Donna Moodie has a home office. But the chief impact officer at the Urban League of Metropolitan Seattle prefers to surround herself with other co-working members, just two blocks away at The Cloud Room in Seattle’s Capitol Hill neighborhood.
“I really like leaving my house to come to work, having this be my workspace, and then going home,” Moodie told GeekWire as she sat laptop to laptop for one of her regular meetings with Ashley Pugh, director of communications and external affairs for the Urban League.
Both women agreed that The Cloud Room, with its buzzing environment, big windows, plush couches, chairs and pillows, does something to stimulate creativity, productivity, and relationship-building that an office cubicle — or home couch — can’t match.
“I like bouncing ideas off people in person,” said Pugh.
The COVID-19 pandemic changed the way we work. And ultimately, it changed WeWork, the co-working giant once valued at $47 billion that filed for bankruptcy protection last month.
But in the wake of WeWork’s downfall, the office-sharing concept looks poised to survive and perhaps even thrive as employers cut their real estate footprints and cope with workforces that have settled into remote and hybrid models.
Workers who appreciate the flexibility of working where they want use the co-working option as a way to avoid commutes, assemble smaller teams in one place, enjoy office-style amenities, and be away from home while staying close to their neighborhood.
In Seattle, at least two dozen spaces previously listed on GeekWire’s incubators/co-working spaces resource page are no longer in business. The Riveter was among the high-profile losses when it shuttered nine of its women-oriented spaces in May 2020. Other casualties included Impact Hall, Atlas Networks, Galvanize, Hing Hay Coworks, Ballard Labs and Office Nomads.
But new spaces are moving in to fill the post-pandemic void and other established companies — albeit much smaller than WeWork — have hung on and in some cases are even growing.
‘Doing better than it ever did’
Liz Dunn has been running The Cloud Room since 2015. The name is a nod to the old bar atop Seattle’s Camlin Hotel, but with its comfortable decor and array of houseplants, the co-working space could very well be called The Living Room.
Dunn was an early Microsoft vet from 1986 to ’96, and she’s now a fixture in the commercial real estate scene, especially with her Chophouse Row development in which The Cloud Room is located.
Dunn said the impact of the pandemic and hybrid work on traditional office real estate has been tough.
“The bright side is that co-working, at least our co-working space, is doing better than it ever did,” she said. “Our team works out of this space. The sun’s shining in and small business people are doing their business, having their meetings.”
With just 6,600 square feet of space on a single floor, The Cloud Room is not a big space. A much bigger WeWork is visible a block away in the view down 11th Avenue. But Dunn has attracted around 200 fully paid members with the usual amenities — and a little cocktail bar — and her desire to build community in the space.
She offers discounts and free memberships here and there for nonprofits and others who infuse the space with a creative edge. And lately, there are plenty of workers who need a place other than home or the traditional office.
“We have a couple corporate employees whose workplace isn’t really firing on all cylinders, and so they are here instead,” Dunn said. “They don’t feel like going to work because there’s nobody there. But they’re tired of being at home. The common theme is they want to go somewhere.”
‘We’re not going to see co-working disappear’
Ryan Masiello, a chief strategy officer at commercial real estate technology platform VTS, said what’s happened with WeWork has probably clouded the reality of what’s happening with co-working.
“I think they’ve sort of sucked all of the air out of the room in terms of attention,” Masiello said. “Obviously you have this company that grew way too fast, that has tried to reinvent itself it feels like 100 times at this point. What’s happening with WeWork is pretty disconnected from what’s happening with the rest of the industry.”
For its part, WeWork says its spaces remain open and operational around the world, including in the Seattle area where there are eight locations.
“Seattle remains a key market for WeWork and we are fully committed to providing our members here with world-class, flexible workspace solutions for the long term,” a WeWork spokesperson told GeekWire. “Our commitment to the city is unwavering as we continue to work collaboratively with our landlord partners, aiming to craft solutions that set all parties up for sustainable success.”
Co-working makes up a very small portion of the commercial real estate market, accounting for just 3.4% in the U.S. and 1.2% in Seattle. While overall office demand in Seattle is down 67% versus pre-COVID levels (2018-19), demand for flex space is actually up 3.2% year over year, according to VTS.
Co-working is a segment of the real estate market that has become more important than ever, Masiello argues, because remote work is here to stay and a lot of companies need an answer for how to get people together with a more flexible arrangement.
“For that reason alone, I think that there’s a lot of operators, both big and small, that are actually doing quite well and are growing and have high occupancy, which I think is good news for that sector.”
JLL‘s Adam Chapman, managing director for tenant representation at the firm, agrees that co-working plays a key role for companies in a number of situations, and he doesn’t see that changing on a fundamental level.
