Third space: What is it, what will it look like and will it work?

by FM Media
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RODNEY TIMM of Property Beyond discusses the concept of third space and what is needed for third space to be financially viable.

As workspace accommodation models have evolved – from shared desks, work from home and distributed workplaces to activity-based working – the concept of ‘third space’ has been getting frequent mentions at workplace seminars, conferences and industry journals. But, few understand what is meant by this concept and the property industry has not come to grips with the business model required to support third space. In Europe, a similar concept known as ‘co-worker space’ has also started to emerge.
The third space concept first emerged in 1989 in Ray Oldenburg’s influential book The Great Good Place. He refers to ‘first place’ as being one’s home, ‘second place’ as the workplace, where people spend much of their time earning a living, and ‘third place’ as the community life anchors that, historically, were likely to be informal meeting places. According to Oldenburg, true third place attributes should include:

  • welcoming and comfortable
  • highly accessible and proximate to users
  • free or inexpensive
  • the availability of food and drink, and
  • habitually congregated by regulars, supporting both old and new friendships.

With an increasing percentage of workers telecommuting from home and working from Wi-Fi spots in client sites, airport lounges, hotels and cafés, the possibilities for third space are becoming evident. Home-based telecommuting workers often cite isolation as an issue and find the possibility of working in public spaces closer to home a good compromise, avoiding the arduous daily commute to the corporate office.
In the context of the growth of distributed and activity-based workplace models, there is likely to be a growing demand by mobile workers seeking out a different type of workspace to complement their home and corporate office bases. But, they will likely be looking for collegiate and supportive environments that foster broader and more creative interactions with their peer groups – all likely to be working for different enterprises.

Research undertaken in Europe lists the key criteria for assessing the suitability of co-worker space as:

  • accessibility (both physical and financial)
  • a welcoming environment with permissiveness
  • the ability to pool resources
  • shared energies that facilitate innovation and output
  • the availability of private or quiet space on an as-needed basis, and
  • an environment that engenders collegiate trusting relationships.

Besides being highly accessible for users, ideally there should be no obligation for users to be there. Freedom to come and go underpins the informal social connections. Being tied down by financial commitments, legal documentation or other obligations is likely to destroy the fundamental concept of the space. However, this freedom of choice will likely be problematic in emerging business models needed to support the creation of sufficient supply of these venues.
For third space to work, it needs to be welcoming with the same feelings of warmth, possession and belonging that can be experienced at homes. Users likely need to feel they are rooted in the space and are reenergised by spending time there. In addition, pooled resources in the form of food and drinks, printers and equipment, desks and lounging chairs, meeting rooms and touchdown stations – many features of activity-based working accommodation solutions – should be available to meet the business activity of the day.
The shared energies emanating from the pool of regulars will likely be the reason for users to come back. These regulars will create the tone, determine the particular characteristics and set the mood of the third space. These locals also need an inclusive attitude to attract newcomers and make them feel accommodated. But, private needs must be accommodated too. Individuals should be able to work privately – without cutting themselves off – when required, with appropriate private storage.
Third space will likely be wholesome, not snobby or pretentious, and without extravagance. Economic or social status should not matter and there should be no prerequisites or requirements preventing participation. This collegiate approach will allow for a sense of commonality among its occupants and create a sense of trust. The highs and lows of business need to be able to shared in a supportive environment.

Third space business models still have a significant gestation period ahead. Experimentation with formats is fundamental to achieving success. Although the ideals discussed do not intuitively underpin commercial returns, most are essential if sustainable third space business models are to be achieved. With the concept of third space becoming popularised and the needs of the typical users becoming more evident, various small businesses are responding.
Many coffee shops, pubs and bookstores, primarily as a driver to grow revenues, have started to recognise these customers’ needs. The general approach by these enterprises is to increase socialisation; for example, customers are invited to stay and hang out, encouraging venue loyalty and social contact between patrons. The expectation is that additional purchases will be made. At the other end of the scale, internet cafés have tended to evolve into cheap internet access venues focused on budget travellers, providing internet access and little else. Often, there is a hollow effect, with users being physically present without making social contact and each user being absorbed by their remote connections. The current layouts and atmosphere in most internet cafés are unlikely to be conducive for potential third space users to linger.
Public libraries are spaces more conducive to working and learning, but they may lack social connectivity as users often operate in isolation. In learning environments like university libraries, however, there is a collegiate atmosphere and socialising among users, who tend to know each other. Similarly, in community centres, RSLs (Returned and Services League) and sports clubs, this atmosphere prevails as the traditional centres of community life. The shared leisure facilities, function halls, social clubs, restaurants and limited workspace areas are usually available for casual use or may be booked for more formal events. These types of facilities have been the key provider of a sense of belonging focused on common interests and may provide some precedence for a third space model.
In the property industry, proponents of third space usually look to the serviced office business model as provided by Regus or Servcorp as the likely intermediary for the third space offering. Over the last decade, the serviced office has evolved with the growing capacity of communication technologies and, in many cases, is now operating merely as a postal and communication hub with occasional ‘drop-ins’ by users. It is, however, debateable whether these operators, within their current business model, will be able to provide many of the attributes of third space as postulated by Ray Oldenburg.
Probably the best surrogates for future third space offerings are the informal business ‘hubs’ that have started to emerge in some global cities. They usually cater to the creative industries and socially aware enterprises; most of the users are not employed by corporate entities and operate as free agents, which means this is their primary place of work. These business hubs appear to have the sense of community, the informality and inclusive nature that third space should provide.

For any business model to be viable there needs to be recurrent and sustainable revenue. Property leases are complex and are not cheap. This requires the intermediaries providing the third space to have the financial viability and credibility with property industry landlords to be successful.
Just as successful café and pub owners do not have contracts with their customers, third space operators need to deliver the services, atmosphere and amenities that meet their prospective customers’ needs. Customer loyalty should be the basis of the business model, meeting expectations and service requirements – not legal agreements or financial commitments.
So, what will future third space look like? We can postulate about operators managing competitive hub facilities in surplus shopping centre space, underutilised sports clubs and reworked suburban office buildings – with their presentation being some form of informal crossover between creative, activity-based working spaces, airline loyalty lounge and community club, and their revenue model being underpinned by loyalty cards, corporate vouchers and margins on food, coffee and other service offerings. Only time will tell. In our ever-changing global environment, however, we are unlikely to have to wait too long.

Rodney Timm is the director of Property Beyond.

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