What happens when the Prarie-Dogs abandon their cubicles?
Melbourne is experiencing an industrial revolution. Automation, globalisation and collaboration are profoundly changing the nature of work, including how and where we work. Yet the debate over Melbourne’s future planning barely gives any attention to these changes, or their implications for how our city works.
This article discusses these trends, as well as the positive role that collaborative work spaces are playing in adapting our city’s workforce to rapid change.
By 2020, freelancers are expected make up 40 percent of the entire Australian workforce. It’s a global trend - specialisation underpins today’s economy, and the unbundling of business functions and supply chains has created a substantial employment market where increasingly people act as independent contractors.
Today, more and more workers are engaged in flexible work (sometimes by choice, often by circumstance). The ‘portfolio career’ is now common and collaboration with other independent contractors to get things done is the new norm for many skilled workers.
Already, around 30% of Australia’s workforce is engaged in flexible work, including moonlighting, multiple part time and casual roles and independent contracting.
Technology is a driving factor - it is displacing many jobs but it is also making being a self-employed global worker easier than ever. Think of platforms such as 99designs, Freelancer, Uber and Airtasker, where the buyer and sellers of skills and services can interact instantaneously and at low cost. The ‘sharing’ or ‘on-demand’ economy, and ‘peer to peer capitalism’ are the new buzzwords.
So the barriers to trying new ideas and starting new businesses are lower than ever, and technology provides greater flexibility to work when and how you want.
But I have been wondering for some time, where do all of these freelancers and self-employed people work from, and how do they collaborate with one another?
Not every freelancer works from home or collaborates online. Many need to be amongst other people for social contact, intellectual stimulation and networking. Many startups and small businesses thrive in clusters on the fringes of the Sydney and Melbourne CBDs. It is becoming obvious why.
Rental costs are only part of the answer, and in fact in many instances they are secondary to factors like flexibility, amenity and culture. Small businesses and freelancers are increasingly seeking out neighbourhods that are accessible, have high amenity, and good IT services. Workers want to be close to home, social and recreational activities, and not spend hours on end stuck on public transport or freeways.
Hubs create attractive social communities – they are places where workers can feel part of a wider community. All work has a social element to it, which is why people will always seek out work spaces which create opportunities to interact with others.
The problem is that in many suburbs there are simply no suitable office accommodation options.
The conventional Melbourne office market doesn’t cater well to the needs of startups and small businesses. Even where it exists, the typical office space is much larger that a sole-trader or small company needs, and the fitouts usually comprise uninspiring partitions and cubicles. Commercial leases are typically long term and inflexible and if refurbishment is required (it usually is) the fitout costs are expensive.
Co-working spaces overcome all of these issues, and they are increasingly becoming the workspace of choice for small businesses and freelancers.
The co-work model is no longer merely the domain of creative artists and millennial startups. In fact it has become a big real estate deal across the globe.
The world’s largest provider of co-work spaces (WeWork) was founded less than six years ago it is already valued as a $16 billion business. WeWork already has over 54 co-working locations across the U.S. and Europe. It has plans to expand to reach every continent (except Antarctica) by the end of 2017, and WeWork will establish its first site in Melbourne in coming months.
WeWork have clearly worked out that there is a very sizeable gap in how the real estate market caters for small business, right across the globe. Companies like GPT, Regus and Dexus are now following in their footsteps.
But it’s not just the global real estate entrepeneurs who have seen the gap. Australia has recorded the highest growth of co-working spaces in the world (per capita). Knight Frank Research have identified that Melbourne now has more than 170 co-working spaces, and that there has been a 940% rate of growth in such spaces since 2013.
With niches ranging from technology, the arts and even (controversially) single-sex office studios, these shared-workspaces are literally the incubators of new work models for the future economy.
Echelon Planning has established its own co-work space (www.prenticestudios.com.au). We are small but growing consultancy business, and we were seeking a work environment that offered flexibility, high amenity and a strong identity. The conventional office rental market was nothing short of depressing, and so we decided to create our own space.
