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Which coworking spaces have been profitable in recent months? In this article, you will learn more about profitability, its drivers, and the margins of coworking spaces.  
By Carsten Foertsch - Thursday, 26 October 2023

At first glance, slightly more coworking spaces operated in the black than in the years before the pandemic. But a few groups fared much better in the past than they do now.

☆☆ The 2023 Global Coworking Survey is supported by Nexudus & Yardi Kube. Find the chart report here. ☆☆

Overall, 46% of coworking spaces were profitable in the twelve months prior to the survey. This share increased significantly to 52% among for-profit coworking spaces.

A quarter of all coworking spaces failed to recoup their expenses, which is on par with 2019. This includes significantly more non-profit coworking spaces than before, which were already less likely to be profitable due to their model.

Coworking spaces could also report as being neither profitable nor unprofitable. Their share fell slightly to 30%.

There were some caveats to the generally positive market performance. 

The first is a statistical effect. The share of very young coworking spaces in the overall market continued to decline, because old spaces generally don't close just because a new one opens. Spaces up to one year old accounted for 13 percent of the overall market this year, down from a quarter in 2019. 

What it means: The group of young coworking spaces was, and still is, the least likely to be profitable, since few businesses start out with an immediate profit. This group has been one of the two main reasons for the industry's low profitability in the past. Conversely, if nothing else changed, their declining share should have automatically led to more profitable coworking spaces in the overall market. However, at least two recent trends have worked against this:

Older locations faltering

While prior to the pandemic coworking spaces were much more likely to be profitable the older they were, the trend has now reversed from an age of more than six years. Among locations over 10 years old, far less than half made a profit. That's below average.

Size is currently not the key to profits

In contrast to the pre-pandemic period, there were few economies of scale that led to a higher probability of profit. In particular, sites with between 250 and 500 workstations were less likely to be profitable. This included larger chains. The survey covered a twelve-month period, so the effects of the pandemic are likely still being felt.



High occupancy is key

On the other hand, coworking spaces with high occupancy rates were still much more likely to be profitable. Similarly, those with a high density of desks and members per space and many members per staff were more able to turn a profit. To a lesser extent, the same is true for coworking spaces where members are not only registered but also work frequently. 

Their locations were also most likely to generate profits in areas with many coworking spaces. They continued to do this most easily in large cities. Surprisingly, this happened more often in peripherical areas, possibly due to lower rents.

As was the case before the pandemic, a high proportion of private offices contributed to the leap into the profit zone. On average, however, their rental accounted for no more than half of all revenues in profitable spaces. Open workspaces and lounge areas remained very important components of profitable coworking spaces.  

High rental prices can be a major threat

As in previous surveys, coworking spaces with relatively high rental costs on the expense side were more likely to be unprofitable. Low occupancy was again the other critical factor. Coworking spaces also confirmed these two factors when directly reporting their problems. In contrast, high energy prices, inflation, and competition did not affect the likelihood of a coworking space being profitable.

Next page: What is the profit margin? And by what cost-effective means do profitable coworking spaces attract new members?

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