Veltra, a Tokyo-based travel agency, is in the business of enticing people to new locations. But, when it came to opening up a new office on the other side of the world – in London – its own experience in a new city was less than favourable, at least to begin with.
In 2012, the company set up an office in Hammersmith, west London. “We were not in the city [centre] and were in a boring grey building,” says Dominique Exmann, Veltra's general manager for Europe. It was not just the location that was lacking but the company was also “locked into a strict contract with expensive overheads”, says Ms Exmann. “This included extortionate costs to rent meeting rooms whenever staff visited from our Japanese headquarters."
After putting up with this for a year, Veltra's executives were finally able to move into much more suitable premises in Old Street, on the doorstep of the so-called 'Silicon Roundabout', London's tech cluster. This was an upgrade in every sense of the word – the offices were nicer and in a much better location – yet the company was paying significantly less than it had been in its original offices in Hammersmith. This was because the offices were part of TechHub, a tech community that provides shared office spaces in seven different cities around the world, including Bangalore, Bucharest and Riga.
Shared office spaces are nothing new – UK-based Regus, one of the most well-known flexible office space providers, has been in business since 1989 – but the concept has gained popularity in recent years, which makes shared offices a viable option for foreign companies looking to enter new markets, according to Bea Wino, a London-based business consultant and tech expert.
“It is only natural that in the time of the sharing economy, companies are warming up to the idea of using shared offices,” says Ms Wino. She is currently looking for a co-working space for her company, Kala, a two-year-old start-up focusing on promoting coding skills. “The perception of shared offices has shifted… [They have gone from] being seen as a cluster of seedy companies to a place for savvy companies that would rather invest in human capital than real estate,” says Ms Wino.
Shared offices help cut real estate expenditures and make managing an office much easier, but there is another reason why an increasing number of companies are choosing this type of office arrangement. “The number of co-working spaces exploded and it is largely because companies seek ecosystems that they can plug into, thanks to the proximity of other tenants, networking events or some level of support that they can find on-site,” says Christophe Garnier, managing partner at Spark Labs, a New York-based co-working ecosystem that provides space for more than 30 technology companies. Mr Garnier says that as part of the Spark Labs service, tenants get access to tech mentors and venture capitalists, as well as help with PR, marketing and legal matters, such as work visas and company registration.
Elizabeth Varley, co-founder and CEO of TechHub, cites a similarly comprehensive set of services. “We offer anything from free initial access to UK-specific legal advice and introductions to start-up-focused accountancy services, through to personal introductions to the UK government and enterprise-level companies,” she says.
All shapes and sizes
As demand for shared offices and co-working spaces grows, so too does the number and range of companies offering such facilities. In Chicago alone, there are more than 30 co-working spaces. They include Workshop, which offers ad-hoc desk spaces; Blue 1647, which focuses on helping underserved areas; Coalition, which focuses on energy and sustainability-focused firms; and 1871, a space for tech companies, venture capitalists and academics, which was named one of the best university-associated incubators by Swedish research initiative UBI Index.
These different spaces are having varying success in attracting large foreign companies to their premises. In Chicago, foreign companies can be found in Coalition, which has tenants including UK non-profit organisation Oxfam and French energy giant Schneider Electric. Foreign companies are also becoming increasingly attracted to 1871. “We have quite a number of companies that use 1871 as a jumping-off point for entering the US,” says Howard Tullman, CEO of 1871.
In many of Chicago's other co-working spaces, however, foreign companies are a rare phenomenon. And, there is a similar dearth of large companies. “Some bigger firms treat co-working offices as their launchpad in a new location, but they tend to quickly overgrow them and we have to be careful in that respect, so we are not dominated by one company,” says Patrick Aylward, co-founder of Chicago-based co-working space Onward.
A targeted offering
But, with competition among co-working spaces heating up, some of them have started targeting foreign firms, offering services designed to be particularly appealing to such companies. Spark Labs, for example, has set its sights on European and Israeli tech firms. “We have an expertise in working with European and Israeli companies, we know what they might need and where to find it. We are not just about [having a] cool Manhattan address,” says Mr Garnier, who is French and runs Spark Labs together with Italy-born Alessandro Anzani and Israeli-born Guy Altberg.
Meanwhile, TechHub's latest facility in Shoreditch, London, is designed specifically to cater for more established companies that want to be a part of the tech community but can also afford more space and more privacy than start-ups. Veltra's decision to move to the premises suggest that there is indeed a gap in the market for such a facility. “We appreciate the value that [TechHub's] eco-system adds to our business,” says Veltra's Ms Exmann, “It is affordable, financially 'low risk' and provides fast-track access to tech scene... and we get free beers delivered to our desks,” she adds.