Toronto: a hub for coworking

Despite high-profile losses, shared workspace industry is here to stay

On August 14, the We Company filed its S-1 form with the United States Securities and Exchange Commission (SEC), revealing to prospective investors that it had a net loss of $900 USD million after revenues of $1.54 billion USD during the first half of 2019.

It’s not surprising for big companies to lose money in their early years. Uber, for example, lost $5.2 billion USD just in the second quarter of 2019. Unlike the wave of tech companies filing for IPO in 2019, the We Company is not a tech-based start-up, but essentially a real-estate company.

Through its main division WeWork, the We Company is the world’s largest provider of coworking spaces. Fundamentally, coworking spaces are venues that, for a fee, provide a space  to work on a short-term or subscription basis. These workspaces comprise of general shared workspaces, small offices, or a mix of the two. Users may also benefit from features like on-site entertainment facilities, technological services, and proximity to a location’s financial district.

“The coworking space also offers a sense of ‘place’ or ‘belonging’ that temporary, public, or solitary independent offices do not,” wrote Professor Hugh Arnold, Adjunct Professor and former Dean of the Rotman School of Management, in an email to The Varsity. “It creates the opportunity for cross-fertilization of ideas and networking among coworking groups.”

While the We Company’s SEC filing may imply that coworking is an unsustainable business model, a broader look at the industry paints a picture of numerous small companies that are slowly finding success. Deskmag’s annual series of Global Coworking Surveys found that 75 per cent of coworking companies at least broke even in 2017, increased from 62 per cent in 2012. Additionally, longevity in the field is increasing, with 69.8 per cent of coworking companies being over a year old in 2017, compared to 48.9 per cent of companies in 2012.

“[The coworking business model] is likely quite sustainable,” wrote Arnold. “The benefits will continue to be important during a time when more and more people are trying to forge a unique work opportunity that provides them with a degree of autonomy and independence that a large employer does not.”

As a hub for international business, Toronto is one location seeing a boom in coworking start-ups. On average, a new coworking space opens every 13 days in Toronto, making it the city with the third fastest-growing coworking industry, behind New York and London, England. Mayor John Tory acknowledged the impact the growing industry had on the city in 2015, by proclaiming February 24, 2015 as Coworking Toronto Day.

The increasing cost of real estate in the city is an important factor in leading new companies to eschew traditional offices in favour of shared options. For U of T students beginning entrepreneurial careers, the university’s ONRamp facility is one such offering. The workspace was opened in September 2017 and occupies 15,000 square feet across three floors of the Banting Institute on College Street.

While membership is available to the general public, ONRamp prioritises university students, faculty, and alumni entrepreneurs, offering these groups reduced annual fees. Entrepreneurs affiliated with McMaster University, Western University, the University of Waterloo, and Queen’s University are also welcome, as ONRamp was built with funding from McMaster and Western.

With the Banting Institute building over 90 years old, ONRamp is projected to move into the new Schwartz Reisman Innovation Centre upon completion of the building. The innovation centre was funded by a $100 million donation by Toronto-based CEOs Gerald Schwartz and Heather Reisman, and is projected to begin construction by the end of the year.

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