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An International Comparison on Coworking Companies Using Case Study Approach An International Comparison on Coworking Companies Using Case Study Approach by Tianyi Fan B.S., Mathematics and Economics, 2016 University of Birmingham Submitted to the Program in Real Estate Development in Conjunction with the Center for Real Estate in Partial Fulfillment of the Requirements for the Degree of Master of Science in Real Estate Development at the Massachusetts Institute of Technology February, 2020 ©2020 Tianyi Fan All rights reserved The author hereby grants to MIT permission to reproduce and to distribute publicly paper and electronic copies of this thesis document in whole or in part in any medium now known or hereafter created. Signature of Author_________________________________________________________ Center for Real Estate January 10, 2020 Certified by_______________________________________________________________ Andrea Chegut Research Scientist, Department of Urban Studies and Planning Thesis Supervisor Accepted by______________________________________________________________ Professor Dennis Frenchman Class of 1922 Professor of Urban Design and Planning Department or Urban Studies and Planning Director, MIT Center for Real Estate This Page Intentionally Left Blank 2 An International Comparison on Coworking Companies Using Case Study Approach by Tianyi Fan Submitted to the Program in Real Estate Development in Conjunction with the Center for Real Estate on January 10, 2020 in Partial Fulfillment of the Requirements for the Degree of Master of Science in Real Estate Development ABSTRACT Coworking industry has achieved rapid development during recent years. People increasingly realize that coworking is far beyond a revolutionary office model which changes traditional office structure into a more flexible and creative working environment. The Coworking industry now plays a transformative role in real estate industry and technology development. It is also viewed as an important motivating factor for entrepreneurship. The “coworking” concept has deep impact on the “work-live-play” lifestyle for professionals. WeWork and International Workplace Group (IWG) are two world’s leading coworking giants which have significant market and geographical presence in all main markets. However, these two multinational coworking companies are not monopoly in the market. A growing number of local coworking companies have become strong competitors. Although the recent decade has witnessed robust growth of coworking industry, systematic comparison study on coworking companies is still limited in both the academia and the industry. My thesis makes an early attempt to conduct an international comparison on some coworking companies in three main markets: U.S, China and Europe from three dimensions: expansion strategy, financing, and supporting role to entrepreneurs and enterprise clients. The first section of is to examine WeWork and IWG’s development and operation across those three main markets. For the second section, I select one leading coworking company in each market to critically evaluate their market practice and business strategy using case study approach. After that, a discussion on key differences among these three coworking firms is performed. Additionally, I propose some possible explanations for their variations in three comparison metrics across different companies and markets considering market factors, organizational value, geographical features and government policies. Two strategic decisions for the coworking industry are discussed: 1) whether coworking compang should lease the space or partner with landlords and then provide coworking services? 2) entrepreneurs or corporate clients, which customer segment should be the business focus of cowering industry? The financial crisis experienced by WeWork in late 2019 re-emphasizes the importance of these two decisions. This thesis contributes to international comparative study on coworking firms and provides some implications for the future sustainable development of this industry. Thesis Supervisor: Andrea Chegut Title: Research Scientist 3 Acknowledgement To my girlfriend, Yixin Zhang, thank you for being my great partner in both academia and life. I would like to thank for my parents for their unconditional support and encouragement all the time. Most importantly, I would like to thank my thesis advisor, Dr. Andrea Chegut, for her extraordinary efforts and guidance. Without her help, this thesis would not have been possible. Finally, infinite thanks to the MIT CRE, professors and all staffs for their help and guidance in this invaluable experience. 4 Table of Contents Acknowledgement ..........................................................................................................................................................4 List of Figures .................................................................................................................................................................6 I. Introduction and Background .................................................................................................................................7 II. Literature Review ..............................................................................................................................................10 2.1 The introduction of coworking spaces ................................................................................................................10 2.2 Location choice of Coworking spaces ................................................................................................................13 2.3 Coworking space and Entrepreneurship .............................................................................................................15 2.4 Risks of Coworking spaces .................................................................................................................................16 III. Comparison Framework ....................................................................................................................................17 IV. International Comparison for WeWork and IWG ............................................................................................19 4.1 WeWork Development Across Three Markets ...................................................................................................19 4.2 IWG Development Across Three Markets .........................................................................................................27 V. Continent-specific Case Study (You+, Talent Garden and Industrious) ..........................................................37 5.1 You+ Youth Hostel .............................................................................................................................................37 A. Expansion Strategy ..........................................................................................................................................38 B. Financing ..........................................................................................................................................................41 C. Supporting Role to Entrepreneurs and Enterprise Clients ...............................................................................42 5.2 Talent Garden ......................................................................................................................................................45 A. Expansion Strategy ..........................................................................................................................................46 B. Financing ..........................................................................................................................................................53 C. Supporting Role to Entrepreneurs and Enterprise Clients ...............................................................................55 5.3 Industrious...........................................................................................................................................................60 A. Expansion Strategy ..........................................................................................................................................60 B. Financing ..........................................................................................................................................................72 C. Supporting Role to Entrepreneurs and Enterprise Clients ...............................................................................75 VI. Integrated Comparison of three Coworking companies ...................................................................................77 VII. Conclusion ........................................................................................................................................................82 Bibliography .................................................................................................................................................................84 5 List of Figures Figure 1: Number of Coworking Spaces Worldwide Across Years ...............................................................................7 Figure 2: Coworking Market Global Players ..................................................................................................................8 Figure 3: Comparison Framework (Conceptual Model) ...............................................................................................17 Figure 4: WeWork Global Coworking Locations Distribution
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