and its underlying dynamics, and thus reveal crucial areas for further research. Such studies would, in turn, benefit coworking space owners and employees trying to explore new adaptations to their operations and practices to successfully steer their spaces and communities through these critical times.

The paper will firstly provide an overview of relevant aspects of the concept of coworking, before outlining the rise of coworking globally and detailing the German market leading up to the pandemic. Subsequently, methodological aspects of the study underlying this paper will be outlined, and results presented. These will be discussed to draw conclusions and provide an outlook for future developments.

Background

Concept and rise of coworking

The rise of coworking was fueled largely by the advancement of technology enabling digitization and the growth of remote work. Especially knowledge workers, being able to fully work remotely, had then experienced the opportunity of working location-independent (Kitching and Smallbone, 2012; Spinuzzi, 2012), paving the way for digital nomadism (Müller, 2016). Yet, despite the advantages of “work-from-anywhere” programmes (Choudhury et al., 2020) also for corporate employees, remote work can also result in feelings of social isolation and loneliness due to the individualization of work processes (Taskin and Devos, 2005) and the resulting negative effects on the individual’s personal life (Hill et al., 2003).

With coworking spaces functioning as hybrid workspaces (Marchegiani and Arcese, 2018), they allow users to work alongside and interact with like-minded others, enhancing feelings of belonging and connectedness. Furthermore, active mediation of community managers (Brown, 2017) strengthens the development of a common culture of shared values, thus aiding the co-construction of a sense of community (Garrett et al., 2017). In that regard, Spinuzzi et al. (2019) further differentiate between different forms of community, each resulting in different frameworks for the activities and interdependencies in the individual spaces. In other words, the community being built is moulded by and to the respective community. Blagoev, Costas and Kärreman (2019) also show how coworking spaces have developed dimensions of organizationality beyond simple co-presence and a sense of community, into patterns of work activities for members building a foundation for collaborative work. These aspects, however, build on the physical space, and the members being together. With governmental restrictions and social distancing measures in place, coworking spaces need to identify and employ new strategies to successfully adjust their practices to these new and pressing circumstances.

Since its emergence in 2005, the coworking concept has undergone several development phases. Gandini and Cossu (2019) discuss how the initial phase was marked primarily by the focus on the community (Garrett et al., 2017; Rus and Orel, 2015) and the related social interaction among members (Leclercq-Vandelannoitte and Isaac, 2016). With the growth of coworking and the emergence of coworking spaces on a global scale, the economic value had been increasingly put into focus (Gandini and Cossu, 2019), also enabling the influx of large, corporate players (Clifton et al., 2019). Most recently, the coworking model has entered a “resilient phase” (Gandini and Cossu, 2019), once again focusing more on the social aspects of coworking in addition to the economic value. However, this focus on the community also extends to social relations with other actors, and actively embraces changing dynamics in the environment with the attempt to achieve social impact and economic sustainability together. The coworking model has now undergone rapid changes, and continues to display fast transformations as the industry is grappling with pandemic-induced challenges.

German coworking market pre-Covid-19

The Global Coworking Growth Study 2020 (coworkingresources.org, 2020) identifies Germany together with India as the fastest-growing market for coworking. Similarly, the industry report published by BNP Paribas Real Estate (2019) shows how coworking has been established in the Big Six – Berlin, Cologne, Frankfurt, Munich, Hamburg and Dusseldorf – with a take-up of more than 250,000 m2 in 2018, as more than a tenfold increase of the average take-up in Germany between 2009 and 2016. The growth is led especially by Berlin as the “coworking capital” (Zahrnt and Barthauer, 2018) providing some 25,000 workspaces to local users in 2018. Zahrnt and Barthauer (2018) also show developments which can be observed in other large cities functioning as coworking hubs. These have witnessed an increasing influx of the major international coworking operators tapping into the local market (Mayerhoffer, 2020) by making use of the increased demand also by corporate users.

Furthermore, Zahrnt and Barthauer (2018) highlight the change in perception of flexible office space which is being understood more and more as a real estate investment opportunity in Germany. Such developments have been on the rise globally up until the pandemic, predicting further popularisation of the coworking model in becoming an important aspect of the commercial real estate industry as well (Arora, 2017). This is further aided by the hybridization of coworking spaces (Yang et al., 2019) with the emergence of a range of new coworking configurations, allowing coworking spaces and investors to tap into additional, more specialized markets as well.

