- Originally published: June 17, 2022
- Last updated: November 26, 2024
If you’re about to open a coworking space (or you’ve just done so recently), figuring out coworking space profitability is probably high on your to-do list. Given that 46% of coworking spaces turn profitable after one year, you might be wondering what exactly makes profitable coworking spaces…well, profitable?
To help answer these big questions (and a few more), we’ve teamed up with Abigail Schilling, Principal at Space Savvy Studio, to break it all down for you.
Abigail owns and runs three successful coworking spaces in Oregon, so she knows firsthand what it takes to make coworking spaces profitable. Through her agency, Space Savvy Studio, she helps coworking spaces improve everything from daily operations to marketing and tech solutions to create better experiences for members.
💡 TL;DR
Are coworking spaces profitable? Most take two years to reach profitability. However, the Global Coworking Survey shows that nearly half struggle to turn a profit, with 25% reporting losses. While the $13 billion market is recovering and expected to grow 15% annually, the actual growth depends on making coworking spaces more profitable.
Profitable coworking spaces often have high occupancy, efficient layouts, and flexible membership options. Beyond strategic floor planning and attracting new members, you can increase revenue by renting meeting rooms, hosting events, or offering member services like mail handling and an in-house café. Keep costs low by automating tasks, outsourcing when needed, and saving on energy. Review your prices regularly, increase them yearly, and focus on balancing income and expenses to stay profitable.In this guide:
Are coworking spaces profitable?
Profitable spaces often have high occupancy, efficient layouts, and flexible membership plans. But, the profitability of a coworking space can vary a lot depending on its size and location. Here’s a general idea of how it breaks down:
- Small spaces (up to 50 members): These often struggle to make a profit and may just break even.
- Medium spaces (50-150 members): Typically see coworking space profit margins of around 10-20%.
- Large spaces (150+ members): Can achieve profit margins of 20-30% or more.
Location plays a significant role, too. Spaces in downtown areas of big cities can charge higher membership fees, but those come with higher operating costs. On the other hand, suburban or small-town spaces usually have lower fees but benefit from reduced expenses.
How do coworking spaces make profits?
Membership structure
Membership fees are the most significant contributor to a coworking space’s financial success, accounting for about half of overall profitability. Various membership options—like day passes, hot desks, dedicated desks, and private offices—help attract diverse members. This flexibility not only meets different needs but also maximizes revenue potential.
Profitability tends to kick in once the membership count reaches approximately 100, with coworking space profit margins improving as the number of members increases.
Location and overheads
Location is a game-changer for coworking spaces, influencing their appeal to members and operational expenses.
- Attracting members: A prime city-center location can draw more members by offering convenience, accessibility, and prestige. Proximity to amenities like cafes, restaurants, and public transport also adds value. Coworking spaces in peripheral urban areas or smaller cities often achieve profitability thanks to lower rent costs.
- Operational expenses: While popular locations offer benefits, they have high rental costs that can eat into profits. Other operational expenses—staffing, utilities, maintenance, and insurance—vary by location.
To optimize profitability, coworking spaces can focus on lease negotiations, creative space utilization, and introducing new revenue streams to offset higher costs. Balancing your revenue and expenses to hit a healthy profitability range is key, no matter where your space is located.
Additional revenue streams
Successful coworking spaces don’t rely solely on membership fees. Diversifying income sources can significantly boost profits. This might include:
- Hosting events or workshops.
- Offering consulting or business services.
- Running on-site amenities like cafes or retail spaces.
Coworking spaces can create a more sustainable and profitable business model by tapping into these extra opportunities.
When I first opened my coworking space, I focused on long-term members and office sales. After a few months, I realized that this traditional focus was limiting the number of people I could convert, and I was missing out on a large market segment that was active in my region. Not wanting to miss out on potential revenue, I decided to diversify my service offerings and target a broader audience. I saw the untapped potential of non-members and the rising demand for flexible options for room bookings and day pass users. I developed a public online signup and booking page, making it effortless for anyone to discover and access the coworking space. I also integrated self-serve automations for both bookings and day passes to cut down on the work that would be required to onboard and serve these bookings. The ease of online bookings attracted new users, significantly driving up utilization rates and diversifying revenue streams.
Through her agency, Space Savvy Studio, Abigail helps coworking operators boost profitability. Take Joanna, for example: her coworking space faced high expenses, staff turnover, and ineffective marketing, putting her business in serious trouble. Despite her best efforts, the space’s financial health was deteriorating, and things were just getting worse as she struggled to look at the right data and relied on ineffective marketing strategies.
