How Profitable are CoWorking Spaces?

CoWorking spaces are only growing in their popularity and with this demand, the profitability of these working spaces is increasing as well. 90% of coworking spaces are able to generate a profit if they can meet a few very simple conditions:

  • A coworking space must survive for at least a year.
  • A coworking space must not subsidize its operation through other businesses.
  • A coworking space should have at least 200 members.

Most of these conditions are fairly easy to honor. Attracting 200 members is often the largest hurdle to any business getting off the ground. Cost-effective operation is also something that a coworking space needs to strive for after getting its membership rate up. Around 43% of the active coworking spaces across the world are currently generating a profit from their operation. About a third of the Coworking spaces are currently operating at break even and only a fourth of coworking spaces in operation are in the start up and losses phase as they are attracting new members. 

The most profitable coworking spaces work to increase their revenue stream by renting out their offices to private teams as well as individuals. A combined membership plan or levels of desk rentals are a popular and profitable way to generate monthly subscription fees. 

Keeping the turnover rate of members very low is also crucial to profitability. The most successful coworking spaces are able to keep their turnover rate lower than 5%. When companies are able to consistently attract new renters with out it eliminating their old renters, they can have a stronger influence over the market. 

CoWorking spaces that are located in cities are often consistently more profitable. In larger population cities it’s much easier for coworking spaces to grow rapidly and become more profitable especially if they are in favorable addresses throughout the city. 

One of the fastest ways that you can grow coworking space in 2019 seems to be in pioneering. If you are in a fairly developed urban area without access to a coworking space, starting coworking spaces with low competition often leads to the best results. Most companies that are able to start up their business and low competition zones reach a breakeven point within just 12 months. 

As you can see, coworking spaces can be a very profitable business. By working at improving membership rates and then  finding continuing success, it’s possible to build a stable business in creating a coworking space. 

This post was written by Tara Kintz. Tara is a director at Signature Workspace which is a  Clearwater Coworking Space. Signature Workspace, owned and operated by Cantor Fund Management, offers services and amenities such as private offices, flex space, coworking space, virtual offices, meeting/conference rooms, and more.