Method

Data was collected using an online questionnaire starting at the end of June until mid-August 2020. Using convenience sampling (Bryman and Bell, 2011), the questionnaire was initially distributed via email to members of the German Coworking Federation (GCF). Whilst convenience sampling can limit the generalizability of findings, the approach was most useful to leverage the network of the GCF which largely consists of current owners, operators, or employees of coworking spaces. In addition to this, the survey was shared on social media platforms to also include non-members, but specifically targeting coworking-related users nevertheless. Given the focus on the German market, the survey was administered in German.

The questionnaire was developed in collaboration with Deskmag and the German Coworking Federation. Initial drafts of the questions were discussed in multiple sessions with a range of GCF members, and the questionnaire was piloted. Upon completion of the data collection process, the author received the raw data, and the analysis has been conducted independently.

Questionnaire constructs

The questionnaire consisted of various parts. A question regarding the respondents’ affiliation to coworking (current, former, future) functioned as a filter to target respondents with more specific questions. Responses from those formerly owning or being employed in a coworking space, as well as responses from future owners, were excluded for this analysis due to the limited sample not allowing for meaningful analysis. Respondents currently owning, operating or working in coworking spaces were asked to provide basic data of their space (size, space distribution, founding year etc.). Demographic data (age, gender, type of employment, GCF membership) were recorded from all respondents.

To capture the economic impact of the pandemic on the coworking spaces (first research question), respondents were asked to evaluate their business situation in general by indicating their perceptions for the months of January (i.e. pre-pandemic), April (i.e. during strictest lockdown), and June (i.e. with relieved governmental restrictions) using a five-point Likert scale ranging from “very bad” to “very good”. Moreover, the questionnaire probed the impact of the imposed restrictions regarding hygienic standards, social distancing, and restrictions of social gatherings, using a five-point Likert scale ranging from “very negative” to “very positive”. The shifts in demand for the various configurations such as hot-desking, fixed desks, or offices, were captured using a five-point Likert scale ranging from “significantly more” to “significantly less”. In addition to absolute figures, respondents were asked to indicate their income and cost structures in January, thus, pre-pandemic, and report on which of the elements had plunged drastically during the lockdown period in April.

For the second research question on strategies employed by the coworking spaces, the reactions of the coworking spaces’ members were probed by providing different aspects (e.g. “asked for discounts”, “offered help”), and respondents were asked to indicate the frequency of occurrence (often, rarely, never). To capture the specific adaptations used by coworking spaces to mitigate the impact of the pandemic, respondents were asked to indicate on a five-point Likert scale ranging from “significantly more” to “significantly less”, which of the provided elements (e.g. offering online services, providing discounts) they had utilized.

Lastly, the questionnaire asked respondents about their view on future developments (third research question) in regard to their expectations for the number of German coworking spaces with different scenarios (eased restrictions, restrictions remain, tightened restrictions) using a five-point Likert scale ranging from “strong increase” to “strong decrease”.

Sample

Table 1 provides an overview of the sample characteristics. The questionnaire recorded a total of 72 useful responses. Of these, 40 respondents were coworking space owners, operators, or employees; the remainder were either respondents planning on founding a coworking space, or former owners/operators/employees, as well as neither of these. 38 of the respondents currently owning, operating or working in a coworking space were located in Germany, and this is the final sample used for this paper. 27 of those were owners, seven were operators, two were employees, and two did not indicate their position. The respondents were related to a mean of 2.1 spaces, ranging from one to nine, and an overall total of 77 spaces.

Respondents with multiple spaces were asked to fill in the questionnaire for the one location they spend most of their time in, or which they felt most familiar with. Of all the spaces, only six remained fully open during April, 21 were open but with limited service, four closed with exceptions, and the remainder either closed fully (5) or did not indicate their operations in April (2).

The surveyed spaces varied in size, with an average of 475 m2, ranging from 55 m2 to 2,300 m2. In terms of the target audience, over half specifically focused on individuals (52 %). About a third of respondents (32 %) targeted individuals and smaller teams primarily. The average age of respondents was 44 years, and of the 28 who disclosed gender, 12 (43 %) were female.

Results

The following section will present the main findings from the responses collected from owners and operators of coworking spaces in Germany.

