The Evolution of the Serviced Office Industry: a Q&A with Jamie Russo

Jamie Russo

The office as a service industry, which includes coworking spaces, business centers, meeting room providers and flexible offices, is on a steep growth curve. It’s also evolving faster than anyone could have predicted. I spoke with Jamie Russo, executive director of the Global Workspace Association (GWA) and owner of Enerspace Coworking, in Palo Alto, California, about changes she sees in the industry, which models are proving successful and what the future may hold for serviced offices.

Cat Johnson: I have a general idea of what the GWA is, but I’d love to hear your perspective of what the association is and what it does.

Jamie Russo: We fly under the radar a bit, which we’re working on, but we are hosting our 31st annual conference in September in Miami. We’re not the new kid on the block. We are also about to launch our 8th annual industry financial survey which is a wealth of data on the financial component of running a shared workspace. This year’s version is one of our most exciting projects—industry players are so hungry for data and it’s an important role for an association to play. Traditionally the association, which has had a number of different names over the years, focused on serviced office operators and other independently owned brands, that were focused on providing private offices and a high level of hospitality—a model that was started decades ago by attorneys who wanted to share a law library. Then coworking came along in about 2006. From an underlying business model, the two are similar, but come in a wide range of flavors depending on the space design, focus on community, education, amenities, etc. About two years ago the association committed to expanding our membership to reflect the evolving industry. At the time, I was running two coworking spaces under the Enerspace Coworking brand, hosting the Everything Coworking podcast and serving as the president of the League of Extraordinary Coworking Spaces. I am a bit of an industry nerd. Associations are not always run by someone in the industry, but given the dramatic changes in the landscape, they wanted an “insider.”

Who does GWA now serve?

We serve three primary groups: providers of flexible office space, users of flexible office space and industry service and technology providers. The provider segment is primarily coworking space operators, serviced office operators and asset owners offering flexibility options within their portfolios. In the user segment, we focus mostly on corporate users trying to successfully navigate mobility options for their employees.

The asset owner segment an interesting addition to the industry.

There’s the perceived negative side, which is that someone with a real estate focused background doesn’t know anything about the community or running a space—that they just see the dollar signs of WeWork and want to be involved. But there also are very progressive landlords who want to add community and vibrancy to their buildings to add value for their tenants. Asset owners are starting to think about their building as more of an ecosystem versus a group of discrete tenants. They’re wondering how to put a shared space in their building that can serve the other groups in the building, that can make connections between the groups in the building, that can offer amenities and event space. I think this is a really positive evolution.

There’s an interesting thing happening where the coworking movement and the shared office industry are overlapping. There are still purist coworking spaces, and there are still office rental facilities, but there are a lot of spaces that adopt aspects of both of these models. What do you see happening in the workspace industry?

When you say purist space, I assume you mean open-plan and very focused on the community piece. We’ve learned over the last few years of experimenting with layouts that it can be hard to make an open-plan focused concept work from a financial sustainability perspective. If an operator is going to run the space and integrate it into a business they already have, and they don’t need to allocate a salary to their P&L, they can have a smaller space and they can sell mostly open space. If the operator is going to hire someone to run a shared workspace and they want to generate a profit, in most markets, they need to offer a blend of private offices, dedicated desks and open plan of say, at least 40 percent private space. The reality is that most members of a shared workspace spend some percentage of their day on the phone and need ample, easy access to phone booths or may simply need a private office. This does not make them anti-community robots. This is just the reality of most people’s business life.

In my experience, there are some people who have offices in coworking spaces and they hide away, but there are others who have offices and are key parts of the community.

It’s more about the personality of the people versus whether they have walls or not. Some of our best Enerspace members—the ones who show up for happy hours, lunch and learns, and are the first to welcome new members—are office users. I will also note that I think there’s a huge misperception of the community element present in serviced office spaces. Many of those owners get into the business for many of the same reasons as coworking space operators. They just haven’t used the same language to describe the experience.

GWA

As a coworking space owner and executive director of GWA, where does your interest and passion lie in this evolving industry?

The industry is evolving so quickly. My passion is to help operators, users and service providers navigate the changes to help the industry evolve more successfully and with fewer growing pains. From a personal perspective, I have had my struggles as an operator. I learned a lot of lessons and screwed a lot of things up. I have a passion for helping people get access to the information and peer support they need to do things right from the beginning and have more fun on their journey. We started a program called the Flight Group. The goal is to attract people who are opening spaces or are in their first year of business and help them be successful. There’s no judgement on what size of space you’re doing, or what type of space—we’re going to help you get the data and the right set of tools to help you be successful. One major shift I’m seeing in the industry is the engagement of the asset owners. I’m surprised that this has happened so quickly and I think it brings some very exciting opportunities to operators. Many operators shine at running a business and creating communities but will struggle with capital needed for expansion. And on the other side of that, asset owners want to offer flexible options in their portfolios but don’t want to operate the day-to-day aspects of that business. There’s a beautiful partnership waiting to happen at this level and we’re building out programs to help to facilitate those partnerships.

What do you see GWA’s role being as the industry changes and expands to embrace all these models and spaces?

We’ve defined our mission as helping our members stay current, competitive and connected. The staying current piece is understanding which models are working—not just financial models, but the community component and the member experience approach. The competitive piece is similar: What is the expectation from a user perspective and how do you design your space and your experience and your culture around that? Through our annual conference and Flight Group program, we help our members stay connected so that they can share best practices, innovate together and have a more rich experience as a business owner.

Anything you’d like to add?

The GWA is a source of credible information from a range of experts. There’s a lot of information out there about the flexible office industry, but you don’t know where it’s coming from or what the perspective is of the person sharing it. The GWA has an elected board that governs everything that we do. The board is a group of successful people in the industry from a range of types of spaces. Cat Johnson is a writer and content strategist focused on coworking, community and the future of work. Publications include Shareable, Yes! Magazine, Mother Jones, Triple Pundit and GOOD. She’s the author of Coworking Out Loud, a guide to content marketing for coworking spaces and collaborative teams. Follow her on Twitter: @CatJohnson