Does Coworking Work?

By Ken Mammarella

The secret to a successful co-working space is planning it like a city, Rob Herrera believes, with a variety of amenities, a variety of businesses and chances and space for member businesses to grow. 

Herrera calls that “community building,” and following and adapting that concept, “touching a little bit of everything,” has led him to the top of Delaware’s coworking sector.

The Mill, which he began in 2016 in the Nemours Building in downtown Wilmington, will cover 81,400 square feet of space, after the latest expansion is complete. In 2019, The Mill added another location, 20,000 square feet in Brandywine Hundred’s Concord Plaza. And, optimistically in early 2025, there will be another 20,000 square feet in operation in Seaford, as part of a project to revitalize a large, old shopping center and the Sussex County city itself.

Of course, The Mill has competition. At least 10 other companies and nonprofits run co-working spaces in New Castle County, and it could be more. “It depends on your definition of ‘co-working,’ ” says Tracy Shickel, associate vice president of corporate engagement at the University of Delaware. “STAR Campus has over 30 companies co-located on our campus.”

Of course, there are plenty of definitions. A comprehensive one comes from WeWork, America’s most famous (and infamous) co-working operator. 

“Co-working space is characterized by shared facilities, services and tools,” it reads in part. “But co-working spaces are more than just a way of reducing overhead. Co-working spaces are community centers, collaboration hubs and social spaces.”

“There are different flavors of offerings available,” says Richard Stat, president of Stat International, which for decades has operated 19,000 square feet of “serviced-enhanced office space (what we called ‘Executive Office Center’ and what’s now called co-working)” in downtown Wilmington.

“The Mill in particular has done a good job in broadening the market,” he says. “Ours has always been positioned as being for professionals. We have no beer, no ping-pong. Some call ours co-working for grownups, and it provides an excellent business environment for people who need to seriously concentrate on serious work, all in a friendly, supportive, professional environment.”

Herrera has concluded coworking spaces need to be big to allow for efficiencies in scale to operate and increase opportunities among members to interact. That’s based on two years of working for WeWork (which he called the first national coworking space company in the U.S.), his college degrees in architecture and infrastructure planning, and eight years of running The Mill.

“The more scale you have, the harder it is for somebody else to replicate that energy and vibe of the business we have here,” he says. “We got lucky early on with companies like Fair Square Financial, which got bought recently by Ally Financial for a few hundred million dollars. With wins like that under our belt, people want to be here, be part of us, want to network with our community. And that’s the real secret to success.”

Community of Entrepreneurs

Ron Berry has an unusual perspective on coworking spaces: He works out of two as a managing partner of Social Contract. One is CSC Station, and the other is the Bond Collective in Philadelphia. CSC is next to Wilmington’s train station, and Bond is atop Philadelphia’s Suburban Station, and those locations make for very easy access. He also worked out of a third that’s defunct.

Social Contract, a consulting firm that aims to “help communities solve complex social problems,” was No. 1831 on this year’s Inc. 5000 list of the fastest-growing for-profit private companies in the country.

He likes the coworking concept so much that he’s recruited organizations that he thought “would benefit from the entrepreneurial system around social impact” — and add to it.

He said the amenities at both are “great,” heaping praise on CSC’s dedicated parking and dedicated floor for conferences and events (although that 20th-floor terrace in Philly is mighty impressive).

That sense of community kept recurring in interviews.

“We’ve created a community for individuals and companies,” says Scott Malfitano, who runs CSC Station, a coworking space on the Wilmington Riverfront. “Water-cooler conversations have now been modernized.” The CSC community now numbers 564 members, growing 3% to 4% a month, he says.

“The office vibe feels great,” says Roger J. Clappe, founder of WhipFlip, a startup in The Mill that uses artificial technology to instantly let consumers sell their car to WhipFlip. “Just great resources. Companies feed off each other and help each other,” he adds, noting that he’s used legal, marketing and video services offered by other Mill members. “You can never know who can use you or who you can use.”

The Pete du Pont Freedom Foundation has been a member of CSC Station for a few months. It became familiar with its setup after a year of meetings with CSC members who were also members of the nonprofit, working to “turn their ideas into action,” says Pete du Pont Freedom Foundation Executive Director Stephanie Johnnie. CSC membership has already paid off in finding new members for the foundation from other people based at CSC. “It’s a foundational space for access and to put down our roots,” she says.

The Delaware Technology Park — a nonprofit aligned with the state, the University of Delaware and the private sector — plans to open 5,000 square feet of incubator and coworking space in January on the sixth floor of its Newark building.

“We want to energize entrepreneurs who are thirsty to grow but need help,” says incubator manager Pedro Moore, whose experience goes back to founding UD’s entrepreneurship club. The help includes access to the community ecosystem, capital, UD experts, workshop and advice — “whatever it takes to go from Point A to Point Z.” 

The first books that “praised the power of coworking” date back to 1628, according to Deskmag, a German magazine focused on offices, and coworking spaces in particular.

Its timeline then fast-forwards to 1995, with a hackerspace in Berlin, and to 1999, with game designer Bernard De Koven coining the modern version of the term and the creation of a lower Manhattan work club for creatives. By 2007, coworking had an entry in Wikipedia.

The timeline skips a Delaware highlight: Stat’s executive office center formed in 1984.