Economic impact

Figure 1 outlines the development of the overall business situation in January, April and June. In January, and thus before the Covid-19 pandemic had gained a foothold in Germany, the majority of spaces perceived their business situation positively. Especially in April, however, which for more than 90% of respondents had been the month with the strictest Covid-19-related rules taken, a significant proportion of coworking spaces evaluated their business situation as very bad (23 %) or rather bad (43 %). This appears to have recovered by June, with the largest proportion of respondents (46 %) perceiving their business situation as satisfactory. Yet, a slightly negative tendency with 29% indications of “rather bad” and 9% as “very bad” remained.

The respondents indicated to be least affected by the increased hygienic standards meaning more frequent cleaning and disinfection, with 69% reporting no impact on their coworking space(s), 21% a slightly negative impact, and 10% reporting a rather positive impact. Minimum distances of 1.5 m between individuals were perceived to have a more negative impact, with almost three out of five (61 %) reporting a rather negative or strongly negative impact. Restrictions for social gatherings, however, have most affected the coworking spaces, with 55% indicating this to be strongly negative, and 38% indicating this to have been slightly negative.

After the strictest measures had been relieved, the demand situation appears to have shifted away from space for larger groups (meeting rooms, event space) to smaller, more flexible configurations. As Figure 2 displays, the demand for hot-desking has increased in just over half of cases. Significant decreases are apparent in meeting rooms (31 %) and event space (41 %). Nevertheless, especially meeting rooms also experienced demand increases in 38% of cases.

Table 2 outlines the average income structures in January, along with indications of where incomes have declined most severely. Desk rentals were generating a third of incomes in January, and plunges beyond 50% in April had been reported by 33% of respondents, as well as plunges of more than 25% in yet again a third of cases. Most severely affected were meeting room rentals, with plunges beyond 50% in four out of five cases. Similarly, event space rentals plummeted beyond 50% with 86%, and the sale of foods and drinks fell strongest in the vast majority (88 %) of the surveyed spaces. Some respondents reported increases in income in the areas of online memberships, services, and virtual office services among others. Comparing June income with that from January, about two thirds (69 %) of respondents indicate lower or significantly lower levels, with only 12% exceeding January incomes in June.

Overall, incomes in January were 19,520€on average per space, with 73% of respondents indicating this to be an average month, and the remaining 27% describing this as an income level above the usual. Incomes in April dropped then to an average of 9,075€. The average drop in income for each space was 36%.

Before the Covid-19 pandemic, rent or leasing accounted for 46% of the incurred costs, followed by personnel (23 %) and other running costs (13 %). During the pandemic, rent or leasing has seen a drastic plunge only in a fraction of cases (17%). The highest cost decreases were reported for personnel cost (61 %), the owner’s salary (67 %), as well as “others (e.g. food and drinks)” (64 %). No drastic plunges were reported by about a fifth of respondents (27 %).

The average costs were at 16,386€in January, with 96% of respondents describing this as an average month. Average costs then dropped in April to 12,207€, with an average cost decrease per space of 18%. Costs were generally reported to have decreased, however, there were a few exceptions in the open-ended sections, indicating that costs had increased for additional cleaning, investments, and marketing (Table 3).

Overall, two-thirds of the responding coworking spaces claim that the Covid-19 pandemic has caused them a loss. 8% claim it generated additional profits, while the remainder assumes no changes. The median reported loss amounted to 10,000€.

Transformations and strategies

Figure 3 provides an overview of the reactions of the members of the respective coworking spaces. For this, the respondents were asked to report on their perception of the most common behaviors of their community members in response to the Covid-19-induced transformations. About a third of members (34 %) showed no reaction, while only some (24 %) continued coming to the space regularly. Given that 21 out of the 38 surveyed coworking space operators/owners had to limit their opening hours, however, this comes as no surprise, and also explains the 22 respondents indicating that their users only came to the space rarely. Discounts or payment breaks were requested only seldomly or never in the vast majority of cases.

As can be seen in Figure 4, there appears to have been a strong shift of coworking spaces toward offering online services, with these being expanded in almost two-third (65 %) of cases. The business was further adapted using temporary discounts (38 %), positioning coworking more as a business model (38 %), as well as offering more private offices (34 %). Some increases are further reported in investments (34 %) and marketing expenses (34 %), however, with some spaces opting for a reduction of these instead. Both the working time and the number of employees remained the same in some 60% of cases. Nine respondents did not give any indication.

Future expectations

When asked about their estimates of the number of coworking spaces within the next 12 months regarding social distancing measures as well as restrictions of social gatherings (Figure 5), the majority of respondents (76 %) expect a slight increase if restrictions are to be eased. Should they remain the same, respondents show a slightly negative tendency and rather expect a decrease. For the imposition of additional and tightened restrictions, 68% of the respondents expect a slight or strong decrease in the number of coworking spaces.

