Why are major corporations moving into Israel's coworking spaces?

"Landlords are very asset-centric companies - they know how to buy, finance and maintain buildings," Itay Banayan, VP Real Estate at Mindspace, told The Jerusalem Post.

A Mindspace coworking space in Israel (photo credit: BOAZ ARAD)
A Mindspace coworking space in Israel
(photo credit: BOAZ ARAD)
Whether it is workplace automation, the gig economy or coworking spaces, the world of work is constantly being reinvented.
Since programmer Brad Neuberg opened the door to the first “coworking space” in San Francisco in August 2005, trendy and flexible shared work environments have sprung up across the world. In 2018 alone, an estimated 2,000 spaces were opened worldwide.
Israel, often among the first locations to embrace new ways of thinking in many sectors, is home to a wide range of coworking spaces, including WeWork, Mindspace, Regus, LABS, Urban Place and Panthera, the first professional women-oriented space.
As expected, start-ups of varying types and sizes were quick to seize opportunities offered by such spaces, offering flexibility, cost-efficiency and a vibrant, communal work environment. It was only a matter of time until larger and larger companies also started recognizing the benefits of coworking spaces.
“Landlords are very asset-centric companies – they know how to buy, finance and maintain buildings,” Itay Banayan, vice president of real estate at Mindspace, told The Jerusalem Post. “They can’t converse, however, about well-being, happiness, productivity and lifestyle. They forced inefficiencies on customers, as they didn’t have time for the needs of small companies, and signing long-term leases forced large companies to start predicting their occupancy needs for the decade to come.”
That started to change, Banayan said, with the small companies and freelancers who came out of the coffee shops and saw that coworking spaces provided a much more pleasant and professional environment.
“That evolved when larger companies started realizing that we can take away the headache of signing a lease, predicting occupancy needs and sending people over to remote countries to manage a project,” said Banayan. “They can have a lot of peace of mind by taking a space for one to two years, giving them freedom to grow and shrink as much as they want, and saving money too.”
Today, approximately 40% of Mindspace’s members at its 28 offices in Europe and the United States are large enterprises, including Microsoft, McDonald’s, Samsung and Barclays.
Mindspace is not alone, with enterprises also accounting for more than 40% of WeWork’s total membership base, and representing the company’s fastest growing membership segment.
On Monday, Mindspace announced plans to open another coworking space in Ramat Gan by the end of 2019.
“Large companies also started realizing that even more than the no-brainer transaction on the real estate front, entering co-working spaces became more of a human resources product than anything else,” said Banayan. “A lot of global companies have teams of various sizes all over the world. Making sure that these people are motivated, happy, and inspired is hard to do when they are abroad. When they put them in an environment like this, they say that they recruit better talent who stay longer, are happier and more productive.”
The evolution of coworking spaces has not just led to changes in perception among start-ups and global enterprises. Landlords too, Banayan believes, have started to realize that coworking is not just a trend.
“Some of the smartest and most capitalized landlords are starting their own brands, but it’s not as good,” said Banayan. “The other option is to collaborate with a company like Mindspace, and that’s the trend that we’re seeing more and more. We join forces, and they enjoy the upside. The future is that the office will be a service, almost like any other. Offices should be competitive, flexible and agile, and should help the companies to be successful rather than constituting an inefficient or expensive product for them.”