Realizing she needed a fresh approach, she turned to Abigail to review her business. Together, they identified key areas where expenses could be cut without compromising service quality. They recognized the need for “the right person in the right seat” and agreed that there was no “unicorn”—no single person could handle all the tasks. This led to outsourcing certain operations, such as marketing and financial management.
This strategic realignment and outsourcing led to a strong turnaround. Operational costs were reduced, and the effectiveness of marketing efforts improved, attracting more members, room bookings, and revenue.
Joanna’s space now operates more efficiently, with a leaner, more focused team and external partners, like Space Savvy Studio, that drive success.
Understanding costs in coworking spaces
Running a coworking space comes with a mix of fixed and ongoing costs. Some contribute directly to revenue, while others are essential for keeping the space functional and attractive for members.
Fixed costs (one-time investments)
- Coworking space furniture and infrastructure: This includes the basics like desks, chairs, lounge seating, and other furnishings needed to set up the space.
- Tech installations: Setting up reliable Wi-Fi, security cameras, and other technology systems.
- Initial marketing and branding: Expenses for launching the space, such as opening events, branding materials, and digital marketing campaigns to attract early members.
- Construction and renovations: These include remodeling costs, such as painting, flooring, electrical work, plumbing, and adding partitions or private booths. They might also include meeting local building codes, accessibility upgrades, and customizations to create a functional and appealing environment.
Ongoing costs
- Lease/rent: Often the largest recurring expense, especially for spaces in high-demand locations.
- Utilities: Covering essentials like electricity, water, and heating/cooling.
- Staff salaries: Paying community managers, cleaners, and other team members who keep the space running smoothly.
- Maintenance and cleaning: Regular upkeep ensures the space stays in great shape.
- Software and Internet: Costs for coworking software, high-speed internet, and other tech services.
- Sales and marketing: Ongoing efforts like advertising, hiring contractors for special projects, and hosting events to attract and retain members.
- Supplies and community perks: From toilet paper to coffee and snacks, these small touches create a positive experience and a sense of community.
How to make a coworking space profitable
Utilization is a crucial metric in knowing your profitability. If you look around your space at any given moment and see a certain percentage of space is not being used—your #1 priority is getting it to generate revenue.
Optimize your coworking space with strategic floor planning
Every part of your coworking space should serve a purpose to maximize profitability:
- Make every space count.
A thoughtful coworking space floor plan can balance revenue generation with member satisfaction, ensuring your space is functional and inviting.
- Community areas: Spaces like lounges and kitchens are essential for networking and collaboration but shouldn’t take up prime real estate that could be used for revenue-generating activities, like private offices. Strategically integrating these areas with hallways or other multifunctional spaces can make them more efficient. For example, a communal area can double as an event space.
- Private offices: These are often the biggest moneymakers, consistently contributing a large share of revenue. However, they should be balanced with open workspaces and lounge areas to provide variety and value for members.
- Creative repurposing: Consider flexible use of space. Open areas can transform into event venues, and underused corners can be turned into quiet zones or additional workspaces, catering to diverse member needs while boosting space efficiency. Speaking of…
- Adapt and repurpose underutilized areas.
Strategic floor planning isn’t just about initial coworking space design but ongoing evaluation and adaptation.
- Analyze how members use your space throughout the day. For example, an empty room in the mornings could be repurposed for small group meetings, workshops, or private work.
- Optimize the layout to improve flow and interaction, creating a sense of community while making the most of your available square footage.
- Use tools to optimize your coworking space.
Advanced coworking management tools like Archie can help visualize and optimize space allocation. This way, you can:
- Spot underutilized areas and redesign them for better use.
- Predict and quickly fill vacancies by tracking member behavior and preferences.
- Strategically group members or businesses to encourage collaboration and networking.
- Measure and analyze key metrics.
Understanding how your space is being used is essential for profitability. Besides office usage insights, the best coworking management tools can provide robust analytics to help you monitor growth. If you’re looking for some inspiration, consider tracking:
- Utilization rate: Measures how effectively your resources are being used.
- Occupancy trends: Helps identify popular spaces and those that need improvement.
- Customer retention and repeat business: Indicates long-term member satisfaction and profitability.
- Operating expenses per square foot: Assesses cost efficiency across your space.