Discussion

The results confirm the expected strong economic impact of the Covid-19 pandemic on coworking spaces, which in January 2020 still found themselves in a favorable business situation. With April as the most severely affected month until the data collection period, income had dropped significantly. Nevertheless, the slight upwards trend in June gives reason for hope for the German coworking spaces. This is further enhanced by the indication of almost 90% of respondents that the summer months usually generate lower incomes than other months, thus putting the reported losses into perspective.

An interesting finding is a change in the demand situation of different coworking elements. Here, especially an equally strong increase, as well as decrease, of meeting rooms with relieved measures raises questions. The data shows no significant differences between rather individual-purposed spaces, or group-purposed spaces, which could have explained the respective shifts. An alternative answer may be found in the future predictions of a shift in the use of coworking spaces by corporate remote teams frequenting coworking spaces for their weekly meetings outside of their usual home office (Conerly, 2020). This may further contribute to the growth potential of the Germany coworking scene, adding to the initially outlined changing perception of flexible office space on the German market.

As of now, however, the findings further show that incomes generated from meeting rooms have fallen by more than 50% in four out of five spaces. The evaluated demand situation may, therefore, be explained by the outlined industry sentiment regarding the relief of measures. When comparing income and cost distributions throughout the surveyed period of time, it affirms how significantly the spaces were affected. Despite a generally advantageous decrease in cost of 18%, the income declining sharply by 36% far outweighed such positive effects. In that regard, it should be noted that the main source of income with desk rentals seems to have fared still comparably well, but has plummeted significantly regardless. However, especially the lack of income generated from meeting room rentals, accounting for 17% of total income, has affected the income distributions negatively.

Furthermore, the major cost decreases were not a result of more efficient processes or the like, however, were mostly explained by large falls in personnel costs and the owners’ salaries. Despite the effectiveness of such measures to cushion the incurred losses, they cannot function as sustainable measures with an approaching second infection wave.

In regard to the Covid-19-induced transformations and strategies, another major finding of the survey is the reaction of members of the coworking spaces, which seem to have built a loyal customer base, with most of the members not showing any reaction to the new situation, and canceled contracts, discount or payment break requests a rarity. This may become even more crucial for the upcoming winter season, for which first indications of a second wave of increased infection levels are gradually in the offing.

It also seems that the Covid-19 pandemic has functioned as a driver of potentially more positive change, and that the coworking spaces embrace the changing dynamics in building resilience (Gandini and Cossu, 2019) whilst entering this new development phase of the coworking model. The surveyed spaces appeared active in re-shaping their business, with a strong expansion into the digital realm as a means to compensate for the lack of physical proximity and the resulting dynamics. Thus, coworking spaces actively diversify their offerings, which is further facilitated by new IT-firms providing the necessary tech to allow coworking spaces their shift to digital. Ideally, coworking spaces would be able to run in a hybrid mode, which would also provide the flexibility to react quickly to governmental restrictions, whilst nevertheless engaging in community-building and mediation. For this, however, the role of the community manager (Brown, 2017) will need to undergo changes to provide the same level of mediation to instil and reinforce a set of shared values in such virtual environments as well.

In addition to the digital shift, the pandemic seems to have forced coworking spaces to explore new ways of both attracting and maintaining talented members in their space. It can be assumed that the learning gained from this will become crucial in keeping the business afloat when future months will be affected more heavily, entailing also additional governmental restrictions which may limit the operations of coworking spaces. Moreover, these new strategies may be an explanatory factor for the increase in profits, which had been reported by 8% of respondents.

The study also gives some indications for future developments and expectations. The results seem to reveal an overall fear regarding stricter or additional measures, with the coworking space owners and operators painting a rather grim picture of the development of the industry in that scenario. Given the current Covid-19-related developments in Germany (Robert Koch-Institut, 2021) as of October 2020, with the number of daily new infections above 4,000 on a regular basis and local incidence at times above 50, however, this outlook increasingly seems to materialize with a looming second infection wave.

Surprisingly, the elevated hygienic standards seem to have perhaps induced some improvement in the operations of the surveyed coworking spaces. As such, they were perceived neutrally, as well as positively in some cases. Yet, especially the restrictions regarding the size of gatherings, as well as the minimum distance among members had been perceived most negatively. Because coworking spaces have, as of now, relied heavily on the physical proximity of members as the key foundation of interaction and bonding in the space, the measures may have thwarted these positive outcomes, inducing additional fear regarding the looming tightening of governmental restrictions.

