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Survey: patterns of coworking space closure

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The coworking movement is showing no signs of slowing. It is widely known that the number of coworking spaces is almost doubling each year. But along with hundreds of new coworking spaces that have opened their doors, there have been a number of casualties of business along the way. The percentage of failed coworking spaces, and in particular the reasons behind their closure, is potentially invaluable information for the coworking community. By determining patterns in coworking space closure, the industry will be able to maintain its growth.

Alex Hillman, co-founder of IndyHall in Philadelphia and tireless coworking advocate, has set out, with the help of the coworking community, to find out which are the recurring elements in stories of coworking space closures. As Alex acknowledges, ‘the business of coworking is susceptible to all of the rules of starting a new business - there's going to be a failure rate.’ What defines this failure rate, and what lessons we can learn from patterns recognized, is the point of interest.

A self-confessed pattern-watcher, Alex has initiated a short survey, and is calling on all founders, managers, ex-coworkers or passionate onlookers of failed coworking spaces to answer a series of personal - though pertinent - questions in order to establish some groundwork into why some coworking spaces fail.

Deskmag has examined coworking space failure in the past, and included a number of questions relating to failed coworking spaces in last year’s Global Coworking Survey. While we did receive responses, there were too few from which to draw any statistically significant data which can be quantified

There are three main reasons for this. First, operators of failed coworking spaces are harder to connect with, given their discontinued involvement in the industry. Second, the information required to conduct meaningful analysis is deeply personal: it is understandable that some may wish to keep such episodes private and look forward.

Third, given the infancy of the movement, it has to date been difficult to explore specific topics without first gaining an overall picture. When last year too there were significantly less coworking spaces at the time of the survey (1,100), a lower number of respondents who closed their coworking space were available to comment on this theme in particular.

This said, we can make some generalizations. Through our constant monitoring of coworking space numbers. We know that while the absolute number of closed coworking spaces has risen, there has been no significant - or indeed, monitorable - increase in the percentage of failed spaces over the past year. It shouldn't be a surprise that an increase of closed coworking spaces has a simple and strong correlation to the increase in the number of coworking spaces in general.

We also notice that coworking spaces in small towns have a higher failure rate than those in big cities. We can attribute this to the higher gap of knowledge about coworking in these areas and fewer overall possibilities to attract coworkers. Coworking spaces in these areas tend to be smaller and members visit the space less frequently, making it more difficult to establish a profitable business - compared to those in big cities.

An article discussing our findings on failed coworking spaces will come shortly, but a more in-depth study is yet to be realized.

To avoid the issue of sensitive data, Alex has ensured that those volunteering information will remain anonymous, and the amount shared is at the discretion of the responder.

In addition, the survey will remain online so he can constantly collect information and determine long-term trends. Anyone with a background in research is invited to review the questionnaire and offer advice on adding fields or data collection.

‘My goal is to organize this information and share some hypothesis that we all study together and share back again, overall helping the ecosystem not just learn from successes but also avoid repeating historic failure patterns,’ Alex wrote.

‘My hope is to be buried under a mountain of responses and have to recruit some of you to help me dig myself out.’

If you are an ex-manager, founder, employee or coworker of a failed coworking space, or you are currently operating or working for a coworking space whose future closure is certain, help Alex and the coworking community to establish trends that others can learn from by completing this survey.

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