Number of Coworking Facilities in the US and a few observations

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sk...@emergentresearch.com

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Jul 15, 2010, 2:58:19 PM7/15/10
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Our research assistants have been working away developing a count of
the number of coworking facilities in the US. While we are not done,
it looks like our estimate will be in 250 range. Our estimate last
december came to about 215-220.

Several interesting things about the count:

1. It is getting harder to do this. The main reason is coworking is
evolving, blurring, hybridizing and shifting. For example, incubators
are becoming coworking facilities, coworking facilities are becoming
incubators and lots of facilities of various types are adding (or at
least claiming to add) coworking features. Many of these "semi-
coworking" facilities share some or many of the attributes of a
traditional coworking space, but in other ways aren't coworking as we
tend to think of it.

While I think the evolution of coworking and the growth of hybrids is
a good thing, it makes it much harder to decide whether or not a
specific facility should be counted as a coworking facility. It also
challenges our ability to do a consistent count over time. There is
already a risk our we are counting apples and oranges instead of just
apples.

We will post our facilities list once it has been cleaned up a bit.

2. There is a fair amount of facility churn. About 10-15% of
facilities on our list in December have fallen off our current list
due to closure or shifts in direction. There are, obviously, a lot of
new facilities on our list. Some are green field and others are
existing spaces that have added and/or shifted to a coworking model.

While we aren't focused on coworking business models at this time, it
does appear to be an area ripe for research:).

3. Coworking has moved beyond the major cities and is spreading
rapidly in mid-sized cities and smaller towns.

4. The number of niche or targeted coworking facilities (aimed at
writers, or telecommuters, or social entrepreneurs, or makers, etc.)
is growing. It is a logical extension of the "like minded people"
phrase we so often hear and use when discussing coworking.

5. There are lots of facilities under development with plans to open
in the next 6-12 months. It appears to us that the facility growth
rate is accelerating due to the addition of new facilities and re-
purposing of existing non-coworking facilities.

Given how few facilities there are relative to the potential
addressable market, an accelerating growth rate is not surprising.

Steve

Alex Hillman

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Jul 18, 2010, 10:08:23 AM7/18/10
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Hey Steve, thanks for keeping up on this!
 
it looks like our estimate will be in 250 range.  Our estimate last
december came to about 215-220.

Can you quickly provide other historical counts date/month/year relative?

1.  It is getting harder to do this.  

What are your research criteria for including a location?
 

2.  There is a fair amount of facility churn.  About 10-15% of
facilities on our list in December have fallen off our current list
due to closure or shifts in direction.  

Any further information on the bases of these closures/shifts in direction? 
 
/ah

sk...@emergentresearch.com

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Jul 18, 2010, 3:18:17 PM7/18/10
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Alex:

Our prior counts have been pretty rough - based on Google searches and
some directional estimating.

The current count is the first time we've formalized the count
process. Having said that, it continues to be an estimate and not a
census. By that I mean we aren't attempting to get an exact count.
This would take too much time and effort and the additional level of
precision is not needed. Instead, we are attempting to get a solid
estimate.

We've done two prior estimates. Last December (09) our estimate was
215-220. Our December 08 estimate was around 130. Given the shift in
methods and the simplicity of the prior counts, I wouldn't read too
much into these numbers except to say the number of coworking
facilities in the US is growing rapidly. Going forward we will be
able to be more confident about growth rates.

We include a facility if: (1) the facility self-identifies as
providing coworking space; (2) it offers a range of membership options
(daily, weekly, monthly, etc.) consistent with traditional coworking
spaces (does not need to provide all); (3) it offers some form of
community space and/or activities (this is subjective based on our
assessment); (4) coworking appears to be a important part of the
facility offering (again, subjective and in part based on the size of
the coworking space) (5) the facility is active (we look for recent
website activity and call if needed).

What we've found this time is identifying coworking facilities is a
bit like identifying pornography - you know when you see it, but
different people see it in different ways. The reason is the growing
number of hybrid coworking facilities and non-coworking facilites
adding coworking makes identification harder. Incubators and office
suite companies in particular are actively adding coworking
options.

A good example is Semantic Seed in San Jose (http://
www.semanticseed.com/coworking.html). They are an start-up incubator
that also provides coworking space. We included them, but only after
a fair amount of debate.

Another interesting segment is the growing number of shared artisan/
DIY spaces (3rd Ward and Tech Shop being examples). These facilities
cater to both professionals and amateurs/hobbyists. We tend to
include them if we think the facility is targeting and catering to
professionals, even if a large share of their members are
amateurs.

We haven't looked at the closures at all and I would again caution
about reading too much into this data. At some point we hope to have
time to better understand what is going on in this area.

Steve

Will Bennis, Locus Workspace

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Jul 20, 2010, 4:48:23 AM7/20/10
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Hi Steve,

It's an (understandable) shame that you're limiting the cataloging of
spaces to those that self-identify as coworking spaces. Is that just a
heuristic to make the selection process easier, or do you think
there's something important to the classification if a space uses that
term? For example, writers' spaces existed before the coworking
movement had a name, but there's little if anything to distinguish
many of them from other coworking spaces. The same could be said for
many of the hacker spaces you brought up.

