Alonso Toledo

The Great Peruvian Government Coworking

January 16, 2019

The decision to invest in corporate headquarters denotes business maturity. It requires not only the financial leeway to subsume the cost of execution (which isn’t modest should one choose to pursue it properly), but also the human resources to manage the new space with a modicum of real estate, maintenance and operations skill. It also points to commercial solidity and strength by recognising the worth of an attractive market presentation in a choice location. Last but not least, there is the known —but not always apparent— fact that a well-tempered office increases productivity at work, translating into ROI instead of just expenditure.

As advantageous as it can be to have quality headquarters, there’s a downside to them, too. For small and mid-sized businesses, the limitation tends to be a lack of capital: the investment in renting, fitting out and maintaining offices can be prohibitive vis-à-vis having a garage firm from which one can work with a small team in suboptimal conditions, but at minimal expense. When it comes to big business, the limitation falls more in the line of uncertainty: upon entering new markets, a transnational may hesitate to fit out a large office if there’s the possibility it will not prosper. For a family business, regardless of scale —and this is a common scenario in Latin American markets— the restriction comes down to management style: quality offices are not a priority for ventures that have been working “well enough” for decades, an idiosyncrasy that is likely to remain unchanged lest it be through cultural or generational resumption.

This creates a clear market demand: how can one secure the benefits of quality corporate offices without incurring the real estate expense and managerial burden they entail? And so the coworking space was born.

Though the concept gained currency in the Peruvian market as of last year, it was not new. As early as 1989, Regus (now IWG) had established its first flexible office for workers who were also frequent travellers in Brussels. The model was imported to Latin America in 1994, and Regus has nine sites in Lima today. The most recent turn of the screw, however —indeed, the one responsible for the coining of coworking as a term— came with the reinvention of the format to meet the needs of the millennial workforce. Providing its members not just with flexible workspace but personal wellbeing —from “free” beer and yoga to help accelerating start-ups— WeWork was founded in 2010, in the thick of the American real estate crisis, and has since become the most outstanding business of its kind. Though it has yet to reach its tenth anniversary, it is already valued at 20 billion dollars, and founder Adam Neumann fondly refers to it as a “kibbutz 2.0”.

Welcome to the new normal. In 2017, the IWP-owned Spaces, a Dutch variant of WeWork, arrived in Peru, opening its first facility in San Isidro. By that time, WeWork already had four establishments in Lima, and an aggressive expansion pack. Homegrown iterations such as Comunal are up to almost ten active workplaces already, all in the course of two years. The future, as always, is now.

At the opposite end of the spectrum, to walk into a typical Peruvian government office is to step into the past. If seen as a business in need of infrastructure with which serve its workers and fulfil its functions, the limitations of Peruvian government are glaring. It is technologically obsolete, with an immense spatial demand for archives and inventories in dire need of digitisation. It has a dismal understanding of what good economies entail, which often leads to low-cost, low-performance purchases under the guise of austerity. The real estate and facilities management of its sites is inefficient, insufficient, and lacking in the vision and know-how to do their part properly. It depends on a deficient, structural bureaucracy which, harnessed to inertia, drags down any incentive seeking to improve the system. No less importantly, it shows fear in the face of innovation; a fear that only makes sense in the sort of setting that will not reward a good investment, but that will punish expenditure.

It’s true that recent years have seen attempts at overhauling. Institutions such as Banco de la Nación have invested in their own headquarters, making way for a generation of ministries and organisms that have more or less succeeded in transferring operations to new sites. But even if this process does update and improve the government’s administrative infrastructure: is it enough to have offices that meet basic standards, when the future has already shown us that the present is behind the times? Beside the few agencies ‘blessed’ with budgets for their headquarters: must the bulk of government infrastructure be kept in an unsustainable state of retardation until it collapses again?

Although the government’s —slow, but hopefully steady— transition to (more) modern sites does represent a step forward, it is not one long enough to reposition Peru at the lead of any race. To the contrary, these colossal efforts more closely resemble those of a horse that crosses the finish line well after the race is done.

The future is now, as before. The market evolution of the office space towards the coworking format is transparent, and the government, as demanding but peculiar corpus, presents a golden opportunity to produce a no-less-specific supply of coworking spaces for it.

Let’s break down the business case for this in greater detail. As a client, the Peruvian state is potentially:

  1. Enormous, with a critical mass of workplaces that amply exceeds that of any agency in the private sector;
  2. Permanent, given the unlikelihood of shutdowns;
  3. Financially secure;
  4. In need of the flexibility to expand or contract in response to the changing political climate;
  5. Benefitting from real estate and facilities management.

In brief, it would be the largest and most stable real estate option in the country.