“It’s a tailor-made solution for firms entering or expanding in a given market, such as the firms we see in the Seattle area that take co-working space as a landing pad until they are ready to decide where or how much space to lease,” Chapman said. “Growth firms and startups will continue to seek out co-working space, and it plays a great role for firms figuring out their hybrid work solution such as a hub-and-spoke with co-working options in outlying markets.”
Matt Walters is an executive VP at CBRE, which tracks about 1.8 million square feet of co-working space in the Seattle region.
“We’re not going to see co-working disappear. The trend in the co-working market, in general, is demand is still relatively strong,” Walters said, echoing what Chapman said about how it provides the flexibility companies need, especially at the startup level.
“True co-working, where you’re building a community of workers … that’s going to continue to grow and continue to be utilized by the tech office users that are so prevalent in Seattle,” Walters said.
‘We never got in this to just expand rapidly’
Started in 2015 by husband-and-wife team Christopher Hoyt and Audrey Hoyt, The Pioneer Collective opened its third location in 2022, in Seattle’s Ballard neighborhood.
The space, which features a floor and a half above a brewery and restaurant, was going to be a WeWork at one time, according to the Hoyts. And they do credit the company, despite all its troubles, with putting the concept of co-working on the map.
“I think we’ve been around long enough where people understand our product and the service that we offer,” Audrey Hoyt said. “In many ways WeWork has been a piece of that, helping create a lot of understanding of what it is we offer.”
Where The Pioneer Collective differs is in its approach to how the small business operates and grows.
“We own the business, so we had to figure out how to be profitable from day one. And we’ve managed to do that all along,” Hoyt said. “We’ve taken a much more slow and steady growth perspective, and we never got in this to just expand rapidly or anything, but to perfect our product and create a sustainable, viable business.”
After surviving a rocky period over the past three to four years where they considered shutting down, The Pioneer Collective is now doing well.
With a mix of hot desks, dedicated workspaces, communal spaces, a couple dozen offices, larger meeting rooms, and more, the Ballard location was busy on a recent workday with people tapping on laptops, taking calls, or even working on a puzzle in the shared kitchen area.
“We kind of doubled down in COVID,” Hoyt said. “We were able to find some opportunity to negotiate the types of leases that made sense because landlords were more eager to do anything.”
A change of scenery
The last time Eric Swanson worked in a traditional office setting, it was March 2020 in San Francisco, at the start of the pandemic. Now a lawyer for a startup based out of California, Swanson had been a nomad for the past few years, living in short-term rentals and working out of different co-working spaces in different cities around the U.S.
The Wall Street Journal reported this month on the trend around spaces located outside downtown areas that appeal to workers who don’t want to commute. Smaller local competitors to WeWork, which charge lower rates, have proliferated in residential and suburban areas of cities, the report said, as workers launch their own businesses and “cling to the work-life balance they struck during the pandemic.”
Swanson is one of of those people avoiding a commute downtown. In May, he and his partner settled in Seattle’s Interbay neighborhood, a short bike commute from Ballard and The Pioneer Collective. He could work from home, but getting out and changing the scenery is beneficial.
“I just found for my productivity, and my relationship with my partner, it’s just a lot better if I’m not sitting at a desk all day,” Swanson said.
Swanson rents a desk month to month, surrounded by others doing various kinds of work. He thinks co-working, at least in relatively high density areas, is a much more preferable solution for companies than signing a big lease in a building.
“I worked in tech in San Francisco,” he said. “These companies are signing leases on these huge buildings and you don’t even know if you’re going to get your next round of funding and you’re locking into twice as much space as you need.”
‘It’s really nice just seeing other humans’
Nicole Buckenwolf makes the short trip from home to The Pioneer Collective two or three days a week, to work out of a small, private office that she has decorated with a few pieces of art.
A senior staff ontologist at Spotify, Buckenwolf helps build models to organize content for the music streaming service, which employs about 60 people in the Seattle area, but has no dedicated office.
Buckenwolf previously worked for Amazon and went remote, along with her husband, when COVID started. But in a small apartment with a small child, it was getting difficult.
“My kid is 6, I was sharing my office with his room. And he’s getting to the age where he’s like, ‘I want my room back,'” Buckenwolf said. “I needed another place to go where my work wasn’t at home. It’s just easier to focus and it’s nice to go somewhere else and not be next to my dirty kitchen.”
Buckenwolf works with a lot of fully remote people in lots of different countries and tends to have meetings at weird times. She likes having an office where her calls aren’t a bother to other people. But mixing in communal settings reminds her of what she liked about being in an office.
“It’s really nice just seeing other humans,” she said. “I love just chatting with people at lunch about what they’re doing.”