Furthermore, with the pandemic having forced employees into the “world’s largest work-from-home experiment” (Banjo et al., 2020), remote work processes are now advanced at a rapid pace. In Germany, for instance, estimates indicate that up to 60% of corporate employees had worked from home during the second quarter of 2020 (Statista, 2020), posing new challenges for managers and workers adapting to their work in the “new normal” (Hofman et al., 2020). This could continue raising awareness for the potential of coworking spaces in providing a flexible workspace for remotely working professionals which allows them to be productive in a nearby space whilst circumventing feelings of social isolation or loneliness, further contributing to the demand developments.

Limitations and future research

Limitations

It should be noted that due to the main intention of the survey as a tool for lobbying work with governmental bodies, the presented results are subject to various limitations. First, with the aim of capturing the industry developments with regards to the Covid-19 pandemic, the data was gathered using non-validated scales. This provides significantly more value for practitioners but limits the academic reliability and use of advanced statistical methods. To avoid response bias with the questionnaire, members of the GCF were involved in discussing the questionnaire, which was also piloted to some members.

Second, the sample size of 38 coworking space owners and operators is fairly limited. Nevertheless, it concerns a total of 77 coworking space locations in Germany. Most industry reports, as well as the coworking platform coworker.com (2020) currently list over 500 German coworking spaces, with this particular platform showing 533 coworking spaces. Thus, the presented sample would comprise 14.4% of the total number of spaces. However, the latter largely depends on the underlying definition of coworking used, and may thus vary strongly. Also, given local differences of coworking spaces in Germany, such as a more mature market in larger cities where the concept was introduced early on, and generally a stronger focus on the local environment (e.g. more corporate finance in Frankfurt, or tech and creatives in Berlin), the data cannot be considered fully representative.

Future research.

It will be crucial to continue tracking the industry developments throughout the coming months with additional surveys. In that regard, especially three factors would significantly contribute to the quality of collected data, as an elevated data quality would be crucial for practitioners to better convince relevant bodies and institutions of the importance of coworking to ensure that the industry receives sufficient funding to help struggling businesses.

Using more in-depth data and validated scales may allow for more detailed analysis in identifying key parameters which may help coworking spaces survive and thrive in a post-Covid-19 industry. Second, whilst this study analyzed the impact of the pandemic on the level of coworking spaces through owners, operators and employees, it would be beneficial to enlarge the focus also to members to better understand the changing dynamics and needs. Such research may reveal crucial insight which may help to steer the coworking spaces more successfully through these times of crisis. Moreover, exploring the new approaches and strategies employed by community managers, as well as their effectiveness from the point of view of members, could add valuable knowledge on community mechanisms, and their changing nature within digital coworking environments. Finally, local and national coworking groups are already collaborating internationally. Using these connections may also allow for international surveys to be administered to outline the regional and national variations, but to also identify best practices to further aid practitioners.

Conclusions and future developments

The paper has analyzed data from coworking space owners and operators on the German market and has outlined the impact of the Covid-19 pandemic before, during, and after the most severely affected month of April. The data shows that the coworking spaces have incurred significant losses, despite a smaller drop in costs. These, however, were largely accounted for by reduced personnel cost and salaries of owners, thus only short-term measures.

Yet, the surveyed spaces seem to be adapting to the new market situation by exploring digital operations, as well as fostering coworking as a business model. Paired with a solid member base that appears loyal to their space, this presents a good opportunity for coworking spaces to diversify and explore new, long-term models of operation with increased degrees of flexibility to react quickly to the further development of the Covid-19 pandemic. In addition to this, especially the shift to the digital realm may open up new markets for the coworking spaces which can attract new members through digital memberships only. Similarly, these developments will be important avenues for future studies, gaining a better understanding of the transformation of the coworking concept and its role for future work arrangements.