Under the traditional model, today, a government agency in need of upgrading its headquarters would have to: justify its need (and not in terms of quality, but because of the unsustainable conditions of its present site); invest in profiling a project; defend the need fo this investment and request funding from the Ministry of Economy and Finances; actually obtain this funding, which it will probably only succeed in doing if it falls in line with the political agenda of the moment; submit to a long bidding process (that will not necessarily result in the selection of the best bidder and/or most viable proposal); execute the project and, finally, set up shop. This is a process made to take up years, susceptible to political whim and provenly prone to corruption, resulting in buildings which, in the aftermath of such officiousness, will in all likelihood not even be current at the time of their inauguration. This, in turn, will drive their occupants to call for immediate readjustments or, what’s worse, to have to settle into the lurch despite all efforts. It goes almost without saying that, during this very cumbersome gestation, the agencies will continue to function to the best of their diminishing ability, and at a mounting expense.

A great coworking for the Peruvian state advances a solution at a diametrical remove, in which the government itself would invest in the design of strategically located, large office buildings. These would not be structured around settled programs or the business case of any given agency, but have the integral needs of the state apparatus as their basis. Their plans would be extremely flexible, allowing for the expansion, subdivision and common usage of shared spaces (i.e. registrar, training rooms, etc.), with a single facilities department to provide cleaning, maintenance and repair services to the entire complex (in lieu of the myriad and discrete subcontracts over scattered sites we have today, all of which contribute to the colossal inefficiencies involved in obtaining the resources needed to update and maintain them, if poorly). The business case to be prepared by each government agency in support of occupation for a given period should not be more complicated than requesting a certain amount of desks at a particular site. For instance:

“We will need 120 desks at the San Borja site for the next two years. We benefit from being near the Lima Convention Centre and, as partners of agency ****, which is currently operating in the two lower floors of the aforesaid building, we would be able to provide better service through a shared registrar.” 

“As of next year, our agency and fellow agency **** will be merging administrative departments; on acount of which we request a renewed occupation of 200 desks for the next two years at the site in Callao (minus 25 seats on account of the merger).

“The state will invest in a site with a maximum occupancy of 2,500 people in San Isidro, to be inaugurated in 2020. Government agncies seeking to work in this space are required to submit their business cases on the last day of the next month at the latest. Please refer to the following forms…”. 

The financial investment the Peruvian government has been making in these sites, which either drown or become paralysed because of political skirmishes or signs of corruption, would undergo an exit transition; to the degree that, in a not too distant future, we should be asking ourselves —and be outraged by— how we put up with the utter inexpediency of the system as it (barely) stands today.

In my personal experience as a consultant to several government agencies, I have been closely acquainted with the pitiful circumstances of their offices, and the minefields that must be traversed in the pursuit of something better. The future has been now for decades. With the resonant example of the coworking revolution at our door, and faced with the government’s urgent need for transparency, thrift and judiciousness in its efforts to garner the trust of a more discerning civil society, the reinvention of its infrastructure should be quick, and as quickly embraced.

Of course, setting these thoughts into practice will be no easy task. They would demand, as before, complex process profiling, bids and significant financial buttressing in a time of austerity. I sustain, nonetheless, that the prime mover for this kind of change would be the political will to follow through with it. An office format of this sort would not just merely entail modernising towards a present that’s already obsolete, but projecting towards currency in the future.

Having said this: can we take advantage of the opportunity to cast ourselves yet further, and chomp at the bit of innovation so that this idea is coherent not just here and now, but regionally and with a purview to 2050? Given Peru’s present political junction, where one cannot underestimate the importance in restoring popular respect for the government and its agents, can we contribute ideas that, besides being sensible, invite us to revamp the function and perception of how government is run?

In response to this I’d like to bring this essay to a close with these points as a corollary:

I want a government that operates in plain sight and not in hermetic, labyrinthine buildings, cloaked in archives that conceal its inefficiency.

I want buildings any citizen can look into from his position in public space, to see the judges at work in their offices, the functionaries meeting with transparency, the effort that is being expended to keep the country on track. In light of the Odebrecht corruption scandal, I want to see the lights of the District Attorney’s Office on into the wee hours, showing that it’s working as diligently as it can to restore justice.

I want a government that is at ease with making room for the press, civil society and the General Comptroller. The buildings that it occupies should provide them with secure, restricted spaces from which they can engage the interior.

I want a government that will open its doors to researchers, volunteers and school visits, and that’s able to express the reciprocity that must exist between investment in its infrastructure and increased efficiency.

I want a government that can serve as a beacon for what a dignified, productive workspace can be, and that can inspire younger generations to partake in it.


 

Alonso Toledo is a consulting architect and founding partner of Diacrítica.