Are office spaces profitable? This is a question that many entrepreneurs and business owners are asking as they consider the potential of coworking spaces. 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. But what about cost-effectiveness? According to andCards, only 43% of coworking spaces are currently profitable. However, this figure is partly due to the fact that the industry is relatively new and expanding rapidly.
After two years in operation, more than 70% of all coworking spaces become profitable. Private companies that own coworking spaces tend to have even higher fees. It's important for small businesses to have enough capital in the bank to last two years without making a profit. To reach profitability faster, it's important to start advertising at least 5 months before opening.
The Global Coworking Survey found that only 43% of coworking spaces are cost-effective, meaning that 57% are not. When it comes to meeting rooms, it's best to have a variety of conference rooms for 6 people that can be easily converted into private offices if underused in the future. Office supplies, toiletries, water coolers and coffee are some of the main supplies that usually come standard in a coworking space. However, most coworking spaces make conference rooms too large, which translates into a waste of space that is left empty.
To make your space successful and profitable in the coming years, consider including imaginative revenue resources such as referral fees, products, virtual office rentals, exclusive mailboxes and staff support for members. 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. Other supplies may include medium- and long-term costs such as office equipment, furniture and facility management costs like lights and light bulbs, wiring and security equipment for the office. Shared space areas (reception, etc.) should be the highlight of the space that welcomes people and set the tone for the space. The biggest drawbacks to furnishing and building a coworking space are the wrong size of the office, the size of the desk, buying furniture that is too expensive, meeting rooms that are too large, and not having the right share of shared space for private use. Once the space reaches a stabilization point of 80% of office occupancy, between 3 and 5% of revenues should be dedicated to advertising. If your space has a community manager who acts like a traditional secretary, then you need a large reception desk but lots of spaces have community managers who blend in with the community and don't require such an expensive desk. The ideal would be to have space for offices of different sizes grouped according to the number of people that fit in each office.
Another thing to keep in mind is that coworking spaces with more than 200 members and a higher ratio of members to staff are more likely to be successful. 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.
