Like many entrepreneurs, Martijn Roordink hasn’t worked in a traditional office for the last 10 years. It’s what you’d expect from the founder of Spaces, the Amsterdam-based co-working company he launched in 2008. Yet his unorthodox working life sheds light on the popularity of communal work–and the extent to which the workstyle has taken root in the U.S. and Europe.
In college, Roordink found himself most productive when he was aboard a moving vehicle. “I loved the train because of the stories, the dynamics, and the openness,” he says of the three-hour rides home to his family from Groningen, in the north of the Netherlands.
Today, the entrepreneur has attempted to bottle and sell that same feeling with Spaces, which has more than 40 locations worldwide. “I feel the connectivity, the energy, the stories, and this is what drives me,” he adds. “I like to be surrounded by people.”
He’s hardly alone. Since mid-2014, shared office companies in the U.S. have leased more than 3.7 million square feet, bringing the total size of the industry to more than 27 million square feet. That’s about 0.7 percent of the U.S. office market, says real estate firm JLL,which adds that the sector is liable to grow over the next three years. It’s estimated that there will be more than 26,000 global co-working spaces by 2020, up from 11,000 in 2016, according to research firm Small Business Labs.
For transportation startup Via, setting up a Spaces office in Long Island City, New York was more convenient and less costly than moving its headquarters out of Manhattan. Here, Spaces charges $300 per month for membership, while dedicated desks start at $429 per month, and can cost as much as $30,000 for groups of 40 or more. While Via wished not to reveal what it pays, it does rent space for 5 to 10 workers who field customer service calls on a daily basis.
The primary advantage, general manager Alex Lavoie explained, is that Long Island City has historically been a hub for taxi drivers. The building in which Spaces is located is also home to New York City’s taxi and limousine commission central headquarters. “We wanted to have another location that was accessible for our drivers,” Lavoie says.
Spaces, which has 15 locations in the U.S., was acquired in 2014 by office group IWG (previously, Regus) for an undisclosed amount. It aims to generate $1 billion in revenues over the next three years combined, and counts clients including Uber, Amazon, Facebook and Twitter. The revenue model is similar to other co-working providers: Spaces primarily leases buildings from real estate developers and converts them into highly-designed workstations. (It also co-owns some properties, and enjoys a profit share deal with those developers.) It then rents out the space–as desks and private rooms–to clients for a variable fee.
To be sure, Spaces faces a formidable competitor in WeWork, the New York City co-working giant said to be worth nearly $20 billion. Launched in 2010, WeWork now has locations in more than 50 cities globally. Although WeWork doesn’t disclose revenues, founder Adam Neumann recently said that the company is on track to do $1 billion in 2017 sales at current rates.
The way Roordink sees it, the co-working sector is big enough for many players–even if WeWork remains the dominant one. “WeWork has a big name, but it’s still very, very small compared to the size of the market,” he says. It’s also not all that dispersed across Europe, unlike Spaces. Although international expansion was cost prohibitive in the early days, Spaces focused on expanding in existing markets: In addition to an office in Amsterdam, it would launch in nearby cities such as Rotterdam and Den Hague, and ultimately in locations across Europe. In France, for example, Spaces has locations in Lyon, Marseille and Bordeaux, in addition to Paris. WeWork, by contrast, has only a single Paris location at present.
For Roordink, all signs indicate co-working will maintain its appeal. And his confidence solidified during the company’s earliest moments. He launched his business on September 15th, 2008–the same day that Lehman Brothers filed for bankruptcy in the U.S. The broader financial downturn made it especially difficult to convince venture capitalists to invest in his company, but Roordink argues that it also created a precedent for the business model. “Looking back, this was the start of the sharing economy,” he says. “We lost billions, and everyone realised that we were living on leveraging, as opposed to sharing.
Originally posted on Inc.com