It’s a refurbished 1970’s warehouse in Brunswick, right near the train station. It’s got lots of light, lots of greenery, NBN, and a fantastic interior designed by Tonya Hinde (now with Billard Leece Partnership). The studio aesthetic is well above the usual ramshackle inner city warehouse vibe, and it so much more charm and personality than the typical ‘prarie-dog cubicle’ experience.
The conventional wisdom is that there is limited demand for office space in the suburbs. Our experience in the inner-north at least is that there is demand, but there simply hasn’t been a supply of suitable office space to cater for the needs of people seeking workspaces.
The Prentice Street studio is filling a gap in the local office market. In the short few months since the Studio opened its doors, we have fielded a steady stream of inquiries from self-employed and small businesses people looking for a local alternative to the CBD or the home office. There is no shortage of demand but it is highly localised to the demographics of the region, so outside of a CBD setting it’s not such a visible choice for investors seeking a quick return on their investment.
Delivering ‘new ideas for old buildings' is more expensive and complicated than it should be. Our experience has been that it can only be achieved on a very lean business model, and it requires a particular expertise, local knowledge and determination in order to achieve results.
The Grattan Institute wrote in 2013 that the options for creating a more productive Melbourne were to bring jobs closer to people, bring people closer to jobs, or improve transport links between the two. It argued that the best option was to bring people closer to jobs. Whilst I certainly agree that more housing is needed in Melbourne’s established areas, much more could be done to facilitate businesses in established areas.
Greater Melbourne is forecast to have an additional 800,000 jobs in the coming 15 years. So where and how will the floorspace come from to meet these needs? I doubt that it will all be in the CBD, Docklands or Fishermans Bend.
If the vision of 20-minute neighbourhoods is to be realised, then Melbourne needs more work-spaces distributed across our city. The emergence of co-work spaces across inner Melbourne has been an organic response to an unmet demand for new workplace options. Knight Frank estimate that 24 new co-working spaces have opened in the past 12 months alone. These facilities offer a type of workspace that simply didn’t exist in Melbourne’s inner suburbs a few years ago.
Many co-work spaces establish in industrial areas or in older commercial spaces, where the rents are affordable. These locations are usually hotspots for urban renewal and land rezoning. Strong demand for housing typically displaces commercial floorspace in such situations.
This is where planning can play a critical role. The challenge is for the planning system to find the right balance between regulation and facilitation:
Employment land should be retained where there is a reasonable prospect that it will be renewed to foster business and jobs growth.
Not all employment precincts need to be set aside for single-use purposes. Achieving a mix of uses is a large part of what drives the amenity and dynamics that make places attractive for business. Achieving mixed use via vertical zoning can be used to create new commercial floorpsace, but only in locations that can sustain such activities. Such strategies should be used judiciously as there are many locations will not have the level of accessibility or amenity needed to sustain commercial activity.
There are many planning and building regulations that act as barriers to the reuse of existing buildings for co-work purposes. These should be reviewed and removed wherever possible.
Having an identifiable ‘place for business’ across our suburbs will become increasingly important. This requires urban planning to respond to the finer grained trends happening in the local property market and having a nuanced approach to land zoning, planning policies and regulations.
At a local level, local Councils play an important role in bringing local business together via ‘placemaking’ programs and economic development initiatives.
Co-working is a relatively new business model that is very different to the conventional office market. It is one that deserves to be better understood because it offers a substantial potential to foster the growth of small business in a variety of metropolitan and even regional locations.
Just like Uber is disrupting transport systems, companies like WeWork look set to disrupt the real estate market. The co-work model is not exclusive domain of large development companies. It has its origins within the start-up community, and it is relatively accessible to smaller developers, investors and businesses alike.
The Prentice St Studio just one success story amongst many – it is wonderful workspace that enables like-minded individuals to work in a dynamic, energetic and collaborative environment. I look forward to city planning better embracing and supporting the growth of co-work spaces like ours right across Melbourne in the coming years.
Mark Woodland is a director of Echelon Planning.