Will

--
Will Bennis

Locus Workspace
Krakovská 22, 110 00 Praha 1
http://www.locusworkspace.com
Tel: +420 223 017 593
Mob: +420 604 776 440

On Jul 15, 8:58 pm, "sk...@emergentresearch.com"

Will Bennis, Locus Workspace

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Jul 20, 2010, 5:00:32 AM7/20/10
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One last comment about counting coworking spaces that I think is
interesting. I see now that you're limiting the catalog to facilities
in the U.S., so this is really not directly for you but just about the
problem of estimating spaces on a global scale. Here in the Czech
Republic there are perhaps 7 spaces open (depending on what counts as
a coworking space) and at least 2 more trying to open. What's
interesting is that until a couple of weeks ago when a couple of us
added most of those spaces to the wiki, you'd have no way to know
there were more than 2 spaces in the Czech Republic by looking at the
wiki. Apparently, there's one space that's completely full that all
but one of us (coworking space owners or jelly organizers) didn't know
existed and that isn't marketing itself anywhere (it's full and in a
small town where word of mouth is enough apparently). Most of these
spaces even have coworking in their names, they're simply not engaged
with the international coworking community. If the Czech Republic is
any model of what's going on around the world, the majority of
coworking spaces around the world might simply be off the
international grid.

Maybe that's even a healthy sign that the world of coworking is
maturing? If coworking spaces are eventually like cafes, with one on
every corner catering to distinct niches and neighborhoods, I guess
we'd all expect many of them to be off the radar and essentially
uncountable.

Will



On Jul 15, 8:58 pm, "sk...@emergentresearch.com"
<sk...@emergentresearch.com> wrote:

marileebowlescarey

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Jul 20, 2010, 10:44:19 AM7/20/10
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Great inisghts, Steve. I wonder if you have been able to estimate the
total size of the potential market or how you would measure it?

Marilee

On Jul 15, 2:58 pm, "sk...@emergentresearch.com"

sk...@emergentresearch.com

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Jul 20, 2010, 1:47:35 PM7/20/10
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Will:

We're using self-identification as coworking spaces for several
reasons. First, it greatly simplifies our work finding facilities.
Our first cut method for finding facilities are a set of search terms
and search criteria. These search algorithms go beyond just searching
on the term "coworking", but coworking is a key term.

The bigger reason is we've found that a focus on building and
nurturing community - which we think is a key component of being a
coworking facility - it tightly correlated with the use of the term
coworking. This is for office facilities - the hackerspaces and
artisan oriented facilities tend to use other language.

But having said that, we've found several facilities that we include
in our count that don't explicitly self-describe using the term
coworking. But because their language is close and their facilities
fit the rest of our criteria, we include them.

We've excluded most writers and artist spaces mostly because many are
effectively private/semi-private clubs with closed, invitation only or
limited memberships and/or membership options. This isn't in any way
a bad thing; we simply consider them to be in a different market
segment.

We originally were planning on doing a global count. We decided to
start with the US and add other parts of the world later. Given the
complexities we've encountered with the US count, we're unlikely to do
a full, world count. But we're still planning on doing some work in
Europe.

BTW one of the reasons the count is complex is the number of coworking
facilities that aren't engaged with the broader community or marketing
themselves beyond their local area. Your Czech experience is a good
example of this. This makes finding and identifying them surprisingly
hard.

Steve



On Jul 20, 2:00 am, "Will Bennis, Locus Workspace"
> > Steve- Hide quoted text -
>
> - Show quoted text -

sk...@emergentresearch.com

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Jul 20, 2010, 3:06:34 PM7/20/10
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Marilee:

The total potential coworking market is big and growing:). A few
numbers:

1. There are about 15 million home-based businesses in the US (SBA
numbers). Of these, about 6.6 million produce at least half of the
owner's household income ( a good proxy for full-time) and about 3.3
million have employees (data from our study on homebased businesses
based on surveys as part of the University of Maryland/Network
Solution Small Business Success Index). While not all home-based
businesses are possible coworkers, most at least would fall into the
category of possible.

The Bureau of Labor Statistics has a slightly broader definition of
home-based businesses and includes contract workers. Their 2008
number for home-based business workers was 17.2 million

2. Most studies of employed telecommuters (people who work for a
company but telecommute) find about 17-18 million US telecommuters.
The World at Work study is a good example of these studies. It is
at: http://www.worldatwork.org/waw/adimLink?id=31115 While not all
telecommuters are potential coworkers, again most probably would fall
into the category of possible.

So you could start with 34-35 million as the potential addressable US
market for coworking. To get a more realistic number, you would need
to do some segmentation work to go from possible to viable, and from
viable to interested. We haven't done this, but a guesstimate that
20% of home-based business workers and telecommuters could work from a
coworking facility seems reasonable. This would put the current US
addressable market at about 7 million.

