Coworking spaces: an economic development strategy?

By Jessica Stillman at GigaOm

When it comes to attracting companies to lovely but not exactly low-cost Santa Cruz, the city just south of Silicon Valley has a problem: no airport. Without an ultra-convenient air link the city struggled to attract large employers and the jobs they’d bring to the area. So what did the city’s creative mayor, Ryan Coonerty, decide to do? Start a coworking space.

“We realized after chasing a lot of companies that instead of attracting one 200-person business, we should attract 200 one-person businesses. The economic impact is bigger, and some of those businesses will grow,” he told Fast Company.

NextSpace, the start-up co-founded by Coonerty, just closed a $700,000 fundraising round and now has four locations in California. In Santa Cruz the space has attracted 200 members and has also proved a boon to nearby businesses, which are serving the programmers, therapists, comedians and lawyers who utilize NextSpace.

In an interview, Jeremy Neuner, the CEO of NextSpace, said that coworking spaces’ ability to boost local businesses and create jobs was very much on the NextSpace team’s minds as the company expanded, explaining that the promise of a lift to the local economy made convincing communities to welcome NextSpace easy:

In many cases, that’s the door opener. If you get a politician to open their mouth, the first five words out of their mouth are going to be jobs. As a matter of fact, the city of San Jose, their economic development director and the council member who represents downtown San Jose came to us. They said, ‘Look, much like the success you guys have had in Santa Cruz and San Francisco. We really think this is going to be good for our downtown and will you come and open up a NextSpace here?’ They were looking at it from that original notion of economic development and job creation.

Coworking makes sense for the community, Coonery agreed when speaking with Fast Company, while also underlining that it makes sense for individual workers as well. “The 9 to 5 at an office is a relatively recent phenomenon in human history, and I think it’s a short-lived phenomenon,” he says. “I don’t think it makes much sense to have all your people spend 45 minutes in traffic, come in, limit their interactions to each other, and disperse those people out at five or six at night.” Look for the trend to continue gathering pace, then.

Would a co-working space be an economic benefit for your community?