Moreover, there appear to be some forecasts assuming that larger coworking chains could possibly benefit from the pandemic, as corporate users may frequent coworking spaces more often (Conerly, 2020). The fight for survival especially of smaller, local coworking spaces may thus be exacerbated even further by such additional competitive pressure. Yet, if the first indications of German companies allowing employees to choose between the home office and working from coworking spaces, as observed in some cities already (Hoffmann, 2020), prove true, this may also help smaller independent spaces ensure business survival through this surge in demand from smaller companies as well. Furthermore, making use of more group-focused coworking spaces as innovative office forms may allow organizations to benefit from knowledge exchange and social networking which may lead to improved organizational performance, as shown in business centers (Weijs-Perrée, Appel-Meulenbroek, et al., 2019). Nevertheless, for the German coworking industry, the future development hinges on the severity of upcoming measures, including social distancing and restrictions for social gatherings, which had been reported to affect coworking spaces the most. Any predictions are strongly contingent on the further management of the Covid-19 pandemic and the progress of vaccine rollouts across the globe.

What is now crucial for the coworking spaces in the industry is to adapt their operations and prepare for relevant eventualities, especially with virtual coworking and digital mediation mechanisms to maintain and build their community through an uncertain future. Moreover, coworking spaces should re-thinking their spatial layout to ensure that governmental restrictions (e.g. sufficient distance between members), as well as general preventive measures (e.g. increased ventilation, and more outdoor air, avoiding recirculation; or installing air filtration systems), can more effectively be met to again benefit from the co-location of members in the physical space. Such adaptations may also add to the coworking space members’ feeling of security and their resulting willingness to frequent the space – if restrictions allow – ultimately mitigating the negative impact that working from home for extended periods of time would bring. In addition to the spatial configuration, managerial aspects in the digital environment, such as the role of community management, would benefit from further research to explore how mediation mechanisms can be actively employed through digital interaction to retain and potentially advance the positive effects on community-building and member development.

Figures

Evaluation of business situation

Figure 1.

Evaluation of business situation

Demand with eased restrictions

Figure 2.

Demand with eased restrictions

Reaction of members

Figure 3.

Reaction of members

Business adaptations

Figure 4.

Business adaptations

Number of coworking spaces: 12-months outlook

Figure 5.

Number of coworking spaces: 12-months outlook

Sample characteristics

Variables n (%)
Total Sample 38
Relation to coworking space    
Owner 27 71.1
Operator 7 18.4
Employee 2 5.3
Did not specify 2 5.3
Number of coworking space locations    
One 22 57.9
Two 5 13.2
Three 5 13.2
Four and more 5 13.2
Did not specify 1 2.6
Opening year of the location    
In 2019 or after 9 23.7
2018 8 21.1
2017–2015 7 18.4
2014–2012 5 13.2
2011 or earlier 7 18.4
Did not specify 2 5.3
Population of the coworking space’s city    
More than 1 m 7 18.4
Less than 1 m 3 7.9
Less than 500,000 9 23.7
Less than 100,000 9 23.7
Did not specify 10 26.3
German Coworking Federation Membership    
Yes 21 55.3
No 5 13.2
Did not specify 12 31.6
Gender    
Female 12 31.6
Male 16 42.1
Did not specify 10 26.3
Age 43.7 (12.1)

Income distribution and development

  Average share of revenue in January (%) Percentage of respondents reporting a plunge of more than 50% Percentage of respondents reporting a plunge between 25%−50%
Desk Rental 33% 33% 33%
Private Office Rental 19% 0% 25%
Meeting Room Rental 17% 80% 0%
Event Space Rental 9% 86% 0%
Others 6%
Memberships (combining multiple services) 6% 25% 33%
Public Funding 4% 50% 0%
Virtual Office Services 3% 9% 14%
Sale of Foods and Drinks 2% 88% 0%
Online Services 0% 0% 0%
Ticket Sales for Internal Events 0% 0% 0%
In none   12% 60%

Cost structure and development

  Average share of total cost in January (%) Percentage of respondents reporting a drastic plunge (%)
Rent or leasing 46 17
Personnel costs 23 61
Running costs (internet, cleaning, …) 13 13
Interest and debt payments 4 33
Technical and office equipment 3 33
Salary for owner 3 67
Others (e.g. food and drinks) 3 64
Maintenance 2 36
External marketing 2 36
In none   27

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Acknowledgements

The author would like to thank Carsten Foertsch for leading the questionnaire development, as well as Johanna Voll and Dina Sierralta for their efforts in promoting the survey. The author is also grateful to the journal editorial team, the guest editor, Dr Marko Orel, and the two anonymous reviewers for their time to review this paper and provide constructive feedback.

This work was supported by the Internal Grant Agency of the Faculty of Business Administration, Prague University of Economics and Business, under no. IGS F3/33/2020.

Corresponding author

Manuel Mayerhoffer can be contacted at: manuel.mayerhoffer@vse.cz