But given the number people currently using coworking facilities in
the US - almost certainly below 25,000 and likely below 15,000 (we'll
have a better number when we complete our study), the current
penetration rate is going to be low no matter how sharp your
segmentation blade is.

Steve

On Jul 20, 7:44 am, marileebowlescarey <marileebowlesca...@gmail.com>
wrote:

marileebowlescarey

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Jul 29, 2010, 5:16:12 PM7/29/10
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Hi Steve, and thanks! This is really helpful.

Marilee

On Jul 20, 2:06 pm, "sk...@emergentresearch.com"

ourspace...@gmail.com

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Jul 30, 2010, 3:01:25 AM7/30/10
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Thanks for the tedious amount of research that you have completed.
In response to your observations:

1. It is getting harder to do this.
The question needs to revolve around the intent of why coworking sites
exist. As I have met on an infrequent basis with the manager of a
local incubator, who has developed a coworking space inside their
facility, I have come to discovered that several virtual spaces and
incubators do it because they think of the buzz and they think the
ability to a make an extra dollar - not the community aspect.
The local incubation cite has a beautiful place with approximately
$100,000 of Herman Miller furniture, but they don't have the community
aspect. The word on the street is that they thought they could
develop a good base clientel that could move on to their pricier
sweets. Hence, they are taking the businesses that seem to be the
most profitable, not those that really could benefit the community and/
or the community.

The second factor is that these seem like a great business to run -
easy, however running a coworking as a quick, operable business, and
lack the work ethic it takes to build a great site. Due to the fact
that I am a unique spot with my space, and I cost sharing, I have been
able to keep going since January. Being in Fort Wayne, fly-over
country, has been a bit tough. It has taken an enormous amount of
time and energy, and a bit of stress. That being said, I had 5 people
that is the first and several meetings with local economic development
professionals, who have begun to pay interest to me. Additionally, I
am starting to grow my network as our local school system shed 300
teaching positions, and teachers don't have assignments yet, the local
Navistar plant will be closing. It's taken a lot of time, sweat and
tears to get to the point I am at; I have 5 members and hoping to
double that in two weeks -- crossing fingers and toes.

2. Teleworkers: Teleworkers are great. However, in obtaining data
from the local county recorder's office, there are approximately 5 new
businesses that are being developing in Fort Wayne per day.


3. Coworking has moved beyond the major cities and is spreading
rapidly in mid-sized cities and smaller towns.

I am in Fort Wayne, Indiana a city of 256,000, county wide population
of 300,000 plus. I might add that we are in the midwest, an area
known for corn and cows more than urban living. And yes, I have
milked a cow. :-)

4. The number of niche or targeted coworking facilities (aimed at
writers, or telecommuters, or social entrepreneurs, or makers, etc.)
is growing. It is a logical extension of the "like minded people"
phrase we so often hear and use when discussing coworking.

While I don't have a niche, I have been able to tape into the growing
film industries. Being in Fort Wayne, RE is cheap (The average cost
of a house is $100,000.), so there are a number of those in NYC and
LA, who were raised in the area, that are relocating back and start to
work of films. I am hosting the first film group next week, and am
worried will I have enough chairs.

Jodi Dean, Founder
OurSpace, LLC
Your Space to Be Creative
825 S. Barr Street
Fort Wayne, IN
www.ourspacefw.com
260-522-6341

sk...@emergentresearch.com

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Jul 30, 2010, 12:31:55 PM7/30/10
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Jodi:

Thanks for the excellent feedback. I'm from Kansas (live in SF area
now) and have also milked cows:). You make several great points:

We've been interviewing folks at "non-tradtional" coworking spaces
(the incubators, office suite companies, etc.). I agree with you that
most are adding coworking due to the buzz and for PR purposes. Also,
most either don't understand the community side of coworking, or they
understand it but don't really want to offer it.

There are some non-traditional spaces (and yes, I think it is funny
that we're using the descriptors "traditional" and "non-tradtional"
for coworking ) that do, in our opinion, offer real coworking.
Dogpatch Labs, an incubator with space in Boston, NY and SF run by the
VC firm Polaris, is an example. Their SF space is very coworking-like
and community plays a huge role in what they are doing. They also
don't have most of the onerous requirements, terms and conditions seed
incubators usually have. Dogpatch describes themselves as a "Frat for
Geeks" and the SF space lives up to it.

Based feedback like yours and our interviews, we learned that most
office suites and incubators are in a different market segment.
Because of this, we don't think many are coworking spaces.

Having said that, we think their market segments overlap with
coworking. We've find it very interesting how many facility users
we've talked to who have told us they narrowed their final space
choices down to an office suite and a coworking facility.

A second point you raise - the difficulties in getting members - is
something we've consistently heard from everyone we've talked to.
Obviously you folks understand this issue much better than do, but we
hope to get more info on this through our user survey and
interviews.

I'm very interested in Ft Wayne becoming a film making cluster.
Please let me know how this goes.

Steve





On Jul 30, 12:01 am, "ourspacefortwa...@gmail.com"
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