GM The Rise of Work Share Spaces and the Evolving Workplace

The Rise of Work-Share Spaces and the Evolving Workplace

Have You Seen the Empty Buildings?

Go to any major city, and entire floors of office buildings are empty. In some cases, it’s nearly the entire building. This is no longer a pandemic by-product. I’ve observed the phenomenon in multiple cities in recent months: San Diego, New York City, Miami, and Washington, DC. You’ve likely seen this as well. What does it have to do with you?

You have people in your company peering out over the lifelines. Do you know who they are, and are you taking actions that will satisfy them and you?  According to Slack’s Future Forum, an ongoing longitudinal survey, 81% of knowledge workers want flexibility in where they work. Further, 93% want flexibility in when they work. Workers who report burnout are over 3 times more likely to seek work elsewhere. We are past quiet quitting and the subsequent remain-in-place syndrome that followed. The knowledge workforce wants options.

In 2024, the dynamic landscape of work-share spaces continues revolutionizing how all industries, including the defense industry, operate. With a significant decline in office building occupancy rates evident, companies are increasingly turning to work-share spaces as a cost-effective solution. According to recent national stats, office occupancy rates have continued to trend downward—15% over the past year. There is a clear shift in how companies strategize their workspace utilization—defense is no exception.

Cost-Effective Solutions and Flexible Environments

The rise of work-share spaces is not merely a response to cost-saving measures but also a reflection of the evolving nature of work. As remote work becomes more prevalent, professionals in the knowledge workforce seek flexible environments that foster innovation and connectivity. It’s not just about working from home. Shared workspaces can offer a modern solution, accommodating both individual-focused work and collaborative projects, thus offering less costly environments where productivity and creativity can thrive.

From startups to established prime contractors, the allure of work-share spaces lies in their inherent flexibility without the burdened cost of bricks and mortar. Industry experts who study these dynamics predict that by the end of 2024, over 40% of businesses in Washington, DC, will incorporate the use of shared workspaces. Such interactions not only drive business growth but also facilitate cross-pollination of ideas.

Occupancy rates of workshare buildings have gone from 40% to 80% in the past three years. The industry predicts a 14% compound annual growth rate (CAGR) by 2030, according to a May 2024 report by Statista. By comparison, the growth of self-storage buildings (that we see popping up all around us!) is less than half at a 5.7% CAGR. Investors know something, and despite the chaos surrounding leadership at We Work, the co-working space industry is booming.

The Four-Day Workweek and the Desire for Change

In recent years, the concept of a four-day workweek has gained traction as companies and governments alike seek to improve work-life balance and increase productivity. Experiments with the four-day workweek have been conducted in both the United States and Europe during 2023 and 2024, with varying degrees of success. While some studies have shown an increase in productivity and employee satisfaction, others have faced challenges in implementation and adjusting to shorter work hours. Nevertheless, the underlying agitation of the workforce is evident.

According to a report from the American Time Use Survey, conducted by the Bureau of Labor Statistics, employees in the United States worked an average of 8.35 hours per day in 2023, down from 8.56 hours in 2022, suggesting a potential shift towards shorter workweeks. Or does it?  Ask yourself, how many of those hours are directly contributing to your company’s revenue and profitability?  No survey can capture this, but look at your own situation.

Since the onset of the pandemic, there has been a notable surge in the establishment of Limited Liability Companies (LLCs) and startup companies across various industries. According to data from the U.S. Census Bureau and the Small Business Administration, over 4.3 million business applications were filed in 2020, marking a significant increase from previous years. The pandemic allowed people to self-reflect on their work and life.

Within this entrepreneurial wave, a portion of these new businesses are associated with the defense industrial base. One might think this bodes well for the growth of the industrial base, but we know starting up and getting contracts are two very different things, separated by the Valley of Death

The Growth of the Gig Economy

Looking at data from 2020-2023, the number of LLCs increased by over 10 million. In April 2024, the Bureau of Labor Statistics reported unemployment at just 3.9%, a number that is holding steady. Unemployment below 5% traditionally reflects a percentage of the workforce that is always in some state of transition. Looking deeper, people who are able to work have jobs, but a growing subset wants something more. The growth of LLCs and the low barrier to a flexible workspace suggest that many of your employees have a side gig or interest in one.

Do you know which of your employees have an interest in a startup or may have an LLC of their own? Several of my clients over the past ten years learned about the business from within the safety of a prime contractor, then struck out on their own when they saw a specific contract opportunity. 

Evaluating your environment is always an essential element of strategy.

Try to look at your environment through the lens of your employees. Are you seeing the same opportunities?

For a copy of my book, Pitching the Big Top: How to Master the 3-Ring® Circus of Federal Sales, and more information on federal sales, visit Capitol Integration.

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