The leading edge of coworking has tended to be the creative and tech sectors, with corporate America trying to copy their vibe. And that presages even more growth: A third of the 53 tech companies recently surveyed by CBRE, a global commercial real estate firm, expect to more than double what CBRE calls their flex space within a year.

The sector, by whatever the name, is surging, CoworkingCafe reported in June, with the number of spaces up 10% for the quarter and the amount of space available up 6% for the quarter. All told, 1.7% of America’s office space is in coworking space.

JLL, a company that runs coworking spaces worldwide as part of its Flex brand, “predicts 30% of office space to be flexible in some form by 2030.”

Law Firms Warm to Coworking

Hiccups on the global growth of coworking included the pandemic. “Covid was stressful,” Herrera says, noting that “shortly thereafter we started getting calls from companies that beforehand would never consider coworking, like large law firms. They see coworking as a way to get their staff to come into the office” yet are reluctant to sign long leases elsewhere.

Stat also has seen that downsizing law firms are “looking for a new professional footprint” by moving into coworking spaces. Over the decades, he’s also seen plenty of firms upsizing and moving out of The Hub, and he cited former DuPonter Bill Wood, who founded a lobbying firm with Bob Byrd, and former DuPonter David Marvin, who founded an investment firm with Stan Palmer.

Law firms formed part of the market for CSC, a company that for more than a century has helped other companies with Delaware corporate law. CEO Rod Ward had decided to invest in the growth and redevelopment of Wilmington, and the result was buying a building next to the Wilmington train station and turning it into a 49,000-square-foot co-working space on six floors.

They already knew that New York and Washington lawyers were taking Amtrak into Delaware, and their new space would provide an easy convenience for meetings.

When CSC Station opened in November 2020, pandemic-related cleanliness was essential. Since then, its offerings have evolved, including the addition of showers and a large conference space, on top of the concierge service, a wellness room, a social cafe and networking events.

Johnnie praises the variety of space at CSC, because sometimes she wants to “put your head down and work,” and sometimes she wants to be sociable.

Sociability could also be considered a distraction, and that’s one of two big downsides (along with cost) that the U.S. Chamber of Commerce lists for coworking spaces, in comparison to alternatives.

CompassRed, a data analytics startup, was a tenant at CSC Station on opening day, and co-founder Patrick Callahan says it was exciting to experience “things we never would have thought of, like a coffee machine that we nicknamed Mustang Sally, to entice workers back to the office.” 

Although CompassRed was bought in 2022 by LabWare and now shares space near the Delaware Art Museum on northwestern edge of Wilmington, he maintains CSC membership for meetings, for team-building on bicycles along the Jack Markell Trail and for supporting the revitalization of downtown Wilmington.

Offerings at The Mill have evolved as well, including adding outdoor seating, phone booths and a wellness room and eliminating the sound system.

 “You can’t make everybody happy with the music,” Herrera acknowledges, noting that portable equipment can be brought in for specific purposes.

And sometimes a key offering is the absence of something. There are no outlets, for instance, in The Mill’s shared pantry. “Nothing kills that vibe” of informal gatherings more than people plugged in, working at laptops, Herrera says.

Coworking Spaces in New Castle County

CSC Station, 112 S. French St., Wilmington Riverfront, 49,000 square feet of space, next to the Wilmington train station. $65 annual membership gives access to all services. Coworking space starts at $15 a day, $60 a month.

Delaware Innovation Space, DuPont Experimental Station, 200 Powder Mill Road, Building E500, near Wilmington, For science-based startups and entrepreneurs.

Delaware Technology Park, 591 Collaboration Way, Newark, 5,000-square-foot “industry-agnostic” incubator and coworking space planned to open in January at its FinTech Innovation Hub. Pop-up desks start at $250 a month, and offices start at $400.

Emerging Enterprise Center, 920 Justison St., Wilmington Riverfront, An incubator, with co-working options, in 5,000 square feet by the New Castle County Chamber of Commerce. Opened in 2017.

The Hub @ 1201  (AKa One Commerce cenTer)1201 N. Orange St. Downtown Wilmington, Desks $20 a day, weekly rate $35. Private offices start at $700  per month. Plus virtual services and conference rooms.

Middletown Business Incubator and Collaborative Workspace,  651 N Broad St., Suite 306, Middletown. Drop-in space and space rentals in the Middletown Area Chamber of Commerce office. Opened in 2015.

The Mill, 1007 N. Orange St., downtown Wilmington, and 3411 Silverside Road, Brandywine Hundred, Community membership starts at $65 a month, virtual office $90, dedicated desk from $250, private office from $850.

PLY 1130, Ogletown Road, near Newark, 12 suites, starting at $500 a month, in a historic farmhouse. Opened in 2023.

Regus, 1000 N. West St. and (opening soon) 901 N. Market St., downtown Wilmington, Drop-in and hot-desks in an open-plan workspace, dedicated desks in a shared office, breakout areas and networking events.

TKO Suites, 300 Delaware Ave., downtown Wilmington, and 1521 Concord Pike, Suite 301, Brandywine Hundred, Virtual space (local phone number and other services) start at $99 a month. Dedicated desks downtown start at $250. Also private, lockable offices (75-155 square feet downtown, 100-350 square feet in the suburbs).

UD STAR Campus, South College Avenue, Newark, Office and laboratory space for science-based startups and, starting in early 2024, office space for digital technology companies.