- Acquisition costs and customer lifetime value: Guides strategic coworking space business planning and budgeting.
- Engage members for feedback.
Regularly seek input from your members to understand their needs and preferences. This could be done through:
- QR codes placed around the space for quick feedback collection.
- Direct conversations and surveys to gather more in-depth insights.
A member-focused approach helps improve satisfaction and ensures your space adapts to changing demands.
Once you combine strategic floor planning, advanced tools, and member feedback, you can create a coworking space that’s efficient, adaptable, and profitable—meeting the needs of your community while maximizing revenue.
But that’s not everything you can do.
Rethink your pricing and fee strategies
A well-thought-out pricing strategy ensures steady revenue and communicates the value of your coworking space to members. Consider the following:
- Automatic renewals: Include auto-renewal clauses in memberships to ensure steady income and reduce administrative overhead.
- Competitive pricing: Review your pricing structure regularly to align with market trends and avoid undercharging. Adjust as needed to reflect your value and operational costs.
- Pass on transaction fees: Consider passing credit card fees onto members, but ensure compliance with local laws and communicate this clearly.
- One-time fees: Introduce joining or setup fees for new members and require non-refundable deposits to secure bookings and reduce cancellations.
- Annual price increases: Implement yearly price adjustments to match inflation and rising costs. Be transparent with members to avoid surprises and build trust.
Offer flexible membership options
Offering a variety of membership plans allows your coworking space to attract a wide range of professionals with different needs and workstyles. Tiered memberships also allow members to upgrade or customize their plans as their requirements evolve. Here are some flexible options to consider:
- Lounge membership: Access to casual spaces for networking or light work.
- Access membership: General access with discounts on desks or meeting room bookings.
- Part-time membership: Includes a limited number of day passes per month.
- Social membership: Grants access to networking events and resources without workspace use.
- Flex desk membership: Open seating is available for members who want flexibility.
- Dedicated desk membership: Reserved desks for those who prefer consistency.
Focus on attracting and retaining members
Growing and maintaining a loyal community is essential for the long-term success of your coworking space. Here are some practical strategies to attract new members and keep existing ones engaged and satisfied:
- Promotions for new members: Offer trials, discounts, or targeted campaigns to attract freelancers, startups, and remote workers.
- Loyalty campaigns: Provide referral bonuses, loyalty discounts, or exclusive premium services for long-term members.
- Collaborate locally: Partner with cafes, gyms, and stores to offer mutual discounts, creating additional value for your members and boosting local business.
- Software perks: Partner with tech providers to offer members discounted or exclusive access to tools that improve productivity.
Expand revenue streams beyond membership fees
Membership fees are the foundation of any coworking space’s income, but introducing new revenue streams can help your coworking space business grow while creating a richer experience for your members. Here are some practical ideas:
- Host events and workshops. Transform your space into a venue for paid events, industry meetups, or seminars. These activities generate extra income and strengthen your community and visibility.
- Partner with local sponsors. Collaborate with local businesses to sponsor events. For instance, they could provide food or drinks in exchange for exposure or pay a sponsorship fee to promote their brand in your space.
- Offer food and beverages: Set up an in-house café that serves coffee, snacks, and quick meals for busy professionals. You can also combine staffing with your coworking team for efficiency. Plus, you can install self-serve vending machines to provide refreshments with minimal management effort.
- Handle mail: Offer mail-handling services or virtual office packages for members and non-members. This attracts freelancers or businesses that don’t need a physical workspace but still want a professional address.
- Provide administrative support: Help members streamline their work with services like scheduling, answering calls, or email management. These can be offered as premium add-ons to their memberships.
- Rent office amenities: Charge for access to office essentials like printing, scanning, or supplies. These pay-per-use services meet practical needs while adding to your revenue.
- Rent high-tech tools and spaces: Offer specialized equipment like podcasting gear, VR headsets, or design tools on a rental basis. Rent out unique spaces such as podcast studios, brainstorming rooms, or video conferencing suites for members and non-members.
- Sell merchandise: Create branded merchandise, such as mugs, notebooks, or T-shirts, to sell to members and visitors. This generates income and acts as free advertising when your brand is seen outside the space.
- Host pop-up shops: Partner with local artists, makers, or small businesses to host pop-up shops. This supports the local economy and creates a fresh, engaging environment for your members.
- Consider wellness activities: Add yoga classes, meditation sessions, or health workshops to create a holistic work environment. These offerings can attract new audiences and provide additional revenue.
Manage coworking expenses, not just revenue growth
Profitability in a coworking space isn’t just about bringing in more members—it’s also about controlling costs. Managing expenses wisely is as necessary as growing revenue to ensure long-term success. Here’s how:
- Improve energy efficiency: To lower utility bills, adopt energy-saving measures like LED lighting, smart thermostats, and motion-sensor lighting.
- Buy in bulk: Purchase essential items like coffee, snacks, and office supplies in bulk to save on costs and ensure a steady supply for members.
- Leverage technology: Use integrated coworking tech stack to streamline operations like guest check-ins, member billing, and event registrations. Automation reduces the need for manual processes and lowers labor costs.
- Partner with vendors: Collaborate with suppliers for better deals on amenities or shared resources, such as coffee machines or maintenance services, to reduce costs while maintaining quality.
- Introduce self-service options: Make it easy for members to handle simple tasks themselves with the coworking software. For example, touchless visitor management or self-service meeting room booking can reduce staff involvement, freeing your team to focus on higher-value tasks.
- Outsource where it makes sense: For tasks that don’t require in-person attention—like accounting, IT support, or coworking space marketing—consider outsourcing to remote professionals or contractors. This approach can be more cost-effective than maintaining a full-time staff for specialized roles.
- Standardize processes: Develop clear, repeatable workflows that anyone on your team can follow. These systems ensure smooth operations, reduce training time and keep things running efficiently even during staff transitions.
- Hire and retain skilled staff: Invest in hiring talented, adaptable community managers and team members who can handle multiple responsibilities. A well-trained, efficient team can deliver excellent service while minimizing overhead.
- Focus on high-demand events: Eliminate low-participation events and use data insights to plan activities that attract more members. This ensures your resources are spent on initiatives that provide real value.
The goal is maintaining high-quality service for members while keeping expenses manageable, striking the perfect balance between profitability and long-term growth.
Key coworking space profitability challenges
Making a coworking space profitable comes with its challenges. Key factors like location, attracting members, and running operations efficiently play a significant role, but certain obstacles can have an even bigger impact on your bottom line:
- High rental costs. For most coworking spaces, rent is the single largest expense. Spaces in prime city-center locations often face sky-high rental rates, which can eat into profits despite higher membership fees. Suburban or smaller-city spaces benefit from lower rent but may struggle to attract enough members.
- High operating costs: Beyond rent, operating costs like utilities, maintenance, staff salaries, and coworking space amenities can add up quickly. These expenses are essential to maintaining a functional and attractive space but can strain budgets if not managed carefully.
- Low occupancy rates. Underutilized space is a major profitability killer. Every empty desk represents lost revenue and spaces with low occupancy rates often struggle to cover fixed costs like rent and utilities.
- Competition: In cities or regions with a high density of coworking spaces, competition can drive down prices and make it harder to differentiate your space.
Interestingly, high energy prices, inflation, and competition are not reported as significant factors affecting profitability, with rental costs and occupancy rates standing out as the primary challenges.
Sample coworking profit and loss report
Coworking profitability FAQs
You can make money owning a coworking space, but it requires careful planning and smart strategies. To boost profits, focus on keeping your space full with high occupancy rates, offer extra services like meeting room rentals, event hosting, and mail handling, and diversify revenue with amenities like a café or vending machines. At the same time, control costs by automating tasks, outsourcing when it makes sense, and improving energy efficiency. Flexible membership plans and regular pricing reviews also help attract and retain members while ensuring you stay competitive. Coworking spaces can be a profitable business with the right balance of income and expense management.
The coworking space profit margin can vary depending on size, location, and how efficiently the space is managed. Small spaces often break even or operate at a loss, while medium spaces (50-150 members) typically see 10–20% profit margins. Larger coworking spaces (150+ members) can achieve higher margins, often around 20–30% or more, especially if they maintain high occupancy and offer additional services like meeting room rentals and event hosting.
Coworking spaces fail for a few reasons, like high rental costs, low occupancy rates, or poor financial management. If a space isn’t full or doesn’t offer enough additional services like meeting room rentals or event hosting, it struggles to cover its expenses. High overhead costs, like utilities and staff, can also eat into profits, especially if the space isn’t optimized for efficiency. Some spaces fail because they don’t adapt to their target market’s needs or lack a clear pricing strategy.
Article sources:
- Insights from Abigail Schilling, Principal at Space Savvy Studio
- Global Coworking Survey
