Are coworking spaces cost-effective? This is a question that many entrepreneurs and business owners are asking as the industry continues to expand at a rapid pace. According to our own analysis, coworking spaces can achieve a profit margin (EBITDA margin) of around 10 to 20% once they reach their maximum capacity, usually between 12 and 16 months after opening. However, only 43% of coworking spaces are currently profitable. But don't be discouraged by this figure.
After two years in operation, more than 70% of all coworking spaces become profitable. Private companies that own the coworking space can even achieve higher fees. Offices are the main source of income, while shared desktop memberships are usually sold up to a certain capacity of 2 times, but no more. Conference rooms can generate around 15% of revenue, so it's important to use third-party services such as Liquidspace, DaVinci and other services to spread the word. When you decide to open a co-working space with Venture X, you won't have to worry about keeping your company at full capacity at all times to get benefits.
Shared space areas (reception, etc.) should be the highlight of the space that welcomes people and set the tone for the space. Modern coworking spaces consist of dissolving the boundaries between teams and workers and bringing them together in more flexible spaces, both in space and time, to create advanced economic models for the joint benefit of all participants. Because of the different ways in which people collaborate or need a location to perform short or long-term tasks, both in a single location and in several, coworking spaces offer diverse sources of income that can become a source of benefits for the owner of the space. If your coworking spaces are dedicated to developing the business of renting meeting rooms over the course of a few years, it is easier and more advisable to rent them as offices. It is also important to have space for offices of different sizes, grouped according to the number of people that fit in each office. Most coworking spaces should not build a large meeting room that can accommodate 12 or more people, but rather have a variety of conference rooms for 6 people that can be easily converted into private offices if underused in the future. Once the space reaches a stabilization point of 80% of office occupancy, between 3 and 5% of revenues should be dedicated to advertising.
Spaces reach profitability faster when they begin to announce it at least 5 months before opening. With this model, all the office expenses that a customer might need in a shared office and social space could become a source of income for the landlord. Chances are, if you're reading this article, you're considering opening your own co-working space business. If so, it's important to keep in mind that with proper planning and execution, you can make your shared office space profitable. By using third-party services such as Liquidspace and DaVinci to spread the word about your space and by offering different types of office spaces for different needs, you can create an environment that is beneficial